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BIR Birchcliff Energy News Story

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Birchcliff Energy Ltd. Announces Excellent Q1 2022 Results, Doubling of Quarterly Common Share Dividend for Q2 2022 and Plans to Increase Common Share Dividend in 2023

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CALGARY, Alberta, May 11, 2022 (GLOBE NEWSWIRE) -- Birchcliff Energy Ltd.
(“Birchcliff” or the “Corporation”) (TSX: BIR) is pleased to announce
its Q1 2022 financial and operational results, the doubling of its quarterly
common share dividend for the quarter ending June 30, 2022 and plans to
further increase the Corporation’s common share dividend in 2023.

“We continue to be committed to maximizing free funds flow generation and
significantly reducing indebtedness. I am pleased to report that Birchcliff
delivered on both fronts in Q1 2022. Our quarterly average production was
76,024 boe/d and we generated quarterly adjusted funds flow(()(1)()) of $183.7
million and record first quarter free funds flow((1)) of $95.4 million. As a
result of the free funds flow we generated in the quarter, we were able to
significantly reduce our total debt(()(2)()) at March 31, 2022 by $368.4
million (47%) from March 31, 2021 and by $90.4 million (18%) from December 31,
2021,” commented Jeff Tonken, Chief Executive Officer of Birchcliff.

Mr. Tonken continued: “Based on the strength of the forward commodity price
environment and our excellent results year-to-date, we have increased our
full-year 2022 targets for adjusted funds flow to $1.18 billion and free funds
flow to $920 million to $940 million(()(3)()) and updated our five year plan
for 2022 to 2026. We expect to reach zero total debt in Q4 2022 and have a
surplus((2)) of $260 million to $280 million at year-end 2022((3)). As a
result, we have accelerated our plans for increasing shareholder returns. Our
board of directors has declared a doubled quarterly common share dividend of
$0.02 per common share for the quarter ending June 30, 2022. In addition, we
are currently targeting increasing our annual common share dividend in 2023 to
at least $0.80 per share ($212 million annually), subject to commodity prices
and the approval of our board of directors. After the payment of this targeted
common share dividend in 2023, we are forecasting a surplus of $575 million at
year-end 2023(()(4)()). We believe that this increased dividend would be
sustainable at an average WTI price of US$70.00/bbl and an average AECO price
of CDN$3.00/GJ.”

UPDATED OUTLOOK AND INCREASED SHAREHOLDER RETURNS HIGHLIGHTS
* Birchcliff is maintaining its previous 2022 guidance for annual average
production at 78,000 to 80,000 boe/d and F&D capital expenditures at $240
million to $260 million, with F&D capital expenditures currently anticipated
to be on the high end of the guidance range.
* Birchcliff anticipates that it will generate adjusted funds flow of $1.18
billion and free funds flow of $920 million to $940 million in 2022 based on
current strip pricing(()(3)()). Birchcliff does not have any fixed price
commodity hedges in place and does not currently intend to hedge any future
production, which allows the Corporation to take full advantage of the robust
commodity price environment.
* Subject to the approval of Birchcliff’s board of directors, Birchcliff
currently intends to redeem all of its outstanding Series A and Series C
preferred shares at the end of Q3 2022.
* Birchcliff expects to reach zero total debt in Q4 2022, even after the
proposed redemption of its Series A and Series C preferred shares, with an
anticipated surplus of $260 million to $280 million at year-end 2022, based on
current strip pricing(()(3)()).
* Birchcliff’s board of directors has declared a quarterly cash dividend of
$0.02 per common share for the quarter ending June 30, 2022, which represents
a 100% increase over the prior quarter. This is the second time in the past
twelve months that Birchcliff has doubled its quarterly common share dividend,
which demonstrates Birchcliff’s commitment to increasing shareholder
returns.
* Birchcliff will consider additional increases to its common share dividend
in 2022, depending on commodity prices and free funds flow levels, among other
things.
* Subject to commodity prices, Birchcliff achieving its target of zero total
debt in Q4 2022 and the approval of the board of directors, the Corporation is
currently targeting increasing its annual common share dividend in 2023 to at
least $0.80 per common share, which is expected to be paid quarterly at a rate
of $0.20 per share, commencing with the quarter ending March 31, 2023. After
the payment of this targeted common share dividend, the Corporation is
forecasting a surplus of $575 million at year-end 2023((4)).
* This targeted dividend of $0.80 per common share ($212 million
annually)(()(5)()) and Birchcliff’s targeted F&D capital expenditures would
be funded over the course of the Corporation’s five year plan at an average
WTI price of US$70.00/bbl, an average AECO price of CDN$3.00/GJ and average
Dawn and NYMEX prices of US$3.30/MMBtu(()(6)()). Assuming these commodity
prices, Birchcliff forecasts a surplus of $218 million at year-end
2023(()(6)()).
Q1 2022 HIGHLIGHTS
* Achieved quarterly average production of 76,024 boe/d, a 1% increase from Q1
2021. Liquids accounted for 20% of Birchcliff’s total production in Q1 2022
as compared to 23% in Q1 2021.
* Generated quarterly adjusted funds flow of $183.7 million, or $0.69 per
basic common share(()(7)()), a 109% increase from Q1 2021. Cash flow from
operating activities was $154.2 million, an 87% increase from Q1 2021.
* Delivered record first quarter free funds flow of $95.4 million, or $0.36
per basic common share(()(7)()).
* Significantly reduced total debt at March 31, 2022 to $409.0 million, a
reduction of $368.4 million (47%) from March 31, 2021.
* Earned quarterly net income to common shareholders of $125.8 million, or
$0.47 per basic common share, a 467% and 488% increase, respectively, from Q1
2021.
* Achieved an operating netback(()(7)()) of $28.47/boe, a 67% increase from Q1
2021.
* Realized an operating expense(()(8)()) of $3.49/boe, a 10% increase from Q1
2021.
* F&D capital expenditures were $88.3 million in Q1 2022. In Q1 2022,
Birchcliff drilled 11 (11.0 net) wells and brought 6 (6.0 net) wells on
production.
* In Q1 2022, Birchcliff purchased 1,303,196 common shares pursuant to its
normal course issuer bid (the “NCIB”) at an average price of $6.66 per
common share for an aggregate gross cost of $8.7 million (before fees).
Year-to-date, Birchcliff has purchased 4,422,192 common shares pursuant to the
NCIB at an average price of $8.58 per common share for an aggregate gross cost
of $38.0 million (before fees).
Birchcliff’s unaudited interim condensed financial statements for the three
months ended March 31, 2022 and related management’s discussion and analysis
will be available on its website at www.birchcliffenergy.com and on SEDAR at
www.sedar.com.

EXTENSION OF CREDIT FACILITIES AND MAINTENANCE OF BORROWING BASE LIMIT
* Subsequent to the end of Q1 2022, Birchcliff’s syndicate of lenders
completed its regular semi-annual review of the borrowing base limit under the
Corporation’s extendible revolving credit facilities (the “Credit
Facilities”).
* In connection therewith, the agreement governing the Credit Facilities was
amended effective May 3, 2022 to extend the maturity dates of each of the
syndicated extendible revolving term credit facility and the extendible
revolving working capital facility from May 11, 2024 to May 11, 2025. In
addition, the lenders confirmed the borrowing base limit at $850.0 million.
The Credit Facilities do not contain any financial maintenance covenants.
(This press release contains forward-looking statements within the meaning of
applicable securities laws. For further information regarding the
forward-looking statements contained herein, see “Advisories –
Forward-Looking Statements”. With respect to the disclosure of
Birchcliff’s production contained in this press release, see “Advisories
– Production”. In addition, this press release uses various “non-GAAP
financial measures”, “non-GAAP ratios”, “supplementary financial
measures” and “capital management measures” as such terms are defined in
National Instrument 52-112 – Non-GAAP and Other Financial Measures
Disclosure (“NI 52-112”). Non-GAAP financial measures and non-GAAP ratios
are not standardized financial measures under GAAP and might not be comparable
to similar financial measures disclosed by other issuers where similar
terminology is used. For further information regarding the non-GAAP and other
financial measures used in this press release, see “Non-GAAP and Other
Financial Measures”.)

________________________

((1) Non-GAAP financial measure. See “Non-GAAP and Other Financial
Measures”.)
((2) Capital management measure. See “Non-GAAP and Other Financial
Measures”. )
((3) Birchcliff’s updated guidance for its adjusted funds flow, free funds
flow and surplus in 2022 is based on an annual average production rate of
79,000 boe/d, which is the mid-point of Birchcliff’s annual average
production range for 2022. See “Outlook and Guidance – Updated 2022
Guidance” for further information regarding Birchcliff’s updated guidance
for 2022 and its updated commodity price and exchange rate assumptions. See
also “Advisories – Forward-Looking Statements”.)
((4) See “Outlook and Guidance – Updated Five Year Outlook and Plans to
Increase Common Share Dividend in 2023” for further information regarding
Birchcliff’s estimate of surplus at year-end 2023 and its updated commodity
price and exchange rate assumptions for the updated five year plan. See also
“Advisories – Forward-Looking Statements”.(5) Assumes 265 million common
shares outstanding.)
((6) Assuming no other changes to the Corporation’s targeted metrics under
the five year plan.)
((7) Non-GAAP ratio. See )(“Non-GAAP and Other Financial Measures”.)
((8) Supplementary financial measure. See “Non-GAAP and Other Financial
Measures”.) 

Q1 2022 FINANCIAL AND OPERATIONAL SUMMARY

                                                  Three months ended March 31, 2022     Three months ended March 31, 2021     
 OPERATING                                                                                                                    
 Average production                                                                                                           
 Light oil (bbls/d)                               2,369                                 3,355                                 
 Condensate (bbls/d)                              4,796                                 5,467                                 
 NGLs (bbls/d)                                    7,976                                 8,734                                 
 Natural gas (Mcf/d)                              365,296                               345,057                               
 Total (boe/d)                                    76,024                                75,065                                
 Average realized sales price (CDN$) ((1)(2))                                                                                 
 Light oil (per bbl)                              115.47                                67.02                                 
 Condensate (per bbl)                             121.56                                74.22                                 
 NGLs (per bbl)                                   43.56                                 24.69                                 
 Natural gas (per Mcf)                            5.40                                  3.52                                  
 Total (per boe)                                  41.79                                 27.47                                 
                                                                                                                              
 NETBACK AND COST ($/boe) ((2))                                                                                               
 Petroleum and natural gas revenue ((1))          41.80                                 27.47                                 
 Royalty expense                                  (4.41              )                  (1.72              )                  
 Operating expense                                (3.49              )                  (3.18              )                  
 Transportation and other expense ((3))           (5.43              )                  (5.52              )                  
 Operating netback ((3))                          28.47                                 17.05                                 
 G&A expense, net                                 (1.12              )                  (0.92              )                  
 Interest expense                                 (0.48              )                  (1.21              )                  
 Realized loss on financial instruments           (0.03              )                  (2.29              )                  
 Other cash income                                0.01                                  0.37                                  
 Adjusted funds flow ((3))                        26.85                                 13.00                                 
 Depletion and depreciation expense               (7.47              )                  (7.47              )                  
 Unrealized gain (loss) on financial instruments  5.07                                  (1.13              )                  
 Other (expense) income (()(4)())                 (0.08              )                  0.25                                  
 Dividends on preferred shares                    (0.25              )                  (0.25              )                  
 Deferred income tax expense                      (5.74              )                  (1.12              )                  
 Net income to common shareholders                18.38                                 3.28                                  
                                                                                                                              
 FINANCIAL                                                                                                                    
 Petroleum and natural gas revenue ($000s) ((1))  285,976                               185,609                               
 Cash flow from operating activities ($000s)      154,152                               82,608                                
 Adjusted funds flow ($000s) ((5))                183,699                               87,820                                
 Per basic common share ($) ((3))                 0.69                                  0.33                                  
 Free funds flow ($000s) ((5)(6))                 95,417                                (8,020             )                  
 Per basic common share ($) ((3)(6))              0.36                                  (0.03              )                  
 Net income to common shareholders ($000s)        125,792                               22,166                                
 Per basic common share ($)                       0.47                                  0.08                                  
 End of period basic common shares (000s)         266,810                               266,045                               
 Weighted average basic common shares (000s)      265,530                               265,989                               
 Dividends on common shares ($000s)               2,658                                 1,330                                 
 Dividends on preferred shares ($000s)            1,717                                 1,746                                 
 F&D capital expenditures ($000s) (()(7)())       88,282                                95,840                                
 Total capital expenditures ($000s) ((5))         88,124                                96,625                                
 Long-term debt ($000s)                           397,752                               701,735                               
 Total debt ($000s) (()(8)())                     408,998                               777,385                               

((1) Excludes the effects of financial instruments but includes the effects of
physical delivery contracts.)
((2) Average realized sales prices and the component values of netback and
cost set forth in the table above are supplementary financial measures unless
otherwise indicated. See “Non-GAAP and Other Financial Measures”. )
((3) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures”.)
((4) Includes non-cash items such as compensation, accretion, amortization of
deferred financing fees and other gains and losses.)
((5) Non-GAAP financial measure. See “Non-GAAP and Other Financial
Measures”.)
((6) Negative free funds flow denotes F&D capital expenditures in excess of
adjusted funds flow.)
((7) See “Advisories – F&D Capital Expenditures”.(8) Capital management
measure. See “Non-GAAP and Other Financial Measures”.)

