2021 Third Quarter Report

	Long term
TSX: PNE	Value Focus
WWW.PINECLIFFENERGY.COM
	Q3-2021 Report

PRESIDENT'S MESSAGE TO SHAREHOLDERS

I hope all of Pine Cliff's shareholders and families are well. I also hope that you are pleased with our Q3 2021 financials as it was our fourth strong quarter in a row and the highest adjusted funds flow for the first nine months of the year in the history of Pine Cliff.

Highlights from Pine Cliff's third quarter ended September 30, 2021 include:

• repaid in full $19.0 million of term debt due July 31, 2022;
• generated $13.3 million of adjusted funds flow ($0.04 per basic and fully diluted share) for the three months ended September 30, 2021, and $32.8 million ($0.10 per basic share and $0.09 per fully diluted share) for the nine months ended September 30, 2021;
• net debt decreased by 34% or $21.6 million from $63.0 million on December 31, 2020, to $41.4 million as of September 30, 2021, which is Pine Cliff's lowest net debt level since the third quarter of 2015; and
• drilled 2 gross (2.0 net) Pekisko oil wells and 2 gross (0.4 net) Ellerslie natural gas wells that were all on production by the end of October 2021.

Balance Sheet Strength

During this quarter, Pine Cliff repaid the full $19.0 million tranche of term debt to AIMCo even though it was not due until July 31, 2022. Our remaining $42 Million of debt is not due until December 31, 2024, but we are permitted to prepay any or all of this debt at any time. We fully expect that we will exit 2021 with a debt to 12 month historical cash flow ratio of less than 1:1. In my opinion, our balance sheet has not been this strong in over six years.

Update on Drilling Program

Two Pekisko horizontal wells were drilled in Q3, 2021 and came on production in late September. We also participated with our Edson partner in two Carrot Creek Ellerslie wells that were drilled (0.40 net to PNE) which came on production in October and one Pine Creek Notikewan well (0.2 net to PNE) which we expect to be on production by the end of the year. We are happy with all the initial results from all of these wells. We are spudding a Mannville gas well (0.9 net to PNE) this week followed up by two North Twining Unit Pekisko wells (1.4 net to PNE). We now expect our 2021 annual production volumes to average at the high end of the guidance range of 18,000 to 18,500 Boe per day.

Outlook

We have seen incredible volatility in global gas prices in 2021. Europe and Asia both had record natural gas highs in Q3 and we are currently experiencing the highest November prices for natural gas in North America than we have seen in eight years. This is due to many factors, including increased power demand throughout the world and decreased energy supply from both natural gas and alternative energy sources. The "scorecard" in the ongoing battle between natural gas supply and demand is seen in global storage levels. Unlike last year where we entered the winter withdrawal season with essentially full storage in Western Canada, the United States and Europe, storage in all three of those markets are currently below their five year averages. As we enter the winter months, there is an increased focus on how low these storage levels could become by next spring, depending on the severity of winter in the various regions. The average AECO natural gas price today was $5.30 per Mcf, the AECO strip forward price for the 2021/2022 winter season is $5.64 per Mcf and the AECO strip forward price for the 2022 calendar year is $4.31 per Mcf.

Capital Allocation

As I mentioned last quarter, Pine Cliff has now reentered the phase of capital allocation. As we indicated in our updated presentation on our website at www.pinecliffenergy.com, if today's commodity strip forward price holds for 2022, and based on the assumptions we indicate on the 2022 Adjusted Funds Flow Projections slide, our adjusted funds flow number would exceed $75 Million. That would result in the highest annual funds flow year in Pine Cliff's history. Actual commodity prices rarely equal forward projected prices, one way or the other, but prices like those have us considering what we would do with that cash flow if those prices do come to fruition. The five primary capital allocation options to a natural gas producer such as Pine Cliff are debt repayment drilling, asset purchases, share buybacks and dividends.

We have dramatically lowered our debt exposure in Q3 and our net debt will continue to drop this winter. At the projected 2022 funds flow based on the forward strip commodity prices, it is possible we could be debt free in 2022 if we choose to.

