Perpetual Energy exists to bring energy to society through finding, exploiting, producing, and marketing oil and gas-based energy.

Fostering:

1. Safe and environmentally responsible operations

2. An entrepreneurial spirit in all facets of our organization, innovating and managing 3. risks in pursuit of chosen strategies

4. Accountability, doing everything possible to achieve our goals while honoring our values 5. A low-cost culture

Perpetual expects exploration and development capital expenditures of $28 to $30 million for full-year 2022, at the high end of previous guidance released on March 15, 2022, to be fully funded from adjusted funds flow. The table below summarizes anticipated exploration and development expenditures and drilling activities for Perpetual for the remainder of 2022.

At Mannville in Eastern Alberta, the preliminary performance of the recent two (2.0 net) well multi-lateral horizontal drilling programs targeting heavy oil in the Sparky formation is promising. One (1.0 net) well rig released in mid-March has fully recovered its oil- based load fluid and is stabilizing at an oil production rate above expectations. No sales production was recorded in the first quarter for this well, as full recovery of the oil-based

Perpetual will continue to monitor the performance of the new Sparky multi-laterals through the second quarter before executing the follow-up drilling program; however, given the promising early performance of the multi-lateral drilling program at Mannville, Perpetual has made preparations to drill up to four (4.0 net) additional multi-lateral horizontal Sparky locations in the second half of 2022.

Perpetual will also continue to be focused on waterflood optimization and battery consolidation projects as well as shallow gas completions and abandonment and reclamation activities in the Mannville property. Following spring break-up, once field conditions allow, Perpetual will participate at its 50% working interest in an East Edson drilling program to drill, complete, equip and tie in six (3.0 net) extended reach horizontal wells in the Wilrich formation as well as one (0.5 net) additional horizontal well targeting the Notikewin formation to begin evaluating the potential of secondary zones at East Edson. The seven (3.5 net) well-drilling program is expected to fill the West Wolf gas plant to maximize natural gas and NGL sales through next winter. Total Company average production for the first quarter of 2022 of 6,804 boe/d (16% oil and NGL) exceeded expectations due to the strong performance of the 2021 East Edson drilling program.

Production is forecast to decline from first-quarter levels through the second quarter of 2022 to an average of 5,900 to 6,200 boe/d, with oil and NGL expected to represent close to 22% of production as the two new multi-lateral heavy oil wells at Mannville begin to contribute to sales volumes. Average production volumes are forecast to grow to achieve 7,000 boe/d during the second half of 2022 as seven (3.5 net) new wells are drilled and come onstream at East Edson and assuming the four (4.0 net) well follow-up drilling program at Mannville is executed later in the third quarter.

❑ Oil

▪ OPEC is committed to managing global supply and inventory levels to match the recovery in demand

• Inventories now nearing 5-year lows justifying price levels(NULL)

▪ The steep backwardation of the WTI curve and US Rig Rate data reaffirms OPEC's view that US Shale producers will remain disciplined(NULL)

▪ Demand recovery continues, aided by government stimulus, vaccines, and lifting of Covid-19 restrictions(NULL)

• Threat of variants and backwardation forward curve is keeping rig counts at bay(NULL)

▪ Line 3 Replacement set to start in Q4 2021, supporting WCS differentials at historically tight levels(NULL)

❑ Natural gas

▪ Production declines due to lower associated gas production, coupled with high 24/7 demand in LNG & Mexico Exports resulting in a tight natural gas market

▪ NYMEX NG curve remains in backwardation as the market expects production to increase in 2022(NULL)