OUTLOOK AND GUIDANCE

Updated 2022 Guidance

Birchcliff is updating its 2022 guidance as a result of the strong commodity
price environment and the excellent results it has achieved year-to-date.
Significant changes to Birchcliff’s guidance include the following:
* Adjusted funds flow guidance has been increased to $1.18 billion, primarily
as a result of the improvement in the commodity price forecast. Birchcliff
does not have any fixed price commodity hedges in place and does not currently
intend to hedge any future production, which allows the Corporation to take
full advantage of the robust commodity price environment.
* Free funds flow guidance has been increased to $920 million to $940 million,
primarily as a result of higher anticipated adjusted funds flow in 2022.
* Birchcliff is now forecasting that it will reach zero total debt in Q4 2022
and have a surplus of $260 million to $280 million at December 31, 2022 as
compared to its original guidance of total debt of $175 million to $195
million. The change to a surplus position is largely as a result of
Birchcliff’s higher anticipated free funds flow in 2022, which is primarily
being used to reduce indebtedness.
* Average royalty expense guidance has been increased to $7.10/boe to
$7.30/boe, primarily as a result of the improvement in the commodity price
forecast.
* Average interest expense guidance has been decreased to $0.20/boe to
$0.40/boe, primarily as a result of the anticipated repayment in full of the
Corporation’s Credit Facilities in 2022.
* Birchcliff’s updated 2022 guidance reflects an increased quarterly common
share dividend, as well as the proposed redemption of all of Birchcliff’s
outstanding cumulative redeemable preferred shares, series A (the “Series A
Preferred Shares”) and cumulative redeemable preferred shares, series C (the
“Series C Preferred Shares”) at the end of Q3 2022. The proposed
redemption of the Series A and Series C Preferred Shares is subject to the
approval of the board of directors. See “Intended Redemption of the Series A
and Series C Preferred Shares”.
The Corporation is maintaining its previous guidance for annual average
production at 78,000 to 80,000 boe/d and F&D capital expenditures at $240
million to $260 million, with F&D capital expenditures currently anticipated
to be on the high end of the guidance range. Birchcliff’s operations in 2022
have been impacted by cost inflation, labour shortages and supply constraints;
however, the Corporation has been able to navigate the impact of these
challenges year-to-date. The Corporation will continue to actively monitor the
impacts of these pressures throughout the remainder of the year and into 2023.

The following table sets forth Birchcliff’s updated and original guidance
and commodity price assumptions for 2022, as well as its free funds flow
sensitivity:

2022 Guidance and Commodity Price Assumptions

                                                           Updated 2022 guidance and            Original 2022 guidance and assumptions – January 19, 2022    
                                                           assumptions – May 11, 2022 ((1))                                                                  
 Production                                                                                                                                                  
 Annual average production (boe/d)                         78,000 – 80,000                      78,000 – 80,000                                              
 % Light oil                                               3%                                   3%                                                           
 % Condensate                                              7%                                   7%                                                           
 % NGLs                                                    10%                                  10%                                                          
 % Natural gas                                             80%                                  80%                                                          
 Q4 average production (boe/d)                             81,000 – 83,000                      81,000 – 83,000                                              
                                                                                                                                                             
 Average Expenses ($/boe)                                                                                                                                    
 Royalty ((2))                                             7.10 – 7.30                          3.10 – 3.30                                                  
 Operating ((2))                                           3.15 – 3.35                          3.15 – 3.35                                                  
 Transportation and other ((3))                            5.20 – 5.40                          4.90 – 5.10                                                  
 Interest ((2))                                            0.20 – 0.40                          0.50 – 0.60                                                  
                                                                                                                                                             
 Adjusted Funds Flow (millions) (()(4))                    $1,180 ((5))                         $590                                                         
                                                                                                                                                             
 F&D Capital Expenditures (millions)                       $240 – $260 ((6))                    $240 – $260                                                  
                                                                                                                                                             
 Free Funds Flow (millions) (()(4)())                      $920 – $940                          $330 – $350                                                  
                                                                                                                                                             
 Excess Free Funds Flow (millions) (()(4)())((7))          $900 – $920                          N/A                                                          
                                                                                                                                                             
 Surplus (Total Debt) at Year End (millions) (()(8)())     $260 – $280 (()(9)())                ($175 – $195)                                                
                                                                                                                                                             
 Natural Gas Market Exposure (()(10)())                                                                                                                      
 AECO exposure as a % of total natural gas production      19%                                  19%                                                          
 Dawn exposure as a % of total natural gas production      42%                                  42%                                                          
 NYMEX HH exposure as a % of total natural gas production  38%                                  38%                                                          
 Alliance exposure as a % of total natural gas production  1%                                   1%                                                           
                                                                                                                                                             
 Commodity Prices                                                                                                                                            
 Average WTI price (US$/bbl)                               99.50 ((1)(1)())                     76.00                                                        
 Average WTI-MSW differential (CDN$/bbl)                   3.10 ((1)(1)())                      5.00                                                         
 Average AECO price (CDN$/GJ)                              6.50 ((1)(1)())                      3.50                                                         
 Average Dawn price (US$/MMBtu)                            6.85 ((1)(1)())                      3.90                                                         
 Average NYMEX HH price (US$/MMBtu)                        6.95 ((1)(1)())                      4.00                                                         
 Exchange rate (CDN$ to US$1)                              1.28 ((1)(1)())                      1.26                                                         

Forward Nine Months’ Free Funds Flow Sensitivity((1)(2)())

 Forward nine months’ sensitivity         Estimated change to 2022 free funds flow (millions)     
 Change in WTI US$1.00/bbl                $2.7                                                    
 Change in NYMEX HH US$0.10/MMBtu         $4.2                                                    
 Change in Dawn US$0.10/MMBtu             $4.7                                                    
 Change in AECO CDN$0.10/GJ               $2.3                                                    
 Change in CDN/US exchange rate CDN$0.01  $5.3                                                    

((1) Birchcliff’s guidance for its production commodity mix, adjusted funds
flow, free funds flow, excess free funds flow, surplus and natural gas market
exposure in 2022 is based on an annual average production rate of 79,000
boe/d, which is the mid-point of Birchcliff’s annual average production
guidance range for 2022. )
((2) Supplementary financial measure. See “Non-GAAP and Other Financial
Measures”. )
((3) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures”. )
((4) Non-GAAP financial measure. See “Non-GAAP and Other Financial
Measures”. )
((5) Birchcliff’s updated estimate of adjusted funds flow takes into account
the effects of its physical and financial basis swap contracts outstanding as
at May 11, 2022 and excludes annual cash incentive payments that have not been
approved by Birchcliff’s board of directors.)
((6) Birchcliff’s estimate of F&D capital expenditures excludes any net
potential acquisitions and dispositions and the capitalized portion of annual
cash incentive payments that have not been approved by Birchcliff’s board of
directors. See “Advisories – F&D Capital Expenditures”. )
((7) Excess free funds flow is defined as free funds flow less common share
dividends paid. The estimate of excess free funds flow set forth in the table
above assumes that: (i) a quarterly common share dividend of $0.02 per common
share is paid for the quarters ending June 30, 2022, September 30, 2022 and
December 31, 2022; and (ii) there are 265 million common shares outstanding,
with no further buybacks of common shares occurring during 2022. Other than
the dividend declared for the quarter ending June 30, 2022, the declaration of
dividends is subject to the approval of the board of directors and is subject
to change. See “Advisories – Forward-Looking Statements”. This measure
was not disclosed on January 19, 2022.)
((8) Capital management measure. See “Non-GAAP and Other Financial
Measures”. )
((9) Surplus is equivalent to adjusted working capital surplus as disclosed in
the Corporation’s financial statements (see “Non-GAAP and Other Financial
Measures”). The estimate of surplus at December 31, 2022 is expected to be
largely comprised of cash on hand plus accounts receivable less accounts
payable at the end of the year and assumes the following: (i) that any free
funds flow remaining after the payment of dividends, asset retirement
obligations and other amounts for administrative assets, financing fees and
capital lease obligations is allocated towards debt reduction; (ii) that there
are 265 million common shares outstanding, with no further buybacks of common
shares occurring during 2022, and a quarterly common share dividend of $0.02
per share is paid for the quarters ending June 30, 2022, September 30, 2022
and December 31, 2022; (iii) that there are 2,000,000 Series A and 1,528,619
Series C Preferred Shares outstanding, with such shares redeemed by the
Corporation at the end of the third quarter of 2022, and a quarterly dividend
of $0.523375 per Series A Preferred Share and $0.4375 per Series C Preferred
Share is paid for the quarters ending June 30, 2022 and September 30, 2022;
(iv) that no significant acquisitions or dispositions are completed by the
Corporation and there is no repayment of debt using the proceeds from equity
issuances during 2022; (v) that there are no further proceeds received from
the exercise of stock options or performance warrants during 2022; (vi) that
the 2022 capital program will be carried out as currently contemplated with
capital spending of $260 million, being the high end of the Corporation’s
F&D capital expenditures guidance range; and (vii) the targets for production,
production commodity mix, capital expenditures, adjusted funds flow, free
funds flow and natural gas market exposure and the commodity price and
exchange rate assumptions set forth herein are met. The amount set forth in
the table above does not include annual cash incentive payments that have not
been approved by Birchcliff’s board of directors. Birchcliff previously
referred to “surplus” as “cash”.)
((10) Birchcliff’s guidance regarding its natural gas market exposure
assumes: (i) 175,000 GJ/d being sold on a physical basis at the Dawn price;
(ii) 12,499 GJ/d being sold at Alliance on a physical basis at the AECO 5A
price plus a premium; and (iii) 152,500 MMBtu/d being contracted on a
financial and physical basis at an average fixed basis differential price
between AECO 7A and NYMEX HH of approximately US$1.23/MMBtu. )
((11) Birchcliff’s updated commodity price and exchange rate assumptions for
2022 are based on anticipated full-year averages, which include settled
benchmark commodity prices and exchange rate for the period from January 1,
2022 to April 30, 2022 and forward strip benchmark commodity prices and CDN/US
exchange rate as of May 4, 2022 for the period from May 1, 2022 to December
31, 2022. )
((12) Illustrates the expected impact of changes in commodity prices and the
CDN/US exchange rate on the Corporation’s estimate of free funds flow for
2022 of $920 million to $940 million. The sensitivity is based on the updated
commodity price and exchange rate assumptions set forth in the table above.
The calculated impact on free funds flow is only applicable within the limited
range of change indicated. Calculations are performed independently and may
not be indicative of actual results. Actual results may vary materially when
multiple variables change at the same time and/or when the magnitude of the
change increases.)

