President's Message to Shareholders

Reserves

We were pleased with our independent reserve evaluation results this year. The acquisition we completed in December 2023 added valuable low decline liquids production and drilling inventory to our portfolio. In addition, that purchase increased the NPV of our reserves enough to offset our 2024 production, despite us not drilling a well in 2024.

PDP reserves were up 8.5% prior to accounting for production, as positive technical revisions in our Central Alberta business unit more than offset the impact of lower gas prices. After production, our PDP was down 7.5% from the end of 2023, while our 2P reserves were up 5.6%. This reflects our ability to book additional two-mile locations from the strategic land swaps we completed throughout the year and improvements in the type curves based on offsetting results in the area. We now have identified 18.4 net two-mile locations in the Sundre area, a significant inventory at Pine Cliff’s measured pace of development.

The 2P reserves also include limited booking for our emerging Basal Quartz play, with two wells included as booked locations at the end of 2024. We are very interested in exploiting this oil-dominated zone and our internal technical work over the past year has identified almost 40 prospective locations. Pine Cliff is fortunate to also control our own gas gathering infrastructure in this area, which is strategic to the growth of this emerging play.

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Dividend

Despite a challenging natural gas environment in 2024, we managed to deliver an all-in payout ratio of less than 100%, which includes payments to lower our term debt and fund our retirement obligations. This is in part due to our effective hedge program that delivered Pine Cliff a realized natural gas price of C$2.24/Mcf, 53% above the average AECO Daily 5A gas price of C$1.46/Mcf for the year. We have declared a $0.005 monthly dividend for March and will continue to closely monitor our total payout ratio using forward strip commodity prices for the year combined with our existing hedge positions.

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2025 Outlook

Average production in 2024 of 23,248 Boe/d3 was in line with our annual guidance range of 23,250 – 23,750 Boe/d4. Note that we lost ~ 630 Boe/d of production through the year largely because of maintenance-related outages and cold weather.

Meanwhile, we managed to spend less, with maintenance and asset retirement spending of $8.9 million coming in below our $12 million budget.

We continue to evaluate our spending plans for 2025 as we think that there is a compelling case for strategically developing our land base, but the pace needs to fit in the context of the prevailing commodity price environment, and by extension, our ability to deploy cash flow. We have not made any final CAPEX decisions for 2025, but it is our current intent to resume a focused drilling program in the back half of the year. We will continue to be flexible and patient in our capital allocation decisions, both of which are made possible by the low decline nature of our production base. As always, our final capital decisions will prioritize cash flow growth over production. In the interim, we will maintain our base production with capex limited to maintenance and reclamation spending.

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Data Centre Announcement

On January 15, 2025, Pine Cliff announced a natural gas supply agreement with a private Canadian company for an Alberta data centre development. Data centres are expected to be a significant source of incremental gas demand growth in the Province of Alberta, and Pine Cliff is proud to be one of the first natural gas producers to announce such an agreement to develop an “off-grid” solution to this growing energy demand source.

In this agreement, Pine Cliff is committed to supplying between 3.2 MMcf/d5 and 4.8 MMcf/d5 of natural gas for an initial term of 25 years, for which we will receive a rolling 12-month price indexed to NYMEX. While these production volumes are relatively small in the context of our total natural gas production (3.0% to 4.4% of fourth quarter volumes), these types of projects act as incremental market diversification without having to pay hedging or transportation costs to get access to US market pricing. We believe that Pine Cliff has other sites that could be suitable for similar development.

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Hedging Update

We continue to believe that hedging is an important part of our marketing strategy to help protect our cash flow which is used to support our business and shareholder distributions. The impact of this strategy was critical in 2024, as our hedges positions helped deliver a Pine Cliff realized natural gas price that was a 53% premium to the AECO 5A benchmark. In addition to using physical hedges, our marketing group works closely with our operations team to determine the best strategies to utilize our three pipelines that take natural gas production out of the Province of Alberta.

Today, using our production in the fourth quarter of 2024 as a benchmark, we have approximately 35% of Pine Cliff’s natural gas volumes hedged at C$2.91/Mcf. On the oil side, we currently have 31% of our fourth quarter production volumes hedged at US$68.92/Bbl.

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Webcast

We will host our quarterly webcast regarding our Q4 and annual results at 9:00 am MT on Thursday March 6th. Participants can access the live webcast via PNE Q4 2024 and Annual Year End Results Webcast, or through the Pine Cliff website at http://www.pinecliffenergy.com.

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Outlook

We are now in our 14th year managing our unique business model. We have experienced many ups and downs to commodity prices, although the current commodity and currency volatility associated with trade tariff speculation is a new circumstance for us. We know that our job is to continue to protect your investment in Pine Cliff and allocate capital in what we feel are the optimal ways to do that. With this type of volatility, maintaining financial flexibility is essential and will continue to be a key focus for our team.

We remain committed to making all our capital and operating decisions with a sharp focus on adding value on a per share basis over a long period of time. Our management team believes that the back half of 2025 should see improved AECO prices with the launch of LNG Canada, currently scheduled for this summer. We believe that natural gas is playing a critical role in the growing global demand for energy and will continue to play a leading role in the rise of lower carbon energy use. Our strategy to be positioned for long-term exposure to the Western Canada natural gas market has not changed, but we have added to our liquid production in the past few years to provide some stability to our funds flow. Thank you for your ongoing support.

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Yours truly,

Phil Hodge

President and Chief Executive Officer

March 5, 2025

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