President's Letter

Capex Update

In early October, we announced an expanded Q4 drilling program which included two gross Glauconite wells in our Central Alberta Caroline area and one gross Pekisko oil well in our Central Alberta Three Hills area. We finished drilling the first Glauconite well in October and are now drilling the horizontal leg of the second Glauconite well. Both wells will be completed at the same time and are expected to be on stream before year-end.

With the increase in oil prices, the drilling economics of our Pekisko locations will compete with our Glauconite play for capital in 2027.

We have identified 59 gross (37 net)³ Glauconite locations in the Caroline area and 44 gross (38 net)⁴ Pekisko locations in the Three Hills/Rowley area. The range of values of the Glauconite and Pekisko locations at various commodity prices is highlighted in our most recent corporate presentation available at www.pinecliffenergy.com.

New Debt Agreement

We amended our syndicated credit facility in early October resulting in an extension to September 30, 2029. This extension will also provide us with an additional $15.0 million to support future drilling opportunities up to and including June 30, 2027, as required.  

Dividend

Since the implementation of our dividend program in June 2022, our priorities have been to maintain a sustainable dividend supported by free cash flow, conduct prudent hedging and ensure a strong balance sheet. At current commodity prices, we are maintaining our monthly dividend at $0.00125 per share.

Our dividend is now back to being fully eligible, for tax purposes, beginning in October 2026.

Hedging and Diversification Update

Our hedging and internal marketing strategies continue to mitigate the impact of commodity price volatility. In the third quarter, Pine Cliff realized an average natural gas price of C$2.44/Mcf, representing a 56% premium to the AECO Daily 5A price of C$1.56/Mcf.  

For the fourth quarter of 2026, we have approximately 41% of gross natural gas production⁵ hedged at an average price of C$3.14/Mcf and approximately 51% of gross crude oil production⁶ hedged at US$68.67/Bbl.

For 2027 we have approximately 31% of gross natural gas production⁵ hedged at an average price of C$2.81/Mcf and 41% of gross crude oil production⁶ at an average price of US$79.08/Bbl for 2027. NGL production is unhedged.

Webcast

Pine Cliff will host a webcast at 9:00 AM MST (11:00 AM EST) on Friday, November 6, 2026. Participants can access the live webcast via Pine Cliff Q3 Conference Call or through the link provided on our website at www.pinecliffenergy.com. A recorded archive of the webcast will also be available on the website.

Outlook

There has been a significant improvement year-over-year in third quarter AECO natural gas prices. This indicates that the Western Canada supply of natural gas is now getting back to being in balance with demand. We have witnessed natural gas storage withdrawals in the past couple weeks, even though we are still in the injection season. Natural gas storage levels are lower in both Canada and the United States compared to this time last year.  LNG Canada Phase 1 appears to be preparing for its first winter season running at or near its capacity of 2 bcf/day, which will consume over 10% of the entire Canadian natural gas supply.

The announcement that LNG Canada Phase 2 is moving forward was another positive piece of news to accompany the multiple Canadian energy infrastructure press releases we saw this summer. With the two Phases of LNG Canada, in addition to the Ksi Lisims, Cedar and Woodfibre projects, LNG exports from the Canadian West Coast are expected to reach 6 bcf/d by the end of the decade and could be more than 8 bcf/d by 2033 with other announced projects. This represents a significant draw on current Canadian gas production of around 19 bcf/d today.  

Pine Cliff is entering a new phase of development, deploying capital to an internal drilling inventory that has never been stronger. Over the past 15 years, we have focused on growth through acquisitions, and we continue to seek accretive assets to add to our portfolio. Our business model was built to generate above industry average free cash flow in stronger natural gas price environments. By focusing on low production decline assets, we built a business model that is resilient in the face of volatile commodity prices.

We are optimistic that investors will increasingly recognize and value Pine Cliff’s exposure to rising Western Canadian natural gas prices this winter and into 2027. We believe that prudent capital allocation through uncertain times remains central to creating long-term shareholder value. Our management team is aligned with our shareholders, and we will direct capital to opportunities we believe can generate the highest returns and free cash flow for them. We look forward to 2027.

Thank you for your continued support.

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Yours truly,

Phil Hodge
President and Chief Executive Officer 
November 5, 2026

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¹ Disclosure Note: Please refer to Pine Cliff’s website for reader advisories regarding forward-looking information, non-GAAP measures, oil and gas measurements and definitions, as this President’s message is subject to the same cautionary statements as set out therein.

² Comprised of 96,927 Mcf/d natural gas, 2,750 Bbl/d NGLs and 1,095 Bbl/d light and medium oil.

³ 29 gross (22.0 net) booked locations in the McDaniel & Associate reserve report effective December 31, 2025.

⁴ 20 gross (18.3 net) booked locations in the McDaniel & Associate reserve report effective December 31, 2025.

⁵ Based on Q3 2026 sales volumes of 96,927 Mcf/d natural gas.

⁶ Based on Q3 2026 sales volumes of 1,095 Bbl/d of light and medium oil.

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