Rubellite Energy : 2021 Annual Information Form

ANNUAL INFORMATION FORM

For the Year Ended December 31, 2021

March 9, 2022

		TABLE OF CONTENTS
ABOUT RUBELLITE	............................................................................................................................................................................	1
PRESENTATION OF INFORMATION ....................................................................................................................................................	1
CORPORATE STRUCTURE..................................................................................................................................................................	2
GENERAL DEVELOPMENT OF THE BUSINESS......................................................................................................................................	2
DESCRIPTION OF THE BUSINESS ......................................................................................................................................................	2
STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION .......................................................................................	6
OTHER OIL AND GAS INFORMATION ...............................................................................................................................................	12
COMMODITY PRICE RISK MANAGEMENT..........................................................................................................................................	14
DIVIDENDS ....................................................................................................................................................................................		14
DESCRIPTION OF CAPITAL STRUCTURE...........................................................................................................................................	15
MARKET FOR SECURITIES...............................................................................................................................................................	15
ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER ...............................................	16
DIRECTORS AND OFFICERS ............................................................................................................................................................	17
AUDIT COMMITTEE INFORMATION .................................................................................................................................................	18
LEGAL PROCEEDINGS AND REGULATORY ACTIONS..........................................................................................................................	19
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ........................................................................................	19
TRANSFER AGENT AND REGISTRAR.................................................................................................................................................	19
MATERIAL CONTRACTS...................................................................................................................................................................	19
INTERESTS OF EXPERTS .................................................................................................................................................................	20
OTHER BUSINESS INFORMATION ....................................................................................................................................................	21
INDUSTRY CONDITIONS .................................................................................................................................................................	22
RISK FACTORS ...............................................................................................................................................................................		31
ABBREVIATIONS.............................................................................................................................................................................		47
VOLUME CONVERSIONS..................................................................................................................................................................	47
FORWARD-LOOKING INFORMATION AND STATEMENTS ...................................................................................................................	48
ADDITIONAL INFORMATION ...........................................................................................................................................................	49
APPENDICES
APPENDIX A	-	REPORT OF MANAGEMENT AND DIRECTORS ON OIL AND GAS DISCLOSURE IN ACCORDANCE WITH FORM
		51-101F3
APPENDIX B	-	REPORT ON RESERVES DATA BY MCDANIEL & ASSOCIATES CONSULTANTS LTD. IN ACCORDANCE WITH
		FORM 51-101F2
APPENDIX C	-	AUDIT COMMITTEE CHARTER

ABOUT RUBELLITE

Rubellite Energy Inc. is a Canadian energy company engaged in the exploration, development and production of conventional heavy crude oil from the Clearwater formation in Eastern Alberta, utilizing multi-lateral horizontal drilling technology. Rubellite has a pure play Clearwater asset base and is pursuing a robust organic growth plan focused on superior corporate returns and free adjusted 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 at www.rubelliteenergy.comand on SEDAR at www.sedar.com.

PRESENTATION OF INFORMATION

Throughout this Annual Information Form, the terms "Rubellite", the "Corporation", the "Company", "we" or "our" refer to Rubellite Energy Inc.

Certain terms used but not defined herein are defined in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), CSA Notice 51-324 - Glossary to NI 51-101Standards of Disclosure for Oil and Gas Activities ("CSA 51-324") and in the Canadian Oil and Gas Evaluation Handbook Volume I (the "COGE Handbook"). Unless otherwise specified, information in this Annual Information Form is as at the end of the Corporation's most recently completed financial year, being December 31, 2021.

All dollar amounts herein are in Canadian dollars, unless otherwise stated. Words importing the singular also include the plural, and vice versa, and words importing one gender include all genders.

Certain portions of Rubellite's audited consolidated financial statements ("Financial Statements") and Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2021 are incorporated by reference into this Annual Information Form as indicated herein. The Financial Statements and MD&A are available on SEDAR at www.sedar.com.

All references in this Annual Information Form to management are to the persons who are identified in this Annual Information Form as the executive officers of the Company. See "Directors and Officers". All statements in this Annual Information Form made by or on behalf of management are made in such persons' capacities as executive officers of the Company and not in their personal capacities.

This Annual Information Form contains information relating to Rubellite's business as well as historical and projected future performance, Rubellite expectations, forecasts and guidance and other market data. When considering this data, investors should bear in mind that historical results and market data may not be indicative of the future results that investors should expect from Rubellite.

The information found on, or accessible through, Rubellite's website does not form part of this Annual Information Form.

A reference to an agreement means the agreement, as it may be amended, supplemented or restated from time to time.

Figures, columns and rows presented in tables provided in this Annual Information Form may not add due to rounding.

This Annual Information Form includes a summary description of certain material agreements of the Company. See "Material Contracts". The summary description discloses attributes that the Company considers material to an investor in the Common Shares (as defined herein) but is not complete and is qualified in its entirety by reference to the terms of the material agreements, which have been filed with the applicable Canadian securities regulatory authorities and are available on SEDAR. Investors are encouraged to read the full text of such material agreements.

Certain market, independent third-party and industry data contained in this Annual Information Form is based upon information from government or other independent industry publications and reports or based on estimates derived from such publications and reports. Government and industry publications and reports generally indicate that they have obtained their information from sources believed to be reliable, but the Company has not conducted its own independent verification of such information. This Annual Information Form also includes certain data, including production, well count estimates, capital expenditures and other operational results, derived from public filings made by independent third parties. While the Company believes this data to be reliable, market and industry data is subject to variations and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. The Company has not independently verified any of the data from independent third-party sources referred to in this Annual Information Form or ascertained the underlying assumptions relied upon by such sources.

This Annual Information Form contains a number of references to industry specific terminology that is commonly used in the oil and gas business and is also used by the Company in this Annual Information Form.

Certain financial terms and measures contained in, or referred to in the documents incorporated by reference into, this Annual Information Form are "specified financial measures" (as such term is defined in National Instrument 52-112- Non-GAAPand Other Financial Measures Disclosure ("NI 52-112")). The specified financial measures contained in, or referred to in the documents incorporated by reference into, this Annual Information Form are comprised of "non-GAAP financial measures", "non-GAAP ratios", "capital management measures" and "supplementary financial measures" (as such terms are defined in NI 52-112). These measures are defined, qualified, and where required, reconciled with the

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nearest GAAP measure in the MD&A under the heading Non-GAAP and Other Financial Measures in the MD&A, which section is incorporated by reference herein.

See also "Abbreviations", "Volume Conversions" and "Forward-Looking Information and Statements".

CORPORATE STRUCTURE

Rubellite was incorporated under the Business Corporations Act (Alberta) (the "ABCA") on July 12, 2021. Rubellite does not have any subsidiaries. Rubellite's head and registered office is located at Suite 3200, 605 - 5th Avenue S.W., Calgary, Alberta, T2P 3H5.

GENERAL DEVELOPMENT OF THE BUSINESS

On July 12, 2021, Rubellite was incorporated as a wholly-owned subsidiary of Perpetual Energy Inc. ("Perpetual").

On July 15, 2021, Rubellite acquired all of Perpetual's Clearwater lands, wells, roads and related facilities in northeast Alberta (the "Clearwater Assets") for aggregate consideration of $65.5 million (the "Acquisition"). The consideration consisted of promissory notes totaling $59.4 million, which were paid in cash