Our Q4 drilling program is underway. We will evaluate the results of this program to determine the level of our 2022 CAPEX budget.

TSX: PNE

WWWPine.PINECLIFFENERGYCliff was built.COMwith nine acquisitions and we have never stopped looking at additional assets that could strengthen the sustainability of our business model. We continue to look at possible asset purchases today, although our focus is narrower than when we were growing from 100 BOE Day. We are now only seeking assets that will fit, and accelerate, our intended return of capital model. We do not believe Pine Cliff needs to grow anymore to achieve a critical size to begin to return capital to shareholders. The test we have always used when looking at acquisitions is whether management personally would invest in the acquisition if it was their own money. I think this test has served us well.

Share buybacks are a popular method to return capital in free cash flow business models. Pine Cliff is a unique public company. Insiders and a small group of shareholders control or have discretion over a large proportion of our stock. Stock liquidity is an important factor considered by new and larger investors, not only for buying their initial position, but also to give them comfort that they can exit should conditions change. Share buybacks in our circumstance could decrease this perceived liquidity, and therefore we do not think instituting a share buyback would be an optimal use of capital for Pine Cliff shareholders at this time.

The final return of capital alternative is instituting a dividend. Building a dividend model is not easy to do when it is based on a volatile commodity, but we believe we have focused on the right assets to allow us to succeed. Pine Cliff currently has the lowest production decline rate of any public oil and gas company in Canada. This low decline means that we do not have to spend as much each year to replace production. The percentage of our funds flow that is "free funds flow" is one of the highest in the industry. It is anticipated that circumstances in 2022 will permit Pine Cliff to take the steps necessary to implement a sustainable dividend model. I have looked forward to writing that last sentence to you for many years.

I want to personally thank all of our shareholders for their support and willingness to invest your hard earned money in our company. I would like to give a special thanks to our long term shareholders who have blessed us with their loyalty and confidence to stay with us from the early days of Pine Cliff. I am thrilled to be able to share our success with all of you.

Yours truly,

Phil Hodge

President and Chief Executive Officer

November 4, 2021

Please refer to the attached Management's Discussion and Analysis for Reader Advisories regarding forward looking information, non-GAAP measures, oil and gas measurements, definitions and is subject to the same cautionary statements as set out therein.

MANAGEMENT DISCUSSION AND ANALYSIS Q3 - 2021

INTRODUCTION

This Management's Discussion and Analysis ("MD&A") is a review of the operations and current financial position of Pine Cliff Energy Ltd. ("Pine Cliff" or the "Company") for the period ended September 30, 2021. This MD&A is dated and based on information available as at November 4, 2021 and should be read in conjunction with the unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2021 ("Financial Statements"), the audited annual consolidated financial statements for the year ended December 31, 2020 ("Annual Financial Statements") and the annual management's discussion and analysis for the year ended December 31, 2020 ("Annual MD&A"). The Financial Statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" using accounting principles consistent with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board using Generally Accepted Accounting Principles ("GAAP"). Additional information relating to the Company, including the Company's Annual Information Form, may be found on www.sedar.com and by visiting Pine Cliff's website at www.pinecliffenergy.com.

Pine Cliff's head office is based in Calgary, Alberta, Canada. Common shares of the Company ("Common Shares") are listed for trading on the Toronto Stock Exchange ("TSX") under the symbol "PNE".

READER ADVISORIES

This MD&A contains financial measures that are not defined under IFRS and forward-looking statements. Please refer to the sections titled "NON-GAAPMEASURES" and "FORWARD LOOKING INFORMATION".

Other Measurements

All amounts herein are presented in Canadian dollars unless otherwise specified. All references to $CAD or $ are to Canadian dollars and monetary references to $US are to United States dollars.

Natural gas liquids ("NGL") and oil volumes are recorded in barrels of oil ("Bbl") and are converted to a thousand cubic feet equivalent ("Mcfe") using a ratio of one (1) Bbl to six (6) thousand cubic feet. Natural gas volumes recorded in thousand cubic feet ("Mcf") are converted to barrels of oil equivalent ("Boe") using the ratio of six (6) thousand cubic feet to one (1) Bbl. This conversion ratio is based on energy equivalence primarily at the burner tip and does not represent a value equivalency at the wellhead. The terms Boe or Mcfe may be misleading, particularly if used in isolation.

