Rubellite Energy : 05/11/2022 – First Quarter Results

NEWS RELEASE

RUBELLITE ENERGY INC. REPORTS FIRST QUARTER 2022 FINANCIAL AND OPERATING RESULTS AND PROVIDES OPERATIONS AND LAND ACQUISITION

UPDATE

Calgary, Alberta - May 11, 2022 (TSX:RBY) - Rubellite Energy Inc. ("Rubellite", or the "Company"), a pure play Clearwater oil exploration and development company, is pleased to report first quarter 2022 financial and operating results and provide an operations and land acquisition update.

Select financial and operational information is outlined below and should be read in conjunction with Rubellite's unaudited condensed interim financial statements and related Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2022, which are available through the Company's website atwww.rubelliteenergy.com and SEDAR atwww.sedar.com.

This news release contains certain specified financial measures that are not recognized by GAAP and used by management to evaluate the performance of the Company and its business. Since certain specified financial measures may not have a standardized meaning, securities regulations require that specified financial measures are clearly defined, qualified and, where required, reconciled with their nearest GAAP measure. See "Non GAAP and Other Financial Measures" in this news release and in the MD&A for further information on the definition, calculation and reconciliation of these measures. This release also contains forward-looking information. See "Forward Looking Information". Readers are also referred to the other information under the "Advisories" section in this news release for additional information.

FIRST QUARTER 2022 HIGHLIGHTS

• • Rubellite has steadily executed its business plan, running a two-rig drilling program since late November. As of March 31, 2022 there were twenty eight (26.0 net) wells contributing to sales production, with another four (3.5 net) wells rig released and recovering oil-based drilling mud ("OBM"), as compared to sixteen (15.0 net) wells on production at the end of the fourth quarter of 2021 with an additional five (5.0 net) wells recovering OBM. Recoveries of OBM are not recorded as sales production as the OBM is recycled for future drilling operations to the extent possible or sold and credited back to drilling capital.

• • The Company averaged 1,525 bbl/d of sales production during the month of March and achieved its 2,000 bbl/d production milestone in late March. Production progressively ramped up through the first quarter of 2022 as new wells fully recovered base-oil load fluid, filled tank inventories and then commenced delivery to sales terminals. Daily average sales production increased 108% from fourth quarter 2021 levels to average 1,251 bbl/d of conventional heavy oil in the first quarter of 2022 (Q4 2021 - 603 bbl/d), at the high end of first quarter guidance of 1,150 to 1,250 bbl/d (100% conventional heavy oil).

• • Capital expenditures(1) totaled $35.5 million in the first quarter of 2022 (Q4 2021 - $17.2 million). Exploration and development spending of $21.8 million was in-line with previous guidance of first quarter 2022 spending of between $20.0 and $22.0 million, and included $3.1 million for equipment, tubulars and OBM inventory procurement for the remainder of the 2022 drilling program. Land purchases during the first quarter of 2022 were $13.7 million (Q4 2021 - $1.5 million) and comprised 65.1 net sections of highly prospective Clearwater undeveloped lands in strategic areas of the Clearwater play.

• • During the quarter, the Company signed a letter of intent to pursue a farm-in and option agreement (the "Peavine Transaction") in the Peavine area, in the vicinity of recent industry Clearwater drilling activity and southwest of Rubellite's existing option acreage at West Dawson in northern Alberta. The Peavine Transaction provides exposure to 61.25 gross (36.75 net) sections of land highly prospective for the Clearwater formation. Subsequent to the end of the quarter, the Company executed the definitive agreement with respect to the Peavine Transaction.

• • Drilling activity for the first quarter of 2022 totaled eleven (9.5 net) multi-lateral horizontal Clearwater wells, including six (6.0 net) wells rig released at Ukalta, two (2.0 net) wells rig released at Figure Lake and three (1.5 net) wells rig released at Marten Hills prior to the end of the first quarter. The two-rig winter drilling program extended into the early part of the second quarter as one (1.0 net) multi-lateral horizontal well at Ukalta was spud on March 24, 2022 and rig released April 5, 2022, followed by the drilling of a vertical water disposal well at Ukalta, and one (0.5 net) multi-lateral horizontal well at Marten Hills was spud on March 20, 2022 and rig released April 8, 2022.