Updated Five Year Outlook and Plans to Increase Common Share Dividend in 2023

Birchcliff’s five year plan for 2022 to 2026 (the “Five Year Plan”),
which was previously announced on January 19, 2022, has been updated to
reflect the strong commodity price environment and the changes to the
Corporation’s 2022 guidance.
* The Corporation’s targets for adjusted funds flow and free funds flow have
been increased each year, primarily as a result of the improvement in the
commodity price forecast.
* The Corporation is now targeting a surplus of $260 million to $280 million
at December 31, 2022 and has increased its targets for surplus in the
remaining years of the Five Year Plan. The Corporation had previously targeted
total debt of $175 million to $195 million at December 31, 2022, with zero
total debt to be achieved in 2023.
* The Corporation’s targeted royalty expense has increased each year,
primarily as a result of the improvement in the commodity price forecast. The
Corporation’s targeted interest expense in 2022 decreased as a result of the
anticipated repayment in full of the Corporation’s Credit Facilities in
2022.
* Birchcliff now anticipates that it will be required to pay Canadian income
taxes commencing in 2023 given the improvement in the commodity price forecast
and the anticipated increases to its adjusted funds flow, which has resulted
in the expectation for higher taxable income in 2023 to 2026. The Corporation
previously anticipated that it would be required to pay Canadian income taxes
starting in 2024.
* The potential free funds flow to be generated during the Five Year Plan
provides Birchcliff with significant capacity to sustainably increase
shareholder returns.
* Subject to commodity prices, Birchcliff achieving its target of zero total
debt in Q4 2022 and the approval of the board of directors, the Corporation is
currently targeting increasing its annual common share dividend in 2023 to at
least $0.80 per common share, which is expected to be paid quarterly at a rate
of $0.20 per share, commencing with the quarter ending March 31, 2023. This
would equate to $212 million of common share dividends paid in 2023, based on
265 million common shares outstanding. * Birchcliff believes that this
targeted dividend is sustainable at substantially lower commodity prices, with
such targeted dividend and Birchcliff’s targeted F&D capital expenditures
expected to be funded over the course of the Five Year Plan at an average WTI
price of US$70.00/bbl, an average AECO price of CDN$3.00/GJ and average Dawn
and NYMEX prices of US$3.30/MMBtu(()(9)()).
* The declaration of dividends is subject to the approval of the board of
directors and the details of any dividends declared (including the final
dividend amount) will be communicated to shareholders via press release, as
and when such dividends are declared. Birchcliff’s common share dividend
policy and the amount of common share dividends will continue to be evaluated
by Birchcliff on an ongoing basis and will depend on commodity prices and free
funds flow levels, among other things.
 
* Birchcliff’s Five Year Plan contemplates significant excess free funds
flow after the payment of common share dividends, providing it with the
ability to further enhance shareholder returns. Birchcliff will continue to
strategically evaluate the potential uses for excess free funds flow and
additional steps to enhance shareholder returns, which may include further
dividend increases, common share buybacks and other opportunities that would
complement or otherwise improve the Corporation’s business and enhance
long-term shareholder value. * Birchcliff currently expects to use its common
share dividend as its primary mechanism for shareholder returns over the
course of the Five Year Plan.
* Birchcliff anticipates that it will continue to repurchase its common shares
to help offset the dilution resulting from the exercise of stock options. In
addition, Birchcliff will continue to evaluate opportunistic repurchases of
its common shares when the intrinsic value of such shares exceeds the current
market price.
 
* Excess free funds flow remaining after the payment of this targeted common
share dividend of $0.80 per common share is forecast to be $323 million in
2023, with a forecasted surplus at year-end 2023 of $575 million.
* There are no changes to the Corporation’s average production, production
commodity mix or F&D capital expenditures in the updated Five Year Plan.
Birchcliff reviews its capital expenditures and other financial metrics on an
ongoing basis and will continue to monitor the impact of cost inflation in
order to determine whether any adjustments to the Five Year Plan are
necessary.
The focus of the Five Year Plan is unchanged and remains on increasing
shareholder value by maximizing free funds flow and reducing the
Corporation’s indebtedness, increasing shareholder returns and fully
utilizing the available processing capacity of the Corporation’s existing
infrastructure.

________________________

((9) Assuming no other changes to the Corporation’s targeted metrics under
the Five Year Plan.)

The following tables set forth the updated targeted production and financial
metrics, commodity price assumptions and cumulative free funds flow
sensitivity for the Five Year Plan((1)):

Five Year Plan – Production and Financial Metrics

                                                 2022               2023    2024    2025    2026    
                                                                                                    
 Average Production (boe/d)                      78,000 – 80,000    81,000  86,000  90,000  90,000  
                                                                                                    
 Liquids (%)                                     20%                20%     20%     19%     18%     
                                                                                                    
 Adjusted Funds Flow (millions) ((2)(3))         $1,180             $795    $860    $880    $865    
                                                                                                    
 F&D Capital Expenditures (millions) ((4))       $240 – $260        $260    $255    $245    $225    
                                                                                                    
 Free Funds Flow (millions) ((2))                $920 – $940        $535    $605    $635    $640    
                                                                                                    
 Common Share Dividends (millions) (()(5)())     $20                $212    $212    $212    $212    
                                                                                                    
 Excess Free Funds Flow (millions) (()(2))((5))  $900 – $920        $323    $393    $423    $428    
                                                                                                    
 Surplus at Year End (millions) ((6)(7))         $260 – $280        $575    $960    $1,380  $1,800  
                                                                                                    
 Cumulative Free Funds Flow (millions) ((2)(6))  $920 – $940        $1,455  $2,060  $2,695  $3,335  

Average Expenses and Commodity Price Assumptions

                                          2022           2023   2024   2025   2026   
                                                                                     
 Average Expenses ($/boe)                                                            
 Royalty ((8))                            7.10 – 7.30    5.05   5.10   4.95   4.85   
 Operating ((8))                          3.15 – 3.35    3.15   3.00   2.90   2.90   
 Transportation and other (()(9)())       5.20 – 5.40    4.85   4.60   4.40   4.40   
 Interest ((8))                           0.20 – 0.40    –      –      –      –      
 Current income tax ((8)()(10)())         –              5.20   5.65   5.60   5.50   
                                                                                     
 Commodity Prices ((1)(1)())                                                         
 Average WTI price (US$/bbl)              99.50          88.00  88.00  88.00  88.00  
 Average WTI-MSW differential (CDN$/bbl)  3.10           5.00   5.00   5.00   5.00   
 Average AECO price (CDN$/GJ)             6.50           5.20   5.20   5.20   5.20   
 Average Dawn price (US$/MMBtu)           6.85           5.40   5.40   5.40   5.40   
 Average NYMEX HH price (US$/MMBtu)       6.95           5.50   5.50   5.50   5.50   
 Exchange rate (CDN$ to US$1)             1.28           1.28   1.28   1.28   1.28   

Cumulative Free Funds Flow Sensitivity((1)(2)())

                                          Estimated change to 2022 to 2026 cumulative free funds flow (millions)      
 Change in WTI US$1.00/bbl                $17.1                                                                       
 Change in NYMEX HH US$0.10/MMBtu         $20.1                                                                       
 Change in Dawn US$0.10/MMBtu             $25.5                                                                       
 Change in AECO CDN$0.10/GJ               $17.9                                                                       
 Change in CDN/US exchange rate CDN$0.01  $28.5                                                                       

((1) For illustrative purposes only and should not be relied upon as
indicative of future results. The internal projections, expectations and
beliefs underlying the Five Year Plan are subject to change in light of
ongoing results and prevailing economic and industry conditions.
Birchcliff’s F&D capital budgets for 2023 to 2026 have not been finalized
and are subject to approval by Birchcliff’s board of directors. Accordingly,
the levels of F&D capital expenditures set forth herein are subject to change,
which would have an impact on the targeted production, production commodity
mix, adjusted funds flow, free funds flow, excess free funds flow, surplus at
year end and expenses set forth herein. See “Advisories – Forward-Looking
Statements”.)
((2) Non-GAAP financial measure. See “Non-GAAP and Other Financial
Measures”. )
((3) Birchcliff’s updated estimates of adjusted funds flow take into account
the effects of its physical and financial basis swap contracts outstanding as
at May 11, 2022 and exclude annual cash incentive payments that have not been
approved by Birchcliff’s board of directors. )
((4) The Five Year Plan contemplates that approximately 170 to 180 wells will
be brought on production by the Corporation over 2022 to 2026.)
((5) Assumes that: (i) for 2022, a quarterly common share dividend of $0.02
per common share is paid for the quarters ending June 30, 2022, September 30,
2022 and December 31, 2022; (ii) for 2023 to 2026, an annual common share
dividend of $0.80 per common share is paid; and (iii) there are 265 million
common shares outstanding. Other than the dividend declared for the quarter
ending June 30, 2022, the declaration of dividends is subject to the approval
of the board of directors and is subject to change. See “Advisories –
Forward-Looking Statements”. )
((6) The Corporation has used the low-point of its 2022 guidance for free
funds flow and surplus at year end in determining the cumulative free funds
flow and surplus at year end for 2023 to 2026.)
((7) Capital management measure. The estimates of surplus at year end are
expected to be largely comprised of cash on hand plus accounts receivable less
accounts payable at the end of the year and assume the following: (i) that any
free funds flow remaining after the payment of dividends, asset retirement
obligations and other amounts for administrative assets, financing fees and
capital lease obligations is allocated towards debt reduction; (ii) that there
are 265 million common shares outstanding, with no further buybacks of common
shares occurring during 2022 and no buybacks occurring during 2023 to 2026;
(iii) that a quarterly common share dividend of $0.02 per share is paid for
the quarters ending June 30, 2022, September 30, 2022 and December 31, 2022
and that a quarterly common share dividend of $0.20 per share is paid in 2023
to 2026; (iv) that the Series A Preferred Shares and the Series C Preferred
Shares are redeemed by the Corporation at the end of the third quarter of 2022
and a quarterly dividend of $0.523375 per Series A Preferred Share and $0.4375
per Series C Preferred Share is paid for the quarters ending June 30, 2022 and
September 30, 2022; (v) that no significant acquisitions or dispositions are
completed by the Corporation and there is no repayment of debt using the
proceeds from equity issuances during 2022 to 2026; (vi) that there are no
further proceeds received from the exercise of stock options or performance
warrants during 2022 to 2026; (vii) that the capital program for each year
will be carried out as currently contemplated and the level of capital
spending set forth herein will be achieved; and (viii) the targets for
production, production commodity mix, capital expenditures, adjusted funds
flow, free funds flow and natural gas market exposure and the commodity price
and exchange rate assumptions set forth herein are met. The amount set forth
in the table above does not include annual cash incentive payments that have
not been approved by Birchcliff’s board of directors. Birchcliff previously
referred to “surplus” as “cash”. )
((8) Supplementary financial measure. See “Non-GAAP and Other Financial
Measures”. )
((9) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures”.)
((10) The Corporation currently expects that it will be required to pay
Canadian income taxes commencing in 2023. )
((11) Updated commodity price and exchange rate assumptions for 2022 are based
on anticipated full-year averages, which include settled benchmark commodity
prices and exchange rate for the period from January 1, 2022 to April 30, 2022
and forward strip benchmark commodity prices and exchange rate as of May 4,
2022 for the period from May 1, 2022 to December 31, 2022. Updated commodity
price and exchange rate assumptions for 2023 to 2026 are based on anticipated
full-year averages from forward strip benchmark commodity prices and exchange
rates as of May 4, 2022. )
((12) Illustrates the expected impact of changes in commodity prices and the
CDN/US exchange rate on the Corporation’s target of potential cumulative
free funds flow of $3.3 billion generated during 2022 to 2026. The sensitivity
is based on the updated commodity price and exchange rate assumptions set
forth in the table above. The calculated impact on cumulative free funds flow
is only applicable within the limited range of change indicated. Calculations
are performed independently and may not be indicative of actual results.
Actual results may vary materially when multiple variables change at the same
time and/or when the magnitude of the change increases.)