2021 HIGHLIGHTS

Highlights from the three and nine months ended September 30, 2021 are as follows:

• repaid in full $19.0 million of Term Debt due July 31, 2022;
• generated $13.3 million of adjusted funds flow ($0.04 per basic share) for the three months ended September 30, 2021, and $32.8 million ($0.10 per basic share) for the nine months ended September 30, 2021;
• net debt decreased by 34% or $21.6 million from $63.0 million on December 31, 2020, to $41.4 million as at September 30,
  2021 and is Pine Cliff's lowest net debt level since the third quarter of 2015;
• generated net earnings of $2.3 million ($0.01 per basic and fully diluted share) for the three months ended September 30, 2021, and $0.1 million ($0.00 per basic and fully diluted share) for the nine months then ended;
• drilled 2 gross (2.0 net) Pekisko oil wells and 2 gross (0.4 net) Ellerslie natural gas wells that were all on production by the end of October 2021; and
• increased the 2021 capital budget by $8.5 million to accommodate the drilling of 1 gross (0.9 net) Mannville natural gas well in Central Alberta, 1 gross (0.2 net) Ellerslie natural gas well at Edson, along with the drilling of 2 gross (1.4 net) and the reactivation of 4 gross (2.8 net) Pekisko oil wells, during the fourth quarter of 2021.

3	PINE CLIFF ENERGY LTD.

	MANAGEMENT DISCUSSION AND ANALYSIS	Q3 - 2021
	Three months ended September 30,	Nine months ended September 30,
	2021	2020	2021	2020
($000s, unless otherwise indicated)
FINANCIAL1
Commodity sales (before royalty expense)	39,890	24,744	109,572	71,878
Cash flow from operating activities	12,411	3,945	29,053	6,121
Adjusted funds flow2	13,333	809	32,827	733
Per share - Basic ($/share)2	0.04	0.00	0.10	0.00
Per share - Diluted ($/share)2	0.04	0.00	0.09	0.00
Earnings/(Loss)	2,323	(12,110)	899	(46,285)
Per share - Basic ($/share)	0.01	(0.04)	0.00	(0.14)
Per share - Diluted ($/share)	0.01	(0.04)	0.00	(0.14)
Capital expenditures	8,903	2,213	10,827	6,210
Net debt2	41,413	69,312	41,413	69,312
Weighted-average common shares outstanding
('000s)
Basic	337,921	330,230	336,760	328,605
Diluted	346,732	330,230	345,571	328,605
OPERATIONS
Production
Natural gas (Mcf/d)	100,462	103,304	99,757	104,105
Natural gas liquids (Bbl/d)	1,178	1,171	1,247	1,159
Crude oil (Bbl/d)	394	367	366	453
Total (Boe/d)	18,316	18,755	18,239	18,963
Realized commodity sales prices
Natural gas ($/Mcf)	3.43	2.18	3.20	2.13
Natural gas liquids ($/Boe)	50.53	25.07	45.67	20.99
Crude oil ($/Bbl)	74.94	40.54	68.52	35.51
Combined ($/Boe)	23.67	14.34	22.01	13.83
Netback ($/Boe)
Commodity sales	23.67	14.34	22.01	13.83
Processing and gathering	0.57	0.65	0.58	0.55
Royalty expense	(2.43)	(0.67)	(2.24)	(0.75)
Transportation	(1.36)	(1.28)	(1.36)	(1.34)
Operating	(11.23)	(11.14)	(10.78)	(10.71)
Operating netback ($/Boe)2	9.22	1.90	8.21	1.58
General and administrative	(0.60)	(0.68)	(0.86)	(0.70)
Interest and bank charges	(0.70)	(0.75)	(0.76)	(0.74)
Corporate netback ($/Boe)2	7.92	0.47	6.59	0.14
Operating netback ($ per Mcfe)2	1.54	0.32	1.37	0.26
Corporate netback ($ per Mcfe)2	1.32	0.08	1.10	0.02

