Calima Energy : March 2022 Quarterly Activities and Cash Flow

26 April 2022

March 22 Quarterly Activities & Cash Flow Report

Calima Energy Limited

ABN: 17 117 227 086

ASX Code: CE1

Calima is a free cash flow and growth focused Canadian Oil and Gas Producer and Explorer

Directors

Glenn Whiddon (Chairman)

Jordan Kevol (Managing Director)

Mark Freeman (Finance Director)

Karl DeMong (NED)

P.L. Tetley (NED)

Capital Structure

ASX Code Share Price Shares Market Cap

Options $1.80 exp 25/8/22 $2.40 exp 25/8/22 0.20c exp 30/4/2024 0.20c exp 30/4/2026

CE1 0.20 cents 615 million A$120 million

$ $ $

WTI (US$) WCS (A$) AECO A$/GJ

94.29 108.54 5.56

Upcoming conference call timing:

$ $ $

101.09 118.34 6.64

•  London Investor Call - Tues 26th April @ 4.00 pm (London time) - register herehttps://bit.ly/3k5JlL3

•  Australian Investor Call - Wed 27th April @ 10:00 am (AWST), 12:00 pm (AEST) - Register herehttps://bit.ly/3LabuMI

Calima Energy Limited (ASX: CE1) ("Calima" or "the Company") is a Canadian production-focused energy company developing its oil plays at Brooks and Thorsby in southern and central Alberta and a significant undeveloped Montney acreage position at Tommy Lakes in NE British Columbia. Calima is dedicated to responsible corporate practices, and places high value on adhering to strong Environmental, Social and Governance ("ESG") principles.

HIGHLIGHTS

Q4 21	Q1 2022	% Increase
Production (boe)	294,561	356,058	20.9%
Revenue (A$ Million)	$19.8	$ 30.9	56.0%
Adjusted EBITDA (A$ Million)	$9.4	$ 18.1	92.6%

Q1 22 Exploration and Development Update:

March 2022 quarter revenue increased by 56% and profitability by 93% (excluding non recuring items) compared to the December 21 quarter. The Company anticipates similar revenue and profitability for the June quarter, however, as no major capital expenditure is planned cash flows will be significantly higher. The Q1 capital program is summarised below:

• • Pisces Glauconitic Program - Pisces 1, 2 and 3 wells commenced production in the quarter and are currently producing ~600 boe/d, which is very encouraging.

• • Gemini Sunburst Program - Geminin 5, 6 and 7 wells were drilled and placed on production in the quarter and currently producing ~300 boe/d. Most exciting is the result from Gemini 5 (vertical well) which has further delineated the Brooks land base identifying up to 6 new Sunburst drilling locations as well as contributing ~ 75 boe/d (well above expectations).

• • Leo Sparky program - Leo 1, 2 and 3 wells produced solidly for the March quarter averaging ~1,000 boe/d. Leo #4 was drilled in January in the Holborn area, just North of Thorsby and will be completed in June/July 2022.

• • Brooks field interconnect pipeline - The 19km pipeline was completed on time and ~A$650,000 under budget allowing 4 new wells to be brought on production in March 2022. Q1 development activities associated with the pipeline included a water disposal well conversion which provided the Company with incremental produced water disposal capacity of 7,500 bbls/d.

• • Waterflood Expansion J2J Pool - Initial pressure results confirm early waterflood response. An additional water injection well is being completed in April as part of the staged plan to repressurize the pool which is expected to increase production 2-4 fold from current rates of ~180 boe/d.

• • Exit production - the Company exited the first quarter of 2022 with average production exceeding 4,300 boe/d (last week of March).

Corporate:

• • The Company completed a $20m fundraising issuing 100m shares at 20 cents ($18.7m after costs). The raise was by Canaccord Genuity (Australia) with significant support from our UK bankers, Auctus Advisors and Hannam & Partners. Proceeds of the raising were used to retire borrowings under the demand revolving credit facility with a Canadian chartered bank (the "Credit Facility")(1). As at March 31, 2022 drawdowns under the Credit Facility were A$0.4 million.

• • Karl DeMong appointed as a Non-Executive Technical Director.

• • On 24 March 2022 the Calima listed on the OTCQB under the trading symbol "RLTOF". Calima has received significant interest from investors based in North America and this allows them to buy Calima shares in their own time zone and currency.

• • Capital Management - the Company objective is to generate unencumbered free cash flow that can be directed to production growth initiatives; shareholder distributions and/or share buybacks and a strong balance sheet. Further details in this area will be provided when the 2H 2022 work program is announced in May 2022.

(1)The Company holds a A$28.7M (C$27.0M) revolving credit facility with a Canadian Chartered bank. The facility is a demand loan and is subject to a semi-annual borrowing base review. The facility is utilised to fund day-to-day working capital requirements associated with the Company's ongoing operations and development programs. As at 31 March 2022, the facility had A$28.3 million undrawn.