• • Operating netbacks(1) in first quarter of 2022 were $8.0 million, or $71.02/bbl (Q4 2021 - $1.5 million or $45.48/boe), reflecting strong Western Canadian Select ("WCS") benchmark prices and increased production. After realized losses on risk management contracts of $3.3 million or $29.02/boe (Q4 2021 - gain of $0.1 million or $1.83/boe), operating netbacks were $4.7 million or $42.00/boe (Q4 2021 - $2.6 million or $47.31/boe).

• • Adjusted funds flow(1) was $3.8 million in the first quarter of 2022 (Q4 2021 - $1.5 million), up 153% quarter-over-quarter, driven by the growth in sales production. Cash flow from operating activities was $3.2 million (Q4 2021 - $1.1 million).

• • Net loss was $9.3 million in the first quarter of 2022 (Q4 2021 - $1.3 million) as a result of an unrealized loss on risk management commodity contracts of $10.6 million.

• • On March 30, 2022, Rubellite completed its previously announced bought deal and non-brokered private placement financings, raising gross proceeds of $38.7 million through the issuance of approximately 10.9 million shares priced at $3.55 per share.

• • Adjusted positive working capital(1) at the end of the first quarter of 2022 was $10.9 million, an increase from the end of the fourth quarter of 2021 of $5.4 million as a result of the equity financings and adjusted funds flow, offset by capital spending on drilling activity and land purchases. The borrowing limit on the Company's reserves-based revolving credit facility was increased to $25.0 million during the quarter and the initial term was extended by 12 months to May 31, 2023.

(1)

Non-GAAP measure, Non-GAAP ratio or supplementary financial measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section entitled "Non-GAAP and Other Financial Measures" contained within this news release.

OPERATIONS UPDATE

At Ukalta, six (6.0 net) wells were rig released in the first quarter and drilling operations continued through the first two weeks of April as the final Clearwater multi-lateral horizontal well on the 13-35 pad was rig released and a vertical water disposal well was drilled to reduce future water handling costs and enhance field netbacks. Drilling in the Ukalta area is now shut down for spring break-up. During the first quarter, three previously drilled Ukalta development wells completed their OBM recovery in mid-to-late February and recorded an average IP30 rate of 137 bbl/d which is on the Ukalta area type curve(1) of approximately 135 bbl/d. The first three wells of the first quarter 2022 drilling program (the "9-9 pad") completed their OBM recovery phase and IP30 period during the quarter. These wells have been experiencing higher water cuts than directly offsetting wells, are still cleaning up and are producing below the Ukalta area type curve. The last pad of the first quarter 2022 drilling program (the "13-35" pad) had two (2.0 net) wells that rig released in March and one (1.0 net) that was rig released in April. Two of the wells have fully recovered their respective OBM and are in their initial 30-day production periods. The final well has been experiencing higher gas rates during start-up operations which has delayed full recovery of OBM. Production is beginning to stabilize on this pad. Since its inception, Rubellite has drilled 9 wells in the primary Clearwater development zone at Ukalta that have completed their initial 30-day production periods, with an average IP30 rate of 113 bbl/d. Excluding the three high water cut wells on the 9-9 pad, the average IP30 rate is 145 bbl/d. When field conditions allow, drilling operations at Ukalta will re-commence at a new six-well pad, targeting to extend the primary Clearwater zone development to the north end of Rubellite's Ukalta area land base.

At Marten Hills, the final eight-leg multi-lateral well of the four (2.0 net) well winter drilling program was rig released in early April. All four wells are located on the same new surface pad and have all recovered their respective OBM and are now producing volumes to sales. Two of the four wells have reached the end of their initial 30-day production periods, recording average IP30 rates of 182 bbl/d as compared to the Marten Hills type curve(1) IP30 of approximately 120 bbl/d. The remaining two wells of the Marten Hills winter drilling program are also performing slightly stronger than the Marten Hills type curve IP30 and are expected to reach the end of their initial 30-day production periods during May.

