Rubellite Energy Inc. announces achievement of fourth quarter 2022 production guidance, successful land acquisitions and provides strong operational update

CALGARY, AB, Jan. 17, 2023 – (TSX:RBY) – Rubellite Energy Inc. (“Rubellite” or the “Company”), a pure play Clearwater oil exploration and development company, is pleased to release its preliminary fourth quarter 2022 and current production results, announce a material expansion in Rubellite’s land base and prospect inventory at Figure Lake, and provide an operational update, all of which highlight successful advancement of Rubellite’s growth focused business plan centered around the attractive Clearwater play. Highlights include:

• Preliminary Q4 2022 average oil sales production, based on field estimates, of 2,180 bbl/d;
• Current oil sales production, based on field estimates, of over 2,700 bbl/d;
• Strong preliminary performance from new development wells rig released at Marten Hills and in the Figure Lake area, relative to Rubellite’s type curve;
• Ongoing one-rig development program at Figure Lake on track to deliver Q1 2023 oil sales production at the high end of previous corporate guidance of 2,200 – 2,600 bbl/d;
• Continued expansion of Figure Lake land base, adding 30.75 net sections in Q4 2022 and January 2023; and
• Spud of first well in Dawson/Peavine area Northern Exploration Program.

PRODUCTION

Rubellite is pleased to report that the Company recorded preliminary fourth quarter oil sales production of 2,180 bbl/d, based on field estimates, at the high end of the fourth quarter guidance range of 1,950 – 2,200 bbl/d. The Company produced close to an additional 70 bbl/d which was not recorded as sales during the quarter, building inventory to fill new tank volumes for oil processing and water separation at pad sites.

Ten (7.9 net) wells were rig released in Rubellite’s two-rig fourth quarter development drilling program at Marten Hills and Figure Lake and began to contribute materially to the ramp up of oil sales production volumes throughout December as new multi-lateral wells were rig released and achieved full recovery of oil-based drilling mud (“OBM”). OBM is not recorded as sales production as the OBM is recovered and re-used in future drilling operations to the maximum extent possible or, when no longer re-usable it is sold, and in both cases credited back to drilling capital.

Field estimates of production through the first two weeks of January averaged over 2,700 bbl/d, in excess of the high end of Rubellite’s Q1 2023 production guidance, with three wells recently rig-released at Figure Lake producing OBM load fluid and therefore not yet included in the sales production estimate.

OPERATIONS UPDATE

Three (0.9 net) new wells drilled in the fourth quarter at Marten Hills fully recovered OBM from the drilling process and completed their respective IP30 production periods, recording average production rates of 231 bbl/d, close to double the Marten Hills type curve (1) IP30 of 120 bbl/d. With primary development on the Company’s Marten Hills acreage now complete, the Company will continue to monitor the performance of several offsetting waterflood pilots and assess the potential for secondary recovery on its acreage at Marten Hills later in 2023.

At Figure Lake, a total of eight (8.0 net) multi-lateral horizontal wells were spud and seven (7.0 net) were rig released during the fourth quarter. Development drilling operations were focused on two existing pads, adding three (3.0 net) horizontal multi-lateral wells to the pad at 1-13-63-18W4 (the “1-13 Pad”) and three (3.0 net) horizontal multi-lateral wells on the pad to the north at 9-23-63-18W4 (the “9-23 Pad”). Two wells were also spud on a new pad at 3-26-63-18W4 (the “3-26 Pad”), with one well rig-released in mid-December and the second rig released January 6, 2023. All three new wells drilled at the 1-13 Pad have recovered their OBM load fluid and progressed through their respective IP30 production periods, recording IP30 rates ranging from 126 to 212 bbl/d to average 159 bbl/d as compared to the Figure Lake type curve(1) IP30 of 115 bbl/d. Thus far, one of the three wells drilled on the 9-23 Pad in the fourth quarter has fully recovered its OBM and recorded an average IP30 production rate of 166 bbl/d. The other two wells on the 9-23 Pad are in their IP30 periods and performing commensurate with the first well’s performance, trending above the Figure Lake type curve (1). Positive results continued from the 3-26 Pad, with the well rig released in mid-December now approximately midway through its IP30 period and again tracking above type curve. The second well on the 3-26 Pad commenced OBM recovery operations after its rig release in early January and has just recently begun producing heavy oil sales volumes. Performance from the new Figure Lake wells is very positive thus far and will be monitored closely to inform future corporate production projections as operating parameters are optimized.