Calima Energy Ltd ACN 117 227 086

Page | 1

Suite 4, 246-250 Railway Parade, West Leederville WA 6007: [phone] Fax: + 61 8 6500 3275 Email:[e-mail]

FOLLOW US

Jordan Kevol, President & CEO:

"We are very pleased to report the robust activity completed by Calima in the first quarter of 2022. We completed our Pisces and Gemini programs at Brooks, resulting in 6 successful producing wells all of which are tied in and producing to our 2-29 oil battery. The Gemini program was particularly successful in the drilling of Gemini #5, a step out vertical well that tested a seismically defined pool extension, which confirmed the significant potential of future horizontal drilling locations targeting the Sunburst Formation in the heart of our Brooks core. Exceeding all expectations, the vertical well is an excellent producer, and follow up horizontal wells are planned to target that pool. The large-scale pipeline project at Brooks is completed, operating, and came in on schedule and under budget. This provides growth opportunities going forward and importantly results in ESG improvements. We are eagerly awaiting the completion and testing of the Leo #4 well at Holborn. With success, it opens up significant future Sparky expansion in the Holborn area, north of our core Thorsby area. At current robust prices for both oil and gas, Calima is experiencing high returns on all projects, and is committed to providing a combination of sustainable production and cash flow growth, coupled with shareholder returns for 2022 and beyond. We thank all stakeholders for their continued support and look forward to sharing continued success throughout this strong commodity cycle."

KEY PERFORMANCE METRICS

Q4 2021

Q1 2022 QTR over QTR change

Production Sales

Oil (bbl) 193,425

249,514

56,089

Natural gas (Mcf) 571,942

603,173

31,231

Natural gas liquids (bbl) 5,813

Sales volumes (gross boe) 294,561

356,058

203 61,497

Sales volumes (boe/d) 3,202

Liquids percentage 68%

Financial

Oil and gas sales (A$ million) $19.8

Adjusted EBITDA (A$ million) $9.4

Capital Expenditure (A$ million) $11.0

72% $30.9 $18.1 $16.4

754 4% $11.1 $8.7 $5.4

Realised prices

Oil (A$/bbl) 84.52

Natural gas (A$/Mcf) 5.34

Natural gas liquids (A$/bbl) 70.70

108.54 5.56 77.27

$24.02 $0.22 $6.57

(1) Refer to Advisories and Guidance for additional information regarding the Company's GAAP and non-GAAP financial measures.

OUTLOOK

Calima's Board intends to ratify an H2 capital program later in the second quarter of 2022. The Calima Board is also evaluating a dividend and/or share buyback program to commence in the third or fourth quarter of 2022. The following table summarises the Company's current outlook for Q2 2022:

Jan - June
2022
Average Daily Production (mboe/d)(1)	4 - 4.2
Sales Revenue (A$ millions)	60 - 65
Adjusted EBITDA (A$ millions)(2)(3)	35 - 39
Funds Flow (after realised hedges) (A$ millions)	24 - 28
Capital expenditures (A$ millions)	19 - 20

(1)H1 2022 average production range of 4,000 - 4,200 boe/d is based on current forecasts. Assumes US$95/bbl WTI, -US$13.50 WTI/WCS differential, C$5.00/gj AECO, 1.25

CAD/USD and 0.94 CAD/AUD for April - June 2022.

(2) EBITDA is adjusted for expected realised hedging losses of A$10.0 million. EBITDA is based on commodity prices stated above, corporate average royalty rates of 19%, and operating costs and G&A assumptions that are based off historical financial performance. Interest, taxes and abandonment expenditures are cashflow items excluded from EBITDA

(3)Refer to Advisories and Guidance for additional information regarding the Company's GAAP and non-GAAP financial measures.

EXPLORATION AND DEVELOPMENT UPDATE

Drilling Update 2021/2022

The following table summarises the results of the Company's drilling programs over the last 12 months:

Well name & unique location	Target	Spud	Drill	Lateral	On
Area	identifier	formation	Date	days	length (m)	Production	Status
Brooks	Gemini #1 - 02/10-29-19-13W4	Sunburst	31/5/21	10	837	26/6/21	Producing
Brooks	Gemini #2 - 03/04-29-19-13W4	Sunburst	8/6/21	5	482	24/6/21	Producing
Brooks	Gemini #3 - 00/03-22-18-14W4	Sunburst	19/6/21	7	622	16/7/21	Producing
Brooks	Gemini #4 - 03/06-06-18-09W4	Sunburst	27/6/21	9	1,864	28/7/21	Producing
Thorsby	Leo #1 - 02/07-07-050-01W5	Sparky	28/7/21	29	2,253	16/11/21	Producing
Thorsby	Leo #2 - 02/06-07-050-01W5	Sparky	27/8/21	11	2,055	18/11/21	Producing
Thorsby	Leo #3 - 00/14-06-050-01W5	Sparky	7/9/21	17	2,153	08/11/21	Producing
Well name & unique location	Target	Spud	Drill	Lateral	On
Area	identifier	formation	Date	days	length (m)	Production	Status
Brooks	Pisces #1 - 04/04-28-19-13W4	Glauconitic	30/11/21	6	1,417	27/1/22	Producing
Brooks	Pisces #2 - 03/06-21-19-13W4	Glauconitic	07/12/21	8	2,687	26/1/22	Producing
Brooks	Pisces #3 - 02/15-11-19-14W4	Glauconitic	02/01/22	7	1,407	22/3/22	Producing
Brooks	Gemini #5 - 00/02-19-19-13W4	Sunburst	09/01/22	4	N/A*	1/3/22	Producing
Brooks	Gemini #6 - 00/02-18-19-13W4	Sunburst	14/01/22	6	646	1/3/22	Producing
Brooks	Gemini #7 - 02/16-36-18-14W4	Sunburst	21/01/22	6	667	3/3/22	Producing
Thorsby	Leo #4 - 00/16-11-051-02W5	Sparky	19/01/22	11	2,473	Pending	Awaiting Completion
* Vertical well

Calima has focused its March quarter operations on delivering on its first half quarter guidance. During the quarter the Company completed the following programs:

• o Pisces Program - 3 Pisces Wells - Pisces 1, 2 and 3 wells were placed on production in the quarter. These wells are Glauconitic Formation wells. Pisces 1 and 2 wells have been on production since late January with the Pisces 3 well commencing flowback production since 22 March 22. Pisces 3 has been a stellar performer producing gas flow rates of over 1.4 mmcf/d. Whilst the well is still cleaning up, the additional gas at these rates significantly increases gas revenue at a time current gas prices exceed $6-7/mcf. The Pisces 2 well also continues to outperform expectations with current rates in the range of 275 - 300 boe/d.

• o Gemini Program - a 3 well drilling campaign was completed with one vertical plus two horizontal Sunburst wells (Gemini #5-#7) drilled and placed on production in the quarter.

• o Leo program - the Leo 4 well was drilled in January and will be completed in June/July 2022. Combined production rates from Leo 1, 2 and 3 wells for the March quarter averaged ~1,000 boe/d and continue to produce at a strong combined rate of ~1,000 boe/d.

• o Strategic infrastructure development - During the quarter the Company completed construction of a large-scale pipeline in the Brooks area under budget and on-time; connecting the Company's 02-29 battery to its land base to the

south, encompassing the area where the 4 recent Pisces and Gemini wells were drilled and enabled them to be brought on production.

• o Waterflood Expansion J2J Pool - The J2J Sunburst pool was discovered in 2003 and developed using vertical wells with horizontal drilling introduced by Blackspur in 2014. Recent efforts to inject water into the field as a method of secondary enhanced oil recovery (EOR) has started and is seeing encouraging results with production increases and re-pressuring of the field underway. A conversion of a standing well to a water injector has started and is necessary to continue re-pressurising the field. The 1P reserves in the J2J pool are ~2 Mmboe with corporate expectations that production profiles will begin to increase over time. Third party modeling based on reservoir parameters indicate the pool has the potential to generate a 2-4 fold production increase, from 180 boe/d currently, over the next 24-36 months.

• o Updated Reserves Report - On 28 March 2022 the Company released its year-end 2021 Reserves (audited by InSite Petroleum Consultants Ltd) with 3P reserves of 24.4 million boe, 2P Reserves 20.4 million boe, 1P Reserves 15.6 million boe and PDP Reserves 5.1 million boe.

Collectively this program in conjunction with the last years efforts has enabled the Company to grow the Brooks and Thorsby assets from 2,500 boe/d to current production in excess of 4,300 boe/d.

Brooks Pipeline

The Company commenced construction of a 19 kilometre six-inch emulsion pipeline at Brooks, including a 8.5 kilometre section with twin six-inch lines, connecting the Company's 02-29 battery in the northern portion of its Brooks, Alberta asset base to its wells, lands, and gathering system in the southern portion of the Company's asset base. The pipeline was completed on time, ~A$650,000 under budget, and enabled Pisces #3 and Gemini #5, #6 & #7 wells to be placed on production.

Q1 development activities associated with pipeline also included a water disposal well conversion providing the Company with incremental produced water disposal capacity of 7,500 bbls/d. An injection pump for the disposal well is currently being installed and is expected to be operational by mid-May. The pipeline is now providing the following benefits:

• 1. Provides egress for multiple future locations in the Sunburst and Glauconitic Formations, with improved full cycle economics on the development of future drilling locations.