At Figure Lake, during the first quarter, the Company drilled and rig released the last two wells of the four well winter drilling program, which followed up last summer's exploration success at the South Figure Lake pad. The first two southpad development wells in the winter program completed their OBM recovery in late January while the last two wells on the same pad completed their OBM recovery in February. On average, the 4 south pad follow up wells recorded average IP30 rates of 133 bbl/d which compares favorably with the Figure Lake type curve(1) of approximately 115 bbl/d. Drilling operations are expected to recommence at Figure Lake later in the second quarter as surface access conditions permit, with a vertical water disposal well and 12 new horizontal multi-lateral wells planned for the remainder of 2022. In addition to enhancing field netbacks during the second half of 2022, the new on-site water disposal well at

Figure Lake is also designed to provide additional reservoir quality information on the prospective Clearwater zone.

Drilling costs escalated 5 to 10% during the quarter due to increased OBM costs which are directly related to the price of base oil. In addition, the flow through of higher fuel surcharges and personnel costs and supply chain issues has further impacted the cost of tubulars and other goods and services. The Company has been successful mitigating the impact of inflationary pressures by improving average drilling performance and employing bulk-purchasing and other capital efficiency strategies.

(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 atwww.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 ACQUISITION UPDATE

Subsequent to the end of the first quarter, Rubellite executed a definitive agreement for the previously announced Peavine Transaction located in the vicinity of recent industry Clearwater drilling activity and southwest of Rubellite's existing option acreage at West Dawson in northern Alberta. The Peavine Transaction provides exposure to 61.25 gross (36.75 net) sections of land highly prospective for the Clearwater formation. Rubellite plans to access the Peavine lands late in 2022 when frozen ground conditions permit to drill a minimum of two exploratory wells prior to April 1, 2023, targeting to establish production and evaluate the future development potential of these Clearwater lands.

Since the end of the first quarter, Rubellite has spent an additional $2.9 million to acquire 52.7 net sections of land through Crown land purchase and other transactions. Including lands acquired in the second quarter of 2022, the Company has grown its land position for exposure to the Clearwater play to over 270 net sections, up 160% from the 104 net sections held by Rubellite at its inception in July of 2021. A significant portion of the newly acquired lands are complementary to existing operating areas in Ukalta and Figure Lake on the southern Clearwater trend, while the remainder of the additional new acreage supplements Rubellite's exploratory acreage in the Northern Clearwater play fairway.

2022 OUTLOOK AND GUIDANCE

Rubellite forecasts capital spending(5) of $26.0 to $28.0 million for the remainder of 2022 to drill, complete equip and tie-in up to 22 (20.1 net) multi-lateral horizontal wells in its three core operating areas at Ukalta, Figure Lake and Marten Hills, as well as two (2.0 net) vertical water disposal wells to mitigate water handling costs. The Company is finalizing its licensing, access and logistical plans to drill four to six (3.0 - 4.0 net) exploratory wells on its northern exploration blocks, including lands at West Dawson and Peavine, to complete earning requirements and delineate area type curves prior to April 1, 2023. In addition, Rubellite plans to continue to pursue additional investments to further grow its land base and its inventory of prospective Clearwater drilling locations.

Forecast drilling activities are expected to be fully funded from adjusted funds flow(5) and the Company's credit facility. The Figure Lake drilling program will be partially funded by the Figure Lake GORR, which contributed approximately $0.4 million during the first quarter of 2022 and is forecast to contribute $2.0 million in 2022.

The table below summarizes Rubellite's exploration and development capital spending(5) and anticipated core area drilling activities for 2022, excluding activity on its northern Clearwater trend exploratory land blocks and undeveloped land purchases and acquisitions.

2022 Exploration and Development Forecast Capital Expenditures(1)(5)

Q1 2022(4)	# of wells	Q2 - Q4 2022	# of wells	2022	# of wells
($ millions)	(gross/net)	($ millions)	(gross/net)	($ millions)	(gross/net)
Ukalta(2)	6 / 6.0	7 / 7.0	13 / 13.0
Figure Lake(2)(3)	2 / 2.0	12 / 12.0	14 / 14.0
Marten Hills(2)	3 / 1.5	3 / 1.1	6 / 2.6
Total(4)	$21.8	11 / 9.5	$26 - $28	22 / 20.1	$48 - $50	33 / 29.6

• (1) Excludes activity on exploratory option blocks, undeveloped land purchases and acquisitions, if any.

• (2) Well count reflects wells rig released during the period. One (1.0 net) well at Ukalta and one (0.5 net) well at Marten Hills were spud late in Q1 2022 and rig released in early April. Full year 2022 well counts exclude two (2.0 net) vertical water disposal wells in Q2 and Q3 2022 at Ukalta and Figure Lake respectively.