Changes in assumed commodity prices and variances in production estimates can
have an impact on the Corporation’s estimates of adjusted and free funds
flow, the Corporation’s other metrics for the Five Year Plan, dividend
levels and the declaration and payment of targeted dividends, which impact may
be material. In addition, any acquisitions and dispositions completed over the
course of the Five Year Plan could have an impact on Birchcliff’s
production, adjusted funds flow, free funds flow, surplus, expenses, dividend
levels and the declaration and payment of targeted dividends, which impact
could be material. For further information, see “Advisories –
Forward-Looking Statements”.

Q1 2022 FINANCIAL AND OPERATIONAL RESULTS

Production

Birchcliff’s production averaged 76,024 boe/d in Q1 2022, a 1% increase from
75,065 boe/d in Q1 2021. The increase was primarily due to incremental
production volumes from the new Montney/Doig wells brought on production since
Q1 2021, including the new 6-well (13-29) pad in Pouce Coupe brought on
production during February 2022, partially offset by natural production
declines.

Liquids accounted for 20% of Birchcliff’s total production in Q1 2022 as
compared to 23% in Q1 2021, with a liquids-to-gas ratio in Q1 2022 of 41.4
bbls/MMcf (47% high-value light oil and condensate). The decrease in the
liquids production weighting was primarily due to the Corporation targeting
horizontal natural gas wells in liquids-rich zones in the Pouce Coupe and
Gordondale areas since Q1 2021 and natural production declines from light oil
and condensate-rich natural gas wells producing since Q1 2021.

Adjusted Funds Flow and Cash Flow From Operating Activities

Birchcliff achieved adjusted funds flow of $183.7 million, or $0.69 per basic
common share, in Q1 2022, a 109% increase from $87.8 million and $0.33 per
basic common share in Q1 2021. The increases were primarily due to higher
reported petroleum and natural gas revenue and lower realized losses on
financial instruments, partially offset by a higher royalty expense. Petroleum
and natural gas revenue and royalty expense were largely impacted by a 52%
increase in the average realized sales price received for Birchcliff’s
production in Q1 2022. The average realized sales price in Q1 2022 benefited
from the significant increase in benchmark oil and natural gas prices since Q1
2021. See “Q1 2022 Financial and Operational Results – Commodity
Prices”.

Birchcliff’s cash flow from operating activities was $154.2 million in Q1
2022, an 87% increase from $82.6 million in Q1 2021. The reasons for the
increase are consistent with the explanation for the increase to adjusted
funds flow; however, cash flow from operating activities was also impacted by
increased non-cash operating working capital, partially offset by decreased
decommissioning expenditures.

Free Funds Flow

Birchcliff delivered free funds flow of $95.4 million, or $0.36 per basic
common share, in Q1 2022. In Q1 2021, Birchcliff’s F&D capital expenditures
exceeded its adjusted funds flow by $8.0 million. The change to a free funds
flow position was due to higher adjusted funds flow and lower F&D capital
expenditures.

Net Income to Common Shareholders

Birchcliff earned net income to common shareholders of $125.8 million, or
$0.47 per basic common share, in Q1 2022, a 467% and 488% increase,
respectively, from $22.2 million and $0.08 per basic common share in Q1 2021.
The increases were primarily due to higher adjusted funds flow and an
unrealized mark-to-market gain on financial instruments, which were partially
offset by an increase in deferred income tax expense in Q1 2022. Birchcliff
recorded an unrealized mark-to-market gain on financial instruments of $34.7
million in Q1 2022 as compared to an unrealized mark-to-market loss on
financial instruments of $7.6 million in Q1 2021.

Operating Netback and Selected Cash Costs

In Q1 2022, Birchcliff’s operating netback was $28.47/boe, a 67% increase
from $17.05/boe in Q1 2021. The increase was primarily due to higher per boe
petroleum and natural gas revenue, partially offset by a higher per boe
royalty expense, both of which were both largely impacted by a 52% increase in
the average realized sales price received for Birchcliff’s production in Q1
2022.

The following table sets forth Birchcliff’s selected cash costs for the
periods indicated:

                                         Three months ended March 31,            
 ($/boe)                                 2022      2021      % Change            
 Royalty expense ((1))                   4.41      1.72      156                 
 Operating expense ((1))                 3.49      3.18      10                  
 Transportation and other expense ((2))  5.43      5.52      (2        )         
 G&A expense, net ((1))                  1.12      0.92      22                  
 Interest expense ((1))                  0.48      1.21      (60       )         

((1) Supplementary financial measure. See “Non-GAAP and Other Financial
Measures”.(2) Non-GAAP financial ratio. See “Non-GAAP and Other Financial
Measures”.)

Royalty expense per boe increased by 156% from Q1 2021, primarily due to the
significant increase in the average realized sales price received for
Birchcliff’s production, partially offset by a prior period gas cost
allowance adjustment of $2.6 million recorded in Q1 2022.

Operating expense per boe increased by 10% from Q1 2021, primarily due to
higher power and fuel costs, municipal property taxes, regulatory fees and
field labour costs in Q1 2022.

G&A expense per boe increased by 22% from Q1 2021, primarily due to higher
employee-related expenses, an increase in corporate travel-related costs due
to the easing of COVID-19 restrictions in Alberta and higher general business
expenditures.

Interest expense per boe decreased by 60% from Q1 2021, primarily due to a
decrease in the Corporation’s average effective interest rate and a lower
average outstanding balance under the Credit Facilities in Q1 2022.

Debt and Credit Facilities

Total debt at March 31, 2022 was $409.0 million, a decrease of 47% from $777.4
million at March 31, 2021. At March 31, 2022, Birchcliff had long-term bank
debt under its Credit Facilities of $397.8 million (March 31, 2021: $701.7
million) from available credit facilities of $850.0 million (March 31, 2021:
$1.0 billion), leaving $448.6 million of unutilized credit capacity after
adjusting for outstanding letters of credit and unamortized fees.

Commodity Prices

The following table sets forth the average benchmark commodity index prices
and exchange rate for the periods indicated:

                                                        Three months ended March 31,        
                                                        2022        2021        % Change    
 Light oil – WTI Cushing (US$/bbl)                      94.29       57.78       63          
 Light oil – MSW (Mixed Sweet) (CDN$/bbl)               115.64      66.46       74          
 Natural gas – NYMEX HH (US$/MMBtu) ((1)())             4.95        2.69        84          
 Natural gas – AECO 5A Daily (CDN$/GJ)                  4.49        2.70        66          
 Natural gas – AECO 7A Month Ahead (US$/MMBtu) ((1))    3.61        2.16        67          
 Natural gas – Dawn Day Ahead (US$/MMBtu) ((1))         4.42        2.97        49          
 Natural gas – ATP 5A Day Ahead (CDN$/GJ)               4.58        4.03        14          
 Exchange rate (CDN$ to US$1)                           1.2699      1.2663      -           
 Exchange rate (US$ to CDN$1)                           0.7875      0.7897      -           

((1) See “Advisories – MMBtu Pricing Conversions”.)

Marketing and Natural Gas Market Diversification

Birchcliff’s physical natural gas sales exposure primarily consists of the
AECO, Dawn and Alliance markets. In addition, the Corporation has various
financial instruments outstanding that provide it with exposure to NYMEX HH
pricing.

The following table details Birchcliff’s effective sales, production and
average realized sales price for natural gas and liquids for Q1 2022, after
taking into account the Corporation’s financial instruments:

 Three months ended March 31, 2022                                                                                                                                                                             
                          Effective sales ((1)) (CDN$000s)  Percentage   Effective production (per day)  Percentage of total natural gas   Percentage of total corporate   Effective average                   
                                                            of total                                     production (%)                    production (%)                  realized sales price ((1)) (CDN$)   
                                                            sales (%)                                                                                                                                          
 Market                                                                                                                                                                                                        
 AECO ((2)(3))            29,913                            10           64,120 Mcf                      18                                14                              5.18/Mcf                            
 Dawn ((4))               83,830                            27           161,291 Mcf                     44                                35                              5.77/Mcf                            
 NYMEX HH ((1)(2)(5))     86,419                            28           139,885 Mcf                     38                                31                              6.86/Mcf                            
 Total natural gas ((1))  200,162                           65           365,296 Mcf                     100                               80                              6.09/Mcf                            
 Light oil                24,624                            8            2,369 bbls                                                        4                               115.47/bbl                          
 Condensate               52,466                            17           4,796 bbls                                                        6                               121.56/bbl                          
 NGLs                     31,265                            10           7,976 bbls                                                        10                              43.56/bbl                           
 Total liquids            108,355                           35           15,141 bbls                                                       20                              79.52/bbl                           
 Total corporate ((1))    308,517                           100          76,024 boe                                                        100                             45.09/boe                           

((1) Effective sales is a non-GAAP financial measure and effective average
realized sales price is a non-GAAP ratio. See “Non-GAAP and Other Financial
Measures”.)
((2) AECO sales and production that effectively received NYMEX HH pricing
under Birchcliff’s long-term physical NYMEX/AECO 7A basis swap contracts
have been included as effective sales and production in the NYMEX HH market.
Birchcliff sold physical AECO 7A basis swaps for 5,000 MMBtu/d at an average
contract price of NYMEX HH less US$1.205/MMBtu during Q1 2022.)
((3) Birchcliff has short-term physical sales agreements with third-party
marketers to sell and deliver into the Alliance pipeline system. All of
Birchcliff’s short-term physical Alliance sales and production during Q1
2022 received AECO premium pricing and have therefore been included as
effective sales and production in the AECO market.)
((4) Birchcliff has agreements for the firm service transportation of an
aggregate of 175,000 GJ/d of natural gas on TransCanada PipeLines’ Canadian
Mainline, whereby natural gas is transported to the Dawn trading hub in
Southern Ontario.)
((5) NYMEX HH sales and production includes financial and physical AECO 7A
basis swaps for 152,500 MMBtu/d at an average contract price of NYMEX HH less
US$1.226/MMBtu during Q1 2022. Birchcliff’s effective average realized sales
price for NYMEX HH of CDN$6.86/Mcf (US$4.96/MMBtu) was determined on a gross
basis before giving effect to the average NYMEX HH/AECO 7A fixed contract
basis differential price of CDN$1.70/Mcf (US$1.23/MMBtu). After giving effect
to the NYMEX HH/AECO 7A basis contact price, Birchcliff’s effective average
realized net sales price for NYMEX HH was CDN$5.16/Mcf (US$3.73/MMBtu) in Q1
2022.)

The following table sets forth Birchcliff’s sales, production, average
realized sales price, transportation costs and natural gas sales netback by
natural gas market for the periods indicated, before taking into account the
Corporation’s financial instruments:

 Three months ended March 31, 2022                                                                                                                                                                                                                   
                     Natural gas sales ((1)) (CDN$000s)  Percentage of   Natural gas          Percentage of    Average realized natural gas sales                              Natural gas                       Natural gas                         
                                                         natural gas     production (Mcf/d)   natural gas      price ((1))((2)) (CDN$/Mcf)                                     transportation                    sales                               
                                                         sales (%)                            production (%)                                                                   costs (()(2)())((3)) (CDN$/Mcf)   netback ((2))(()(4)()) (CDN$/Mcf)   
 AECO                72,361                              41              158,501              43               5.07                                                            0.52                              4.55                                
 Dawn                83,830                              47              161,291              44               5.77                                                            1.57                              4.20                                
 Alliance (()(5)())  21,419                              12              45,504               13               5.23                                                            -                                 5.23                                
 Total               177,610                             100             365,296              100              5.40                                                            0.92                              4.48                                
 Three months ended March 31, 2021                                                                                                                                                                                                                   
                     Natural gas sales ((1)) (CDN$000s)  Percentage of   Natural gas          Percentage of    Average realized natural gas sales price ((1))((2)) (CDN$/Mcf)  Natural gas                       Natural gas                         
                                                         natural gas     production (Mcf/d)   natural gas                                                                      transportation                    sales                               
                                                         sales (%)                            production (%)                                                                   costs ((2))(()(3)()) (CDN$/Mcf)   netback ((2))(()(4)()) (CDN$/Mcf)   
 AECO                39,392                              36              133,379              39               3.28                                                            0.51                              2.77                                
 Dawn                53,869                              49              160,280              46               3.73                                                            1.57                              2.16                                
 Alliance (()(5)())  16,180                              15              51,398               15               3.50                                                            -                                 3.50                                
 Total               109,441                             100             345,057              100              3.52                                                            0.93                              2.59                                

((1) Excludes the effects of financial instruments but includes the effects of
physical delivery contracts.)
((2) Supplementary financial measure. See “Non-GAAP and Other Financial
Measures”.)
((3) Reflects costs to transport natural gas from the field receipt point to
the delivery sales trading hub.)
((4) Natural gas sales netback denotes the average realized natural gas sales
price less natural gas transportation costs.)
((5) Birchcliff has short-term physical sales agreements with third-party
marketers to sell and deliver into the Alliance pipeline system. Alliance
sales are recorded net of transportation tolls.)