1 Includes results from acquisitions and excludes results for disposition from the closing date

2This is a non-GAAP measure, see "NON-GAAP MEASURES" for additional information

4	PINE CLIFF ENERGY LTD.

MANAGEMENT DISCUSSION AND ANALYSIS Q3 - 2021

SENSITIVITIES

Pine Cliff's results are sensitive to changes in the business environment in which it operates. The following chart shows the Company's sensitivity to key commodity price variables. The sensitivity calculations are performed independently showing the effect of the change of one variable; all other variables are held constant.

Business environment sensitivities		Impact on annual adjusted funds flow1
	Change2	$000s	$ per share4
Realized natural gas price3	$0.10	3,300	0.01
Realized NGL price3	$1.00	387	0.00
Realized crude oil price3	$1.00	129	0.00

1. This analysis does not adjust for changes in working capital and uses corporate royalty rates from the nine months ended September 30, 2021.
2. Sensitivity pricing changes are based on a change in realized prices for natural gas of $0.10/Mcf and $1.00 Bbl for both crude oil and NGLs, as defined herein.
3. Pine Cliff has prepared this analysis using its Q3 2021 production volumes annualized for twelve months.
4. Based on the Q3 2021 basic weighted average shares outstanding.

BENCHMARK PRICES
		Three months ended September 30,	Nine months ended September 30,
		2021	2020	% Change	2021	2020	% Change
	Natural gas
	NYMEX (US$/Mmbtu)1	4.01	1.98	103	3.18	1.88	69
	AECO Daily 5A (C$/Mcf)2	3.58	2.23	61	3.27	2.08	57
	Crude oil
	WTI (US$/Bbl)	70.56	40.93	72	64.82	38.32	69
	Edmonton Light (C$/Bbl)	83.78	49.83	68	75.88	43.68	74
	Foreign exchange
	US$/C$	1.260	1.332	(5)	1.252	1.354	(8)

1. Mmbtu is the abbreviation for millions of British thermal units. One Mcf of natural gas is approximately 1.02 Mmbtu.
2. AECO prices are quoted in $/Gigajoule. Price has been converted from $/GJ to $/Mcf by multiplying by 1.05.

Quarterly Benchmark Prices

Pine Cliff's financial results are influenced by fluctuations in commodity prices, dollar exchange rates and price differentials. The following table shows select market benchmark average prices and foreign exchange rates in the last eight quarters to assist in understanding the volatility in prices and foreign exchange rates that have impacted Pine Cliff's business.

	Q3-2021	Q2-2021	Q1-2021	Q4-2020	Q3-2020	Q2-2020	Q1-2020	Q4-2019
Natural gas
NYMEX (US$/Mmbtu)1	4.01	2.83	2.69	2.66	1.98	1.72	1.95	2.50
AECO Daily 5A (C$/Mcf) 2	3.58	3.08	3.14	2.63	2.23	1.98	2.02	2.46
Pine Cliff realized natural
gas price (C$/Mcf)	3.43	3.03	3.14	2.73	2.18	2.03	2.19	2.52
Crude oil
WTI (US$/Bbl)	70.56	66.07	57.84	42.66	40.93	27.85	46.17	56.96
Edmonton Light (C$/Bbl)	83.78	77.28	66.58	50.24	49.83	29.77	51.44	66.57
Pine Cliff realized NGL
price (C$/Bbl)	50.53	42.83	43.87	28.89	25.07	14.56	22.69	35.36
Pine Cliff realized oil price
(C$/Bbl)	74.94	69.90	60.09	43.46	40.54	22.10	43.47	59.91
Foreign exchange
US$/C$	1.260	1.231	1.266	1.303	1.332	1.386	1.345	1.320

1. Mmbtu is the abbreviation for millions of British thermal units. One Mcf of natural gas is approximately 1.02 Mmbtu.
2. AECO prices are quoted in $/Gigajoule. Price has been converted from $/GJ to $/Mcf by multiplying by 1.05.

5	PINE CLIFF ENERGY LTD.