• (3) Capital expenditures at Figure Lake are reduced for the Figure Lake GORR which contributed $0.4 million in Q1 2022 and is forecast to contribute $2.0 million in 2022.

• (4) Q1 2022 capital expenditures included $3.1 million for equipment, tubulars and OBM inventory procurement for the remainder of 2022 drilling program. Forecast 2022 exploration and development capital expenditures include spending for two vertical water disposal wells.

• (5) Non-GAAP measure, Non-GAAP ratio or supplementary financial measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section entitled "Non-GAAP and Other Financial Measures" contained within this news release.

The drilling program planned after spring break-up at Ukalta, Figure Lake and Marten Hills is expected to continue to drive progressive growth over the remainder of 2022. With spring breakup conditions and new wells being optimized during their initial production phases, sales production volumes will fluctuate during the second quarter. Second quarter production volumes are expected to average between 1,525 and 1,625 bbl/d and will continue to ramp up through the balance of the year. The Company's full year 2022 average sales production levels of between 2,200 and 2,400 bbl/d is unchanged from previous guidance.

2022 Guidance assumptions are unchanged from those released March 9, 2022 and exclude undeveloped land purchases and additional acquisitions as well as activity on exploration blocks in the Northern Clearwater trend which are dependent on timing of surface access.

Financial and Operating Highlights

($ thousands, except as noted)

Three months ended March 31, 2022

Three months ended

December 31, 2021

Financial

Oil revenue Net loss

10,876

3,931

(9,272) (1,265)

Per share - basic(1)(2)

(0.21) (0.03)

Per share - diluted(1)(2)

(0.21) (0.03)

Cash flow from operating activities Adjusted funds flow(1)

3,192 1,115

3,835 1,469

Per share - basic(1)(2)

0.09 0.03

Per share - diluted(1)(2)

0.09 0.03

Net debt

(10,858)

(5,375)

Capital expenditures(1)

35,581 17,180

Exploration and development

21,774 15,660

Land and acquisitions

13,737 1,520

Wells Drilled(3) - gross (net)

11 / 9.5

8 / 8.0

Common shares outstanding(4) (thousands)

Weighted average - basic

43,930 41,834

Weighted average - diluted

43,930 42,360

End of period

54,723 43,809

Operating

Daily average oil sales production(5) (bbl/d)

1,251

603

Average prices

West Texas Intermediate ("WTI") ($US/bbl)

94.29 77.13

Western Canadian Select ("WCS") ($CAD/bbl)

101.01 78.65

Average Realized oil price(2) ($/bbl)

96.61 70.94

Average Realized oil price(2) - after risk management contracts ($/bbl)

67.57 72.77

• (1) Non-GAAP measure. Refer to the section entitled "Non-GAAP and Other Financial Measures" contained within this news release and in the MD&A for an explanation of composition.

• (2) Non-GAAP ratio. Refer to the section entitled "Non-GAAP and Other Financial Measures" contained within this news release and in the MD&A for an explanation of composition.

• (3) Well count reflects wells rig released during the period.

• (4) Per share amounts are calculated using the weighted average number of basic or diluted common shares outstanding.

• (5) Conventional heavy crude oil sales production excludes tank inventory volumes.

ADDITIONAL INFORMATION

About Rubellite

Rubellite is a Canadian energy company engaged in the exploration, development and production of heavy crude oil from the Clearwater formation in Eastern Alberta, utilizing multi-lateral drilling technology. Rubellite has a pure play Clearwater asset base and is pursuing a robust organic growth plan focused on superior corporate returns and funds flow generation while maintaining a conservative capital structure and prioritizing environmental, social and governance ("ESG") excellence. Additional information on Rubellite can be accessed at the Company's website atwww.rubelliteenergy.com and on SEDAR atwww.sedar.com.

The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.

For additional information please contact:

Rubellite Energy Inc.

Suite 3200, 605 - 5 Avenue SW Calgary, Alberta, Canada T2P 3H5

Telephone: [phone] Fax: [phone] Email:[e-mail]

Susan L. Riddell Rose Ryan A. ShayPresident and Chief Executive Officer

Vice President Finance and Chief Financial Officer