Capital Activities and Investment

In Q1 2022, Birchcliff drilled 11 (11.0 net) wells and brought 6 (6.0 net)
wells on production. F&D capital expenditures were $88.3 million in Q1 2022.

OPERATIONS UPDATE

Birchcliff has had a strong start to its 2022 capital program, with 15 wells
drilled year-to-date and 16 wells completed (which includes 5 wells that were
drilled and rig released in Q4 2021). The following table sets forth the wells
that are part of the Corporation’s 2022 capital program, including the
anticipated timing of the remaining wells to be drilled, completed and brought
on production in 2022:

                                            Total # of wells to be     Drilled    Completed    On production  
                                            brought on production                                             
                                                                                                              
 POUCE COUPE                                                                                                  
                                                                                                              
       13-29 pad  Basal Doig/Upper Montney  2                          0          2            2              
                  Montney D1                4                          1          4            4              
                  Total                     6 ((1))                    1          6            6              
                                                                                                              
       01-08 pad  Basal Doig/Upper Montney  4                          4          4            Q2             
                  Montney D1                5                          5          5            Q2             
                  Montney C                 1                          1          1            Q2             
                  Total                     10                         10         10                          
                                                                                                              
       04-04 pad  Basal Doig/Upper Montney  6                          3          Q2           Q3             
                  Montney D1                3                          0          Q2           Q3             
                  Montney C                 1                          1          Q2           Q3             
                  Total                     10                         4                                      
 GORDONDALE                                                                                                   
                                                                                                              
       06-35 pad  Montney D2                5                          Q2         Q3           Q3             
                  Montney D1                4                          Q2         Q3           Q3             
       Total                                9                                                                 
                                                                                                              
 TOTAL                                      35 ((1))                   15         16           6              

((1) Includes 5 wells that were drilled and rig released in Q4 2021.)

Birchcliff’s 13-29 pad in Pouce Coupe was drilled in Q1 2022 and brought on
production in March 2022 through Birchcliff’s owned and operated
infrastructure. The wells from the 13-29 pad have now been producing for over
60 days and have produced at better rates than previously forecast. During the
initial 30 and 60 days of production, the pad was flowing inline post-fracture
condensate, raw natural gas and frac water. The production rates of the wells
are stabilized and the frac water flowing back to surface continues to
diminish over time. The following table summarizes the aggregate and average
production rates for the 6 wells from the 13-29 pad:

                                                                              IP 30 ((1))  IP 60 ((1))  
 Aggregate production rate (boe/d)                                            7,261        6,789        
                        Aggregate natural gas production rate (Mcf/d)         42,235       39,776       
                        Aggregate condensate production rate (bbls/d)         222          160          
 Average per well production rate (boe/d)                                     1,210        1,132        
                        Average per well natural gas production rate (Mcf/d)  7,039        6,629        
                        Average per well condensate production rate (bbls/d)  37           27           
 Condensate-to-gas ratio (bbls/MMcf)                                          5            4            

((1) Represents the cumulative volumes for each well measured at the wellhead
separator for the 30 or 60 days (as applicable) of production immediately
after each well was considered stabilized after producing fracture treatment
fluid back to surface in an amount such that flow rates of hydrocarbons became
reliable. See “Advisories – Initial Production Rates”.)

The Corporation recently finished completion operations on its 01-08 pad in
Pouce Coupe and all 10 wells are expected to be brought on production in Q2
2022.

In addition to its drilling and completion activities, Birchcliff has
successfully completed several large gathering infrastructure projects that
will allow for stable base production declines and provide additional pipeline
capacity to support future growth.

In April 2022, Birchcliff successfully completed its planned two-week
turnaround at its 100% owned and operated natural gas processing plant in
Pouce Coupe (the “Pouce Coupe Gas Plant”) ahead of schedule and on-budget,
while effectively mitigating the impact to production volumes. The scheduled
turnaround at AltaGas’ deep-cut sour gas processing facility in Gordondale
(the “AltaGas Facility”) is planned for two weeks starting at the end of
May 2022.

As part of its long-term planning strategy, the Corporation has secured
multi-year contracts with its key services providers to ensure the efficient
execution of its short and long-term plans.

DECLARATION OF QUARTERLY COMMON SHARE AND PREFERRED SHARE DIVIDENDS

Birchcliff’s board of directors today declared the following quarterly cash
dividends for the quarter ending June 30, 2022:

 Shares                     TSX stock symbol  Dividend per share      
 Common Shares              BIR               $0.02                   
 Series A Preferred Shares  BIR.PR.A          $0.523375               
 Series C Preferred Shares  BIR.PR.C          $0.4375                 

The dividends are payable on June 30, 2022 to shareholders of record at the
close of business on June 15, 2022. The ex-dividend date is June 14, 2022.

All of the dividends have been designated as eligible dividends for the
purposes of the Income Tax Act (Canada).

INTENDED REDEMPTION OF THE SERIES A AND SERIES C PREFERRED SHARES

Subject to the approval of the board of directors, Birchcliff currently
intends to redeem all of its outstanding Series A and Series C Preferred
Shares at the end of the third quarter of 2022. As Friday, September 30, 2022
is a federal holiday, the proposed redemptions, if approved, are expected to
occur on the next business day, being Monday, October 3, 2022.

Subject to the provisions of the Series A Preferred Shares (the “Series A
Provisions”), on September 30, 2022 and every five years thereafter, the
Corporation, upon giving notice as provided in the Series A Provisions, may
redeem all or any part of the Series A Preferred Shares by the payment of an
amount in cash for each share to be redeemed equal to $25.00 plus all accrued
and unpaid dividends thereon to but excluding the date fixed for redemption.

Subject to the provisions of the Series C Preferred Shares (the “Series C
Provisions”), the Corporation may, upon giving notice as provided in the
Series C Provisions, redeem at any time all or any number of the outstanding
Series C Preferred Shares on the payment of the redemption price. The
redemption price per share at which any Series C Preferred Share is redeemable
shall be $25.00, together with an amount equal to all accrued and unpaid
dividends thereon to but excluding the date fixed for redemption.

This announcement does not constitute a notice of redemption for the Series A
or Series C Preferred Shares. If a decision is made to proceed with the
redemption of all or any part of the Series A or Series C Preferred Shares and
the approval of the board of directors is obtained, formal notice will be
provided in accordance with the Series A Provisions and the Series C
Provisions, copies of which are available on SEDAR under the Corporation’s
company profile at www.sedar.com. See “Advisories – Forward-Looking
Statements”.

ANNUAL MEETING OF SHAREHOLDERS – MAY 12, 2022

Birchcliff’s annual meeting of shareholders is scheduled to take place
tomorrow, Thursday, May 12, 2022, at 3:00 p.m. (Mountain Daylight Time) in the
McMurray Room at the Calgary Petroleum Club, 319 – 5(th) Avenue S.W.,
Calgary, Alberta.

ABBREVIATIONS

 AECO        benchmark price for natural gas determined at the AECO ‘C’ hub in southeast Alberta                                                                                                                
 ATP         Alliance Trading Pool                                                                                                                                                                              
 bbl         barrel                                                                                                                                                                                             
 bbls        barrels                                                                                                                                                                                            
 bbls/d      barrels per day                                                                                                                                                                                    
 boe         barrel of oil equivalent                                                                                                                                                                           
 boe/d       barrel of oil equivalent per day                                                                                                                                                                   
 condensate  pentanes plus (C5+)                                                                                                                                                                                
 F&D         finding and development                                                                                                                                                                            
 G&A         general and administrative                                                                                                                                                                         
 GAAP        generally accepted accounting principles for Canadian public companies, which are currently International Financial Reporting Standards as issued by the International Accounting Standards Board  
 GJ          gigajoule                                                                                                                                                                                          
 GJ/d        gigajoules per day                                                                                                                                                                                 
 HH          Henry Hub                                                                                                                                                                                          
 IP          initial production                                                                                                                                                                                 
 Mcf         thousand cubic feet                                                                                                                                                                                
 Mcf/d       thousand cubic feet per day                                                                                                                                                                        
 MMBtu       million British thermal units                                                                                                                                                                      
 MMBtu/d     million British thermal units per day                                                                                                                                                              
 MMcf        million cubic feet                                                                                                                                                                                 
 MPa         megapascal                                                                                                                                                                                         
 MSW         price for mixed sweet crude oil at Edmonton, Alberta                                                                                                                                               
 NGLs        natural gas liquids consisting of ethane (C2), propane (C3) and butane (C4) and specifically excluding condensate                                                                                  
 NYMEX       New York Mercantile Exchange                                                                                                                                                                       
 OPEC        Organization of the Petroleum Exporting Countries                                                                                                                                                  
 WTI         West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma, for crude oil of standard grade                                                                            
 000s        thousands                                                                                                                                                                                          
 $000s       thousands of dollars                                                                                                                                                                               

NON-GAAP AND OTHER FINANCIAL MEASURES

This press release uses various “non-GAAP financial measures”, “non-GAAP
ratios”, “supplementary financial measures” and “capital management
measures” (as such terms are defined in NI 52-112), which are described in
further detail below. These measures facilitate management’s comparisons to
the Corporation’s historical operating results in assessing its results and
strategic and operational decision-making and may be used by financial
analysts and others in the oil and natural gas industry to evaluate the
Corporation’s performance.

Non-GAAP Financial Measures

NI 52-112 defines a non-GAAP financial measure as a financial measure that:
(i) depicts the historical or expected future financial performance, financial
position or cash flow of an entity; (ii) with respect to its composition,
excludes an amount that is included in, or includes an amount that is excluded
from, the composition of the most directly comparable financial measure
disclosed in the primary financial statements of the entity; (iii) is not
disclosed in the financial statements of the entity; and (iv) is not a ratio,
fraction, percentage or similar representation. The non-GAAP financial
measures used in this press release are not standardized financial measures
under GAAP and might not be comparable to similar measures presented by other
companies where similar terminology is used. Investors are cautioned that
non-GAAP financial measures should not be construed as alternatives to or more
meaningful than the most directly comparable GAAP measures as indicators of
Birchcliff’s performance. Set forth below is a description of the non-GAAP
financial measures used in this press release.

Adjusted Funds Flow, Free Funds Flow and Excess Free Funds Flow

Birchcliff defines “adjusted funds flow” as cash flow from operating
activities before the effects of decommissioning expenditures and changes in
non-cash operating working capital. Birchcliff eliminates settlements of
decommissioning expenditures from cash flow from operating activities as the
amounts can be discretionary and may vary from period to period depending on
its capital programs and the maturity of its operating areas. The settlement
of decommissioning expenditures is managed with Birchcliff’s capital
budgeting process which considers available adjusted funds flow. Changes in
non-cash operating working capital are eliminated in the determination of
adjusted funds flow as the timing of collection and payment are variable and
by excluding them from the calculation, the Corporation believes that it is
able to provide a more meaningful measure of its operations and ability to
generate cash on a continuing basis. Adjusted funds flow can also be derived
from petroleum and natural gas revenue less royalty expense, operating
expense, transportation and other expense, net G&A expense, interest expense
and any realized losses (plus realized gains) on financial instruments and
plus any other cash income sources. Management believes that adjusted funds
flow assists management and investors in assessing Birchcliff’s financial
performance after deducting all operating and corporate cash costs, as well as
its ability to generate the cash necessary to fund sustaining and/or growth
capital expenditures, repay debt, settle decommissioning obligations,
repurchase common shares and pay common share and preferred share dividends.

Birchcliff defines “free funds flow” as adjusted funds flow less F&D
capital expenditures. Management believes that free funds flow assists
management and investors in assessing Birchcliff’s ability to generate
shareholder returns through a number of initiatives, including but not limited
to, debt repayment, preferred share redemptions, common share repurchases, the
payment of dividends and acquisitions.

Birchcliff defines “excess free funds flow” as free funds flow less common
share dividends paid. Management believes that excess free funds flow assists
management and investors in assessing Birchcliff’s ability to further
enhance shareholder returns after the payment of its common share dividend,
which may include dividend increases, common share buybacks and other
opportunities that would complement or otherwise improve the Corporation’s
business and enhance long-term shareholder value.

The following table provides a reconciliation of cash flow from operating
activities, as determined in accordance with GAAP, to adjusted funds flow,
free funds flow and excess free funds flow for the periods indicated:

                                               Three months ended March 31,            
 ($000s)                                       2022                2021                
 Cash flow from operating activities           154,152             82,608              
 Change in non-cash operating working capital  28,830              4,129               
 Decommissioning expenditures                  717                 1,083               
 Adjusted funds flow                           183,699             87,820              
 F&D capital expenditures                      (88,282   )         (95,840   )         
 Free funds flow                               95,417              (8,020    )         
 Dividends on common shares                    (2,658    )         (1,330    )         
 Excess free funds flow                        92,759              (9,350    )         

Transportation and Other Expense

Birchcliff defines “transportation and other expense” as transportation
expense plus marketing purchases less marketing revenue. Birchcliff may enter
into certain marketing purchase and sales arrangements with the objective of
reducing any available transportation and/or fractionation fees associated
with its take-or-pay commitments. Management believes that transportation and
other expense assists management and investors in assessing Birchcliff’s
total cost structure related to transportation activities. The following table
provides a reconciliation of transportation expense, as determined in
accordance with GAAP, to transportation and other expense for the periods
indicated:

                                   Three months ended March 31,            
 ($000s)                           2022                2021                
 Transportation expense            37,837              37,684              
 Marketing purchases               3,569               2,047               
 Marketing revenue                 (4,234    )         (2,458    )         
 Marketing gain                    (665      )         (411      )         
 Transportation and other expense  37,172              37,273              

Operating Netback

Birchcliff defines “operating netback” as petroleum and natural gas
revenue less royalty expense, operating expense and transportation and other
expense. Management believes that operating netback assists management and
investors in assessing Birchcliff’s operating profits after deducting the
cash costs that are directly associated with the sale of its production, which
can then be used to pay other corporate cash costs or satisfy other
obligations. The following table provides a breakdown of Birchcliff’s
operating netback for the periods indicated:

                                    Three months ended March 31,            
 ($000s)                            2022                2021                
 Petroleum and natural gas revenue  285,976             185,609             
 Royalty expense                    (30,158   )         (11,627   )         
 Operating expense                  (23,847   )         (21,498   )         
 Transportation and other expense   (37,172   )         (37,273   )         
 Operating netback – Corporate      194,799             115,211             

Effective Sales – Total Corporate, Total Natural Gas, AECO Market and NYMEX
HH Market

Birchcliff defines “effective sales” in the AECO market and NYMEX HH
market as the sales amount received from the production of natural gas that is
effectively attributed to the AECO and NYMEX HH market pricing, respectively,
and does not consider the physical sales delivery point in each case.
Effective sales in the NYMEX HH market includes realized gains and losses on
financial instruments and excludes the notional fixed basis costs associated
with the underlying financial contract in the period. Birchcliff defines
“effective total natural gas sales” as the aggregate of the effective
sales amount received in each natural gas market. Birchcliff defines
“effective total corporate sales” as the aggregate of the effective total
natural gas sales and the sales amount received from the production of light
oil, condensate and NGLs. Management believes that disclosing effective sales
for each natural gas market assists management and investors in assessing
Birchcliff’s natural gas diversification and commodity price exposure to
each market. The following table provides a reconciliation of natural gas
sales, as determined in accordance with GAAP, to effective total natural gas
sales and effective total corporate sales for the periods indicated:

                                         Three months ended March 31,        
 ($000s)                                 2022        2021 ((1))              
 Natural gas sales                       177,610     109,441                 
 Realized loss on financial instruments  1,167       (14,009     )           
 Notional fixed basis costs ((2))        21,385      21,325                  
 Effective total natural gas sales       200,162     116,757                 
 Light oil sales                         24,624      20,238                  
 Condensate sales                        52,466      36,516                  
 NGLs sales                              31,265      19,407                  
 Effective total corporate sales         308,517     192,918                 

((1) Prior period amounts have been adjusted to include the aggregate notional
fixed basis cost for comparison purposes.)
((2) Reflects the aggregate notional fixed basis cost associated with
Birchcliff’s financial and physical NYMEX HH/AECO 7A basis swaps in the
period.)

Non-GAAP Ratios

NI 52-112 defines a non-GAAP ratio as a financial measure that: (i) is in the
form of a ratio, fraction, percentage or similar representation; (ii) has a
non-GAAP financial measure as one or more of its components; and (iii) is not
disclosed in the financial statements of the entity. The non-GAAP ratios used
in this press release are not standardized financial measures under GAAP and
might not be comparable to similar measures presented by other companies where
similar terminology is used. Set forth below is a description of the non-GAAP
ratios used in this press release.

Adjusted Funds Flow Per Boe and Adjusted Funds Flow Per Basic Common Share

Birchcliff calculates “adjusted funds flow per boe” as aggregate adjusted
funds flow in the period divided by the production (boe) in the period.
Management believes that adjusted funds flow per boe assists management and
investors in assessing Birchcliff’s financial profitability and
sustainability on a cash basis by isolating the impact of production volumes
to better analyze its performance against prior periods on a comparable basis.
The Corporation previously referred to adjusted funds flow per boe as
“adjusted funds flow netback”.

Birchcliff calculates “adjusted funds flow per basic common share” as
aggregate adjusted funds flow in the period divided by the basic common shares
outstanding at the end of the period. Management believes that adjusted funds
flow per basic common share assists management and investors in assessing
Birchcliff’s financial strength on a per common share basis.

Free Funds Flow Per Basic Common Share

Birchcliff calculates “free funds flow per basic common share” as
aggregate free funds flow in the period divided by the basic common shares
outstanding at the end of the period. Management believes that free funds flow
per basic common share assists management and investors in assessing
Birchcliff’s financial strength and its ability to generate
shareholder returns on a per common share basis.

Transportation and Other Expense Per Boe

Birchcliff calculates “transportation and other expense per boe” as
aggregate transportation and other expense in the period divided by the
production (boe) in the period. Management believes that transportation and
other expense per boe assists management and investors in assessing
Birchcliff’s cost structure as it relates to its transportation and
marketing activities by isolating the impact of production volumes to better
analyze performance against prior periods on a comparable basis.

Operating Netback Per Boe

Birchcliff calculates “operating netback per boe” as aggregate operating
netback in the period divided by the production (boe) in the period.
Management believes that operating netback per boe assists management and
investors in assessing Birchcliff’s operating profitability and
sustainability by isolating the impact of production volumes to better analyze
its performance against prior periods on a comparable basis.

Effective Average Realized Sales Price – Total Corporate, Total Natural Gas,
AECO Market and NYMEX HH Market

Birchcliff calculates “effective average realized sales price” as
effective sales, in each of total corporate, total natural gas, AECO market
and NYMEX HH market, as the case may be, divided by the effective production
in each of the markets during the period. Management believes that disclosing
effective average realized sales price for each natural gas market assists
management and investors in comparing Birchcliff’s commodity price
realizations in each natural gas market on a per unit basis.

Supplementary Financial Measures

NI 52-112 defines a supplementary financial measure as a financial measure
that: (i) is, or is intended to be, disclosed on a periodic basis to depict
the historical or expected future financial performance, financial position or
cash flow of an entity; (ii) is not disclosed in the financial statements of
the entity; (iii) is not a non-GAAP financial measure; and (iv) is not a
non-GAAP ratio. The supplementary financial measures used in this press
release are either a per unit disclosure of a corresponding GAAP measure, or a
component of a corresponding GAAP measure, presented in the financial
statements. Supplementary financial measures that are disclosed on a per unit
basis are calculated by dividing the aggregate GAAP measure (or component
thereof) by the applicable unit for the period. Supplementary financial
measures that are disclosed on a component basis of a corresponding GAAP
measure are a granular representation of a financial statement line item and
are determined in accordance with GAAP.

Capital Management Measures

NI 52-112 defines a capital management measure as a financial measure that:
(i) is intended to enable an individual to evaluate an entity’s objectives,
policies and processes for managing the entity’s capital; (ii) is not a
component of a line item disclosed in the primary financial statements of the
entity; (iii) is disclosed in the notes to the financial statements of the
entity; and (iv) is not disclosed in the primary financial statements of the
entity. Set forth below is a description of the capital management measures
used in this press release.

Total Debt and Adjusted Working Capital Deficit (Surplus)

Birchcliff calculates “total debt” as the amount outstanding under the
Corporation’s Credit Facilities plus adjusted working capital deficit
(surplus). “Adjusted working capital deficit (surplus)” is calculated as
working capital (current assets less current liabilities) less fair value of
financial instruments and capital securities. Surplus as disclosed in this
press release is equivalent to adjusted working capital surplus. Management
believes that total debt assists management and investors in assessing
Birchcliff’s overall liquidity and financial position at the end of the
period. Management believes that adjusted working capital deficit (surplus)
assists management and investors in assessing Birchcliff’s short-term
liquidity. The following table provides a reconciliation of the amount
outstanding under the Credit Facilities and working capital deficit, as
determined in accordance with GAAP, to total debt and adjusted working capital
deficit (surplus), respectively:

 As at, ($000s)                              March 31, 2022      December 31, 2021     
 Revolving term credit facilities            397,752             500,870               
 Working capital deficit                     46,213              53,312                
 Fair value of financial instruments         3,249               (16,517    )          
 Capital securities                          (38,216   )         (38,268    )          
 Adjusted working capital deficit (surplus)  11,246              (1,473     )          
 Total debt                                  408,998             499,397               

ADVISORIES

Unaudited Information

All financial and operational information contained in this press release for
the three months ended March 31, 2022 and 2021 is unaudited.

Currency

Unless otherwise indicated, all dollar amounts are expressed in Canadian
dollars and all references to “$” and “CDN$” are to Canadian dollars
and all references to “US$” are to United States dollars.

Boe Conversions

Boe amounts have been calculated by using the conversion ratio of 6 Mcf of
natural gas to 1 bbl of oil. Boe amounts may be misleading, particularly if
used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an
energy equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead. Given that the
value ratio based on the current price of crude oil as compared to natural gas
is significantly different from the energy equivalency of 6:1, utilizing a
conversion on a 6:1 basis may be misleading as an indication of value.

MMBtu Pricing Conversions

$1.00 per MMBtu equals $1.00 per Mcf based on a standard heat value Mcf.

Oil and Gas Metrics

This press release contains metrics commonly used in the oil and natural gas
industry, including netbacks. These oil and gas metrics do not have any
standardized meanings or standard methods of calculation and therefore may not
be comparable to similar measures presented by other companies where similar
terminology is used. As such, they should not be used to make comparisons.
Management uses these oil and gas metrics for its own performance measurements
and to provide investors with measures to compare Birchcliff’s performance
over time; however, such measures are not reliable indicators of
Birchcliff’s future performance, which may not compare to Birchcliff’s
performance in previous periods, and therefore should not be unduly relied
upon. For additional information regarding netbacks, see “Non-GAAP and Other
Financial Measures”.

Production

With respect to the disclosure of Birchcliff’s production contained in this
press release: (i) references to “light oil” mean “light crude oil and
medium crude oil” as such term is defined in National Instrument 51-101 –
Standards of Disclosure for Oil and Gas Activities (“NI 51-101”); (ii)
except where otherwise stated, references to “liquids” mean “light crude
oil and medium crude oil” and “natural gas liquids” (including
condensate) as such terms are defined in NI 51-101; and (iii) references to
“natural gas” mean “shale gas”, which also includes an immaterial
amount of “conventional natural gas”, as such terms are defined in NI
51-101. In addition, NI 51-101 includes condensate within the product type of
natural gas liquids. Birchcliff has disclosed condensate separately from other
natural gas liquids as the price of condensate as compared to other natural
gas liquids is currently significantly higher and Birchcliff believes
presenting the two commodities separately provides a more accurate description
of its operations and results therefrom.

Initial Production Rates

Any references in this press release to initial production rates or other
short-term production rates are useful in confirming the presence of
hydrocarbons; however, such rates are not determinative of the rates at which
such wells will continue to produce and decline thereafter and are not
indicative of the long-term performance or the ultimate recovery of such
wells. In addition, such rates may also include recovered “load oil” or
“load water” fluids used in well completion stimulation. While
encouraging, readers are cautioned not to place undue reliance on such rates
in calculating the aggregate production for Birchcliff. Such rates are based
on field estimates and may be based on limited data available at this time.

With respect to the production rates for the Corporation’s 6-well (13-29)
pad in Pouce Coupe disclosed herein, such rates represent the cumulative
volumes for each well measured at the wellhead separator for the 30 and 60
days (as applicable) of production immediately after each well was considered
stabilized after producing fracture treatment fluid back to surface in an
amount such that flow rates of hydrocarbons became reliable (between 0 and 4
days), divided by 30 or 60 (as applicable), which were then added together to
determine the aggregate production rates for the 6-well pad and then divided
by 6 to determine the per well average production rates. The production rates
excluded the hours and days when the wells did not produce. Approximate tubing
pressures for the 6 wells were stabilized between 3.3 and 3.6 MPa for IP 30
production rates and between 3.2 and 3.5 MPa for IP 60 production rates.
Approximate casing pressures for the 6 wells were stabilized between 8.8 and
12.9 MPa for IP 30 production rates and between 8.3 and 12.1 MPa for IP 60
production rates. To-date, no pressure transient or well-test interpretation
has been carried out on any of the wells. The natural gas volumes represent
raw natural gas volumes as opposed to sales gas volumes.

F&D Capital Expenditures

Unless otherwise stated, references in this press release to “F&D capital
expenditures” denotes exploration and development expenditures determined in
accordance with GAAP. Management believes that F&D capital expenditures
assists management and investors in assessing Birchcliff capital cost outlay
associated with its exploration and development activities for the purposes of
finding and developing its reserves.

Forward-Looking Statements

Certain statements contained in this press release constitute
forward‐looking statements and forward-looking information (collectively
referred to as “forward‐looking statements”) within the meaning of
applicable Canadian securities laws. The forward-looking statements contained
in this press release relate to future events or Birchcliff’s future plans,
strategy, operations, performance or financial position and are based on
Birchcliff’s current expectations, estimates, projections, beliefs and
assumptions. Such forward-looking statements have been made by Birchcliff in
light of the information available to it at the time the statements were made
and reflect its experience and perception of historical trends. All statements
and information other than historical fact may be forward‐looking
statements. Such forward‐looking statements are often, but not always,
identified by the use of words such as “seek”, “plan”, “focus”,
“future”, “outlook”, “position”, “expect”, “project”,
“intend”, “believe”, “anticipate”, “estimate”, “forecast”,
“guidance”, “potential”, “proposed”, “predict”, “budget”,
“continue”, “targeting”, “may”, “will”, “could”,
“might”, “should”, “would”, “on track”, “maintain” and
other similar words and expressions.

By their nature, forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or events to
differ materially from those anticipated in such forward‐looking statements.
Accordingly, readers are cautioned not to place undue reliance on such
forward-looking statements. Although Birchcliff believes that the expectations
reflected in the forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct and Birchcliff makes
no representation that actual results achieved will be the same in whole or in
part as those set out in the forward-looking statements.

In particular, this press release contains forward‐looking statements
relating to the following:
* Birchcliff’s plans and other aspects of its anticipated future financial
performance, results, operations, focus, objectives, strategies,
opportunities, priorities and goals, including: that Birchcliff continues to
be committed to maximizing free funds flow generation and significantly
reducing indebtedness; that Birchcliff does not have any fixed price commodity
hedges in place and does not currently intend to hedge any future production,
which allows the Corporation to take full advantage of the robust commodity
price environment; Birchcliff’s commitment to increasing shareholder
returns; that Birchcliff will consider additional increases to its common
share dividend in 2022, depending on commodity prices and free funds flow
levels, among other things; that excess free funds flow remaining after the
payment of the targeted common share dividend of $0.80 per common share is
forecast to be $323 million in 2023, with a forecasted surplus at year-end
2023 of $575 million; that the targeted dividend of $0.80 per common share
($212 million annually) and Birchcliff’s targeted F&D capital expenditures
would be funded over the course of the Five Year Plan at an average WTI price
of US$70.00/bbl, an average AECO price of CDN$3.00/GJ and average Dawn and
NYMEX prices of US$3.30/MMBtu and that assuming these commodity prices, the
Corporation is forecasting a surplus of $218 million at year-end 2023; and the
anticipated repayment in full of the Corporation’s Credit Facilities in
2022;
* the information set forth under the heading “Outlook and Guidance –
Updated 2022 Guidance” and elsewhere in this press release as it relates to
Birchcliff’s updated outlook and guidance for 2022, including: estimates of
annual and Q4 average production, production commodity mix, average expenses,
adjusted funds flow, F&D capital expenditures, free funds flow, excess free
funds flow, surplus at year end and natural gas market exposure; that the
estimate of surplus at December 31, 2022 is expected to be largely comprised
of cash on hand plus accounts receivable less accounts payable at the end of
the year; the expected impact of changes in commodity prices and the CDN/US
exchange rate on Birchcliff’s estimate of free funds flow; that Birchcliff
expects to reach zero total debt in Q4 2022; that Birchcliff’s free funds
flow in 2022 is primarily being used to reduce indebtedness; and that
Birchcliff’s F&D capital expenditures are currently anticipated to be on the
high end of the guidance range;
* Birchcliff’s plans for increases to its common share dividend, including:
that subject to commodity prices, Birchcliff achieving its target of zero
total debt in Q4 2022 and the approval of the board of directors, the
Corporation is currently targeting increasing its annual common share dividend
in 2023 to at least $0.80 per common share, which is expected to be paid
quarterly at a rate of $0.20 per share, commencing with the quarter ending
March 31, 2023; that this targeted dividend would equate to $212 million of
common share dividends paid in 2023; and that Birchcliff believes that this
increased dividend would be sustainable at an average WTI price of
US$70.00/bbl and an average AECO price of CDN$3.00/GJ;
* the information set forth under the heading “Outlook and Guidance –
Updated Five Year Outlook and Plans to Increase Common Share Dividend in
2023” and elsewhere in this press release as it relates to Birchcliff’s
updated Five Year Plan, including: estimates and targets of average
production, production commodity mix, adjusted funds flow, F&D capital
expenditures, free funds flow, common share dividends, excess free funds flow,
surplus at year end and average expenses; that the estimates of surplus at
year end are expected to be largely comprised of cash on hand plus accounts
receivable less accounts payable at the end of the year; the expected impact
of changes in commodity prices and the CDN/US exchange rate on Birchcliff’s
target of potential cumulative free funds flow; that the Corporation now
anticipates that it will be required to pay Canadian income taxes commencing
in 2023 and the Corporation’s expectation for higher taxable income in 2023
to 2026; that the potential free funds flow to be generated during the Five
Year Plan provides Birchcliff with significant capacity to sustainably
increase shareholder returns; that the Five Year Plan contemplates significant
excess free funds flow after the payment of common share dividends, providing
Birchcliff with the ability to further enhance shareholder returns; that
Birchcliff will continue to strategically evaluate the potential uses for
excess free funds flow and additional steps to enhance shareholder returns,
which may include further dividend increases, common share buybacks and other
opportunities that would complement or otherwise improve the Corporation’s
business and enhance long-term shareholder value; that Birchcliff currently
expects to use its common share dividend as its primary mechanism for
shareholder returns over the course of the Five Year Plan; that Birchcliff
anticipates that it will continue to repurchase its common shares to help
offset the dilution resulting from the exercise of stock options; that
Birchcliff will continue to evaluate opportunistic repurchases of its common
shares when the intrinsic value of such shares exceeds the current market
price; and that the focus of the Five Year Plan is unchanged and remains on
increasing shareholder value by maximizing free funds flow and reducing the
Corporation’s indebtedness, increasing shareholder returns and fully
utilizing the available processing capacity of the Corporation’s existing
infrastructure;
* statements under the heading “Operations Update” regarding
Birchcliff’s 2022 capital program and its exploration, production and
development activities and the timing thereof, including: the number and types
of wells to be drilled and brought on production in 2022; and planned facility
turnarounds; and
* the proposed redemption of the Series A and Series C Preferred Shares,
including the anticipated timing thereof.
With respect to the forward‐looking statements contained in this press
release, assumptions have been made regarding, among other things: the degree
to which the Corporation’s results of operations and financial condition
will be disrupted by circumstances attributable to the COVID-19 pandemic;
prevailing and future commodity prices and differentials, exchange rates,
interest rates, inflation rates, royalty rates and tax rates; the state of the
economy, financial markets and the exploration, development and production
business; the political environment in which Birchcliff operates; the
regulatory framework regarding royalties, taxes, environmental, climate change
and other laws; the Corporation’s ability to comply with existing and future
environmental, climate change and other laws; future cash flow, debt and
dividend levels; future operating, transportation, G&A and other expenses;
Birchcliff’s ability to access capital and obtain financing on acceptable
terms; the timing and amount of capital expenditures and the sources of
funding for capital expenditures and other activities; the sufficiency of
budgeted capital expenditures to carry out planned operations; the successful
and timely implementation of capital projects and the timing, location and
extent of future drilling and other operations; results of operations;
Birchcliff’s ability to continue to develop its assets and obtain the
anticipated benefits therefrom; the performance of existing and future wells;
reserves volumes and Birchcliff’s ability to replace and expand reserves
through acquisition, development or exploration; the impact of competition on
Birchcliff; the availability of, demand for and cost of labour, services and
materials; board of director approval of proposed dividends and the proposed
redemption of the Series A and Series C Preferred Shares; the ability to
obtain any necessary regulatory or other approvals in a timely manner; the
satisfaction by third parties of their obligations to Birchcliff; the ability
of Birchcliff to secure adequate processing and transportation for its
products; Birchcliff’s ability to successfully market natural gas and
liquids; the results of the Corporation’s risk management and market
diversification activities; and Birchcliff’s natural gas market exposure. In
addition to the foregoing assumptions, Birchcliff has made the following
assumptions with respect to certain forward-looking statements contained in
this press release:
* Birchcliff’s 2022 guidance (as updated on May 11, 2022) assumes the
following commodity prices and exchange rate: an average WTI price of
US$99.50/bbl; an average WTI-MSW differential of CDN$3.10/bbl; an average AECO
price of CDN$6.50/GJ; an average Dawn price of US$6.85/MMBtu; an average NYMEX
HH price of US$6.95/MMBtu; and an exchange rate (CDN$ to US$1) of 1.28.
* With respect to estimates of capital expenditures for 2022, such estimates
assume that the 2022 capital program will be carried out as currently
contemplated. The amount and allocation of capital expenditures for
exploration and development activities by area and the number and types of
wells to be drilled and brought on production is dependent upon results
achieved and is subject to review and modification by management on an ongoing
basis throughout the year. Actual spending may vary due to a variety of
factors, including commodity prices, economic conditions, results of
operations and costs of labour, services and materials.
* With respect to Birchcliff’s estimates of adjusted funds flow, free funds
flow and excess free funds flow for 2022, such estimates assume that: the 2022
capital program will be carried out as currently contemplated and the level of
capital spending for 2022 set forth herein will be achieved; and the targets
for production, production commodity mix, expenses and natural gas market
exposure and the commodity price and exchange rate assumptions are met.
* With respect to Birchcliff’s production guidance for 2022, such guidance
assumes that: the 2022 capital program will be carried out as currently
contemplated; no unexpected outages occur in the infrastructure that
Birchcliff relies on to produce its wells and that any transportation service
curtailments or unplanned outages that occur will be short in duration or
otherwise insignificant; the construction of new infrastructure meets timing
and operational expectations; existing wells continue to meet production
expectations; and future wells scheduled to come on production meet timing,
production and capital expenditure expectations.
* With respect to statements of future wells to be drilled and brought on
production, such statements assume: the continuing validity of the geological
and other technical interpretations performed by Birchcliff’s technical
staff, which indicate that commercially economic volumes can be recovered from
Birchcliff’s lands as a result of drilling future wells; and that commodity
prices and general economic conditions will warrant proceeding with the
drilling of such wells.
* With respect to the Five Year Plan (as updated on May 11, 2022), the plan is
based on the commodity price, exchange rate and other assumptions set forth
under the heading “Outlook and Guidance – Updated Five Year Outlook and
Plans to Increase Common Share Dividend in 2023”. In addition: * The
forecast production estimates contained in the Five Year Plan are subject to
similar assumptions set forth herein for Birchcliff’s other production
guidance.
* With respect to Birchcliff’s estimates of capital expenditures and
spending plans, such estimates and plans assume that Birchcliff’s capital
programs are carried out as currently contemplated, with the Pouce Coupe Gas
Plant and the AltaGas Facility being filled by the end of 2024. The Five Year
Plan also forecasts that approximately 170 to 180 wells will be brought on
production over the five year period, which forecast is subject to similar
assumptions regarding wells drilled and brought on production as set forth
herein.
* With respect to Birchcliff’s estimates of adjusted funds flow, free funds
flow and excess free funds flow, such estimates assume that: Birchcliff’s
capital programs will be carried out as currently contemplated and the level
of capital spending for each year will be achieved; and the targets for
production and production commodity mix and the commodity price and exchange
rate assumptions set forth herein are met.
* The Corporation’s expectation that it will be required to pay Canadian
income taxes commencing in 2023 is based on the current tax regime in Canada,
the Corporation’s current available income tax pools and the commodity price
assumptions set forth herein. In addition, this expectation is based on the
Five Year Plan as illustrated herein and assumes, among other things, that the
levels of spending and production set forth under the heading “Outlook and
Guidance – Updated Five Year Outlook and Plans to Increase Common Share
Dividend in 2023” are achieved.
Birchcliff’s actual results, performance or achievements could differ
materially from those anticipated in the forward-looking statements as a
result of both known and unknown risks and uncertainties including, but not
limited to: the risks posed by pandemics (including COVID-19), epidemics and
global conflict and their impacts on supply and demand and commodity prices;
actions taken by OPEC and other major producers of crude oil and the impact
such actions may have on supply and demand and commodity prices; general
economic, market and business conditions which will, among other things,
impact the demand for and market prices of Birchcliff’s products and
Birchcliff’s access to capital; volatility of crude oil and natural gas
prices; risks associated with increasing costs, whether due to high inflation
rates, supply chain disruptions or other factors; fluctuations in exchange and
interest rates; stock market volatility; loss of market demand; an inability
to access sufficient capital from internal and external sources on terms
acceptable to the Corporation; risks associated with Birchcliff’s Credit
Facilities, including a failure to comply with covenants under the agreement
governing the Credit Facilities and the risk that the borrowing base limit may
be redetermined; fluctuations in the costs of borrowing; operational risks and
liabilities inherent in oil and natural gas operations; the occurrence of
unexpected events such as fires, severe weather, explosions, blow-outs,
equipment failures, transportation incidents and other similar events; an
inability to access sufficient water or other fluids needed for operations;
uncertainty that development activities in connection with Birchcliff’s
assets will be economic; an inability to access or implement some or all of
the technology necessary to operate its assets and achieve expected future
results; the accuracy of estimates of reserves, future net revenue and
production levels; geological, technical, drilling, construction and
processing problems; uncertainty of geological and technical data; horizontal
drilling and completions techniques and the failure of drilling results to
meet expectations for reserves or production; uncertainties related to
Birchcliff’s future potential drilling locations; delays or changes in plans
with respect to exploration or development projects or capital expenditures;
the accuracy of cost estimates and variances in Birchcliff’s actual costs
and economic returns from those anticipated; incorrect assessments of the
value of acquisitions and exploration and development programs; changes to the
regulatory framework in the locations where the Corporation operates,
including changes to tax laws, Crown royalty rates, environmental laws,
climate change laws, carbon tax regimes, incentive programs and other
regulations that affect the oil and natural gas industry; actions by
government authorities, including those with respect to the COVID-19 pandemic;
an inability of the Corporation to comply with existing and future
environmental, climate change and other laws; the cost of compliance with
current and future environmental laws; political uncertainty and uncertainty
associated with government policy changes; dependence on facilities, gathering
lines and pipelines; uncertainties and risks associated with pipeline
restrictions and outages to third-party infrastructure that could cause
disruptions to production; the lack of available pipeline capacity and an
inability to secure adequate and cost-effective processing and transportation
for Birchcliff’s products; an inability to satisfy obligations under
Birchcliff’s firm marketing and transportation arrangements; shortages in
equipment and skilled personnel; the absence or loss of key employees;
competition for, among other things, capital, acquisitions of reserves,
undeveloped lands, equipment and skilled personnel; management of
Birchcliff’s growth; environmental and climate change risks, claims and
liabilities; potential litigation; default under or breach of agreements by
counterparties and potential enforceability issues in contracts; claims by
Indigenous peoples; the reassessment by taxing or regulatory authorities of
the Corporation’s prior transactions and filings; unforeseen title defects;
third-party claims regarding the Corporation’s right to use technology and
equipment; uncertainties associated with the outcome of litigation or other
proceedings involving Birchcliff; uncertainties associated with counterparty
credit risk; risks associated with Birchcliff’s risk management and market
diversification activities; risks associated with the declaration and payment
of future dividends, including the discretion of Birchcliff’s board of
directors to declare dividends and change the Corporation’s dividend policy;
the failure to obtain any required approvals in a timely manner or at all; the
failure to complete or realize the anticipated benefits of acquisitions and
dispositions and the risk of unforeseen difficulties in integrating acquired
assets into Birchcliff’s operations; negative public perception of the oil
and natural gas industry and fossil fuels; the Corporation’s reliance on
hydraulic fracturing; market competition, including from alternative energy
sources; changing demand for petroleum products; the availability of insurance
and the risk that certain losses may not be insured; breaches or failure of
information systems and security (including risks associated with
cyber-attacks); risks associated with the ownership of the Corporation’s
securities; and the accuracy of the Corporation’s accounting estimates and
judgments.

While Birchcliff anticipates approval by the board of directors of the
proposed redemption of the Series A and Series C Preferred Shares and the
proposed increase to the annual common share dividend to $0.80 per share in
2023, the proposed redemption and the payment of the increased common share
dividend remain subject to the approval of the board of directors. In
addition, the proposed increase to the common share dividend in 2023 is
subject to commodity prices and Birchcliff achieving its target of zero total
debt in Q4 2022. The proposed redemption of the Series A and Series C
Preferred Shares and the declaration and payment of any proposed dividends are
subject to the discretion of the board of directors and may not be approved or
may vary depending on a variety of factors and conditions existing from time
to time, including commodity prices, free funds flow, current and forecast
commodity prices, fluctuations in working capital, financial requirements of
Birchcliff, applicable laws (including solvency tests under the Business
Corporations Act (Alberta) for the declaration and payment of dividends) and
other factors beyond Birchcliff’s control. The redemption of the Series A
and Series C Preferred Shares and the payment of dividends to shareholders is
not assured or guaranteed and dividends may be reduced or suspended entirely.
In addition to the foregoing, the Corporation’s ability to pay dividends now
or in the future may be limited by covenants contained in the agreements
governing any indebtedness that the Corporation has incurred or may incur in
the future, including the terms of the Credit Facilities. The agreement
governing the Credit Facilities provides that Birchcliff is not permitted to
make any distribution (which includes dividends) at any time when an event of
default exists or would reasonably be expected to exist upon making such
distribution, unless such event of default arose subsequent to the ordinary
course declaration of the applicable distribution.

Readers are cautioned that the foregoing lists of factors are not exhaustive.
Additional information on these and other risk factors that could affect
results of operations, financial performance or financial results are included
in Birchcliff’s most recent Annual Information Form under the heading
“Risk Factors” and in other reports filed with Canadian securities
regulatory authorities.

This press release contains information that may constitute future-orientated
financial information or financial outlook information (collectively,
“FOFI”) about Birchcliff’s prospective financial performance, financial
position or cash flows, all of which is subject to the same assumptions, risk
factors, limitations and qualifications as set forth above. Readers are
cautioned that the assumptions used in the preparation of such information,
although considered reasonable at the time of preparation, may prove to be
imprecise or inaccurate and, as such, undue reliance should not be placed on
FOFI. Birchcliff’s actual results, performance and achievements could differ
materially from those expressed in, or implied by, FOFI. Birchcliff has
included FOFI in order to provide readers with a more complete perspective on
Birchcliff’s future operations and management’s current expectations
relating to Birchcliff’s future performance. Readers are cautioned that such
information may not be appropriate for other purposes. FOFI contained herein
was made as of the date of this press release. Unless required by applicable
laws, Birchcliff does not undertake any obligation to publicly update or
revise any FOFI statements, whether as a result of new information, future
events or otherwise.

Management has included the above summary of assumptions and risks related to
forward-looking statements provided in this press release in order to provide
readers with a more complete perspective on Birchcliff’s future operations
and management’s current expectations relating to Birchcliff’s future
performance. Readers are cautioned that this information may not be
appropriate for other purposes.

The forward-looking statements contained in this press release are expressly
qualified by the foregoing cautionary statements. The forward-looking
statements contained herein are made as of the date of this press release.
Unless required by applicable laws, Birchcliff does not undertake any
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

ABOUT BIRCHCLIFF:

Birchcliff is a Calgary, Alberta based intermediate oil and natural gas
company with operations focused on the Montney/Doig Resource Play in Alberta.
Birchcliff’s common shares and Series A and Series C Preferred Shares are
listed for trading on the Toronto Stock Exchange under the symbols “BIR”,
“BIR.PR.A” and “BIR.PR.C”, respectively.

 For further information, please contact:                                                                                                                                                                                                                                                                                                               
 Birchcliff Energy Ltd. Suite 1000, 600 – 3 (rd)Avenue S.W. Calgary, Alberta T2P 0G5 Telephone: (403) 261-6401 Email: info@birchcliffenergy.com www.birchcliffenergy.com      Jeff Tonken – Chief Executive Officer  Chris Carlsen – President and Chief Operating Officer  Bruno Geremia – Executive Vice President and Chief Financial Officer        

(https://www.globenewswire.com/NewsRoom/AttachmentNg/06500df7-717b-4abd-bae9-7c472190ab87)



GlobeNewswire, Inc. 2022

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