Operationally, Rubellite intends to keep one drilling rig running continuously at Figure Lake until break up in late March, to drill a total of seven (7.0 net) wells during the first quarter of 2023, focusing primarily on infill development drilling at the 9-23 and 3-26 Pads to grow production. The second drilling rig moved north to the Dawson/Peavine area in early January to execute the horizontal multi-lateral drilling in Rubellite’s Northern Exploration Program.

Rubellite began operations in its Northern Exploration Program in the fourth quarter with the drilling of a vertical evaluation well at 7-24-83-9W5, including coring operations to ascertain the nature of the Clearwater reservoir and quality of heavy oil on its 43.75 net section land block at Cranberry Lake. While detailed core and fluid analysis work is ongoing, the Company has no immediate plans to drill a follow-on horizontal multi-lateral well. The first horizontal multi-lateral well at Dawson (5-16-81-16W5) spud January 9, 2023 and drilling operations are expected to continue for approximately two weeks. In late January, the drilling rig is expected to move to the first of two multi-lateral wells planned at Peavine for this winter. Licenses have been acquired to execute additional Northern Exploration activities as performance dictates and timing allows.

(1)  Type curve assumptions are based on the Total Proved plus Probable Undeveloped reserves contained in the McDaniel Reserve Report as disclosed in the Company’s Annual Information Form which is available under the Company’s profile on SEDAR at www.sedar.com. “McDaniel” means McDaniel & Associates Consultants Ltd. independent qualified reserves evaluators. “McDaniel Reserve Report” means the independent engineering evaluation of the crude oil, natural gas and NGL reserves, prepared by McDaniel with an effective date of December 31, 2021 and a preparation date of March 9, 2022.

LAND ACQUISITIONS

Rubellite is also pleased to announce that the Company has been successful in executing multiple land acquisition transactions in the Figure Lake area to expand its Clearwater play land position, adding 30.75 net sections of prospective land, a high percentage of which directly brackets the reservoir sweet spot identified by the recent successful development drilling activities at the 1-13, 9-23 and 3-26 Pads at Figure Lake. The transactions include a Land Acquisition and Drilling Commitment Agreement with the Buffalo Lake Métis Settlement whereby Rubellite plans to drill a minimum of four multi-lateral wells prior to December 31, 2023.

Q1 2023 OUTLOOK

Rubellite is on track to achieve its combined Q4 2022 and Q1 2023 capital expenditure (see “Non-GAAP and Other Financial Measures”) guidance released November 10, 2022 of approximately $33.0 to $41.0 million to continue its two-rig drilling program through to the end of the first quarter of 2023 to drill, complete, equip and tie-in 7 (7.0 net) multi-lateral horizontal development / infill wells at Figure Lake in the first quarter of 2023 and to execute its four to six (3.0 to 4.0 net) well Northern Exploration program. Forecast drilling activities are expected to be fully funded from adjusted funds flow and the Company’s credit facility. The Figure Lake drilling program in Q4 2022 was partially funded by the last of the Figure Lake GORR drilling payments.

Factoring in the positive initial performance from the Q4 2022 drilling program to date, production sales volumes for the first quarter of 2023 are expected to average at the high end of the previous November 10, 2022 guidance of 2,200 to 2,600 bbl/d.

Rubellite also plans to continue exploration activities to pursue additional prospective land capture and de-risk acreage.

An updated Corporate Overview presentation has been posted to the Company’s website at www.rubelliteenergy.com.

For further information: please contact: Rubellite Energy Inc., Suite 3200, 605 – 5 Avenue SW Calgary, Alberta, Canada T2P 3H5, Telephone: 403 269-4400, Fax: 403 269-4444, Email: info@rubelliteenergy.com; Susan L. Riddell Rose, President and Chief Executive Officer; Ryan A. Shay, Vice President Finance and Chief Financial Officer

NT4