• 2. Economic benefits expected to be realized in 3rd party reserve reports in the PDP, 1P, 2P and 3P reserve categories.

• 3. Trucking costs reduced by ~C$55,000 per month and other operating costs savings of the pipeline are expected to mostly offset the loan repayments of the pipeline.

• 4. Operating cost savings from future well developments will exceed pipeline project repayments with an increase to free cash flow.

• 5. The pipeline provides the following ESG benefits:

  • • Eliminates the need to flare new wells during testing in the range of 400-800 tCO2e for each new well tied-into the pipeline; and

  • • Reduces trucked volumes of emulsion from existing, newly drilled, and future wells pipeline connected to the 2-29 battery. Reducing trucking improves the Company's safety and spill prevention profile and ESG score. Pipelines are safer, more environmentally friendly, and more economic, when compared to the trucking of oilfield fluids.

Upcoming Capital Works to 30 June 2022 - Minimum Expenditure (~A$3.5m)

Calima is very pleased with the production and development growth since acquisition on 1 May 2021. The Company will work to optimise the wells that have been drilled and completed during the period ended 30 June 2022 as follows:

• o The Leo #4 exploration step out well at North Thorsby / Holborn (50%WI) will be stimulated in June/July 2022 and placed on production ~30 days post stimulation. North Thorsby contains a series of oil charged Sparky Formation channel sands that contain some of the thickest oil columns in the regional area. North Thorsby is estimated to have over 200MMbbl OOIP with some of the sections approaching OOIP of 28MMbbl. Success in this well will have a material impact on the Company's exploration upside and provide running room for significant increased production base.

• o The Waterflood Expansion J2J Pool will see an additional injector conversion and pipelines completed.

• o Upgrades to the Brooks 2-29 Bantry Oil and Gas Facility will ensure that the facility will be able to process additional volumes of oil, gas and water from the Brooks area to ensure the Company can manage additional production anticipated from the second half development and drilling programs.

Inside the H2Sweet Plant at 2-29.

This facility safely extracts the hydrogen sulfide (H2S) from the natural gas and converts it to a solid sulphur cake that can be disposed of safely (or potentially sold with additional processing). This process is one of a kind and reduces operating costs by $1.30/mcf compared to triazine operations and significantly reduces the comparative environmental impact of triazine disposal.

This 600-horsepower electric motor runs at our Bantry 2-29 plant, its role is to increase compression at the facility so produced natural gas can be placed into the sales gas line.

Montney Maximisation Initiatives

Dustin, one of our wellsite supervisors, is overseeing a workover to convert a previous oil producer to a water disposal well at the 2-29 Bantry Facility. This conversion enables the Company to dispose of additional produced water from our current wells and the recent and future Pisces and Gemini wells. This disposal well is ready to be put in service.

As announced on 4 April 2022, the Montney assets hold significant inherent value and Calima remains committed to unlocking it for the benefit of shareholders. The Montney Formation is world class and is the most active oil and gas play in Canada with an estimated remaining 449Tcf of gas, 14.4 billion bbls of condensate and 1.1 billion bbls of oil. Together with Peters & Co the Company continues to work towards a strategy to realize the inherent value in the Montney, however this process is taking longer than expected due to the size of the opportunity, the significant M&A activity that occurred in 2021 (C$8.5 billion transaction value) and the time to absorb new deals. The Calima Lands are development ready with existing egress capacity in excess of 11,000 boe/d of gas and related liquids (50,000 mcfg/d and 2,500 bo/d) through the Tommy Lakes facilities with significant growth upside.

With the world economies recalibrating to increased demand for gas and LNG the Montney presents a significant opportunity for the Company. Gas prices are now in excess of C$6-7/mcf whilst just 2 years ago they were below $2/mcf. As LNG Canada is closer to development (start-up is expected 2024/25), it will take up to 3 bcf/d out of the Montney, significantly reducing the amount of gas that is presently being used on the west coast of Canada and flowing to the USA, ultimately placing increasing demands on the Montney's current production base of 7-8 bcf/d.

With the current recalibration of energy security world-wide, the need for Europe to source natural gas from Tier 1 jurisdictions over the coming years and with rising commodity prices, Calima sees no need to enter into transactions on less than optimum terms.

On 28 March 2022 the Company confirmed a slightly higher 213.3 MMCFG & 10.1 million barrels of light oil and natural gas liquids (2020: 212.8 MMCFG & 10.8 MMBO) of Contingent Resources is continuing to be defined as Development Pending, reconfirming a significant portion its Montney acreage as being development ready subject only to securing the necessary funding to construct a tie-in pipeline. Total Montney Resources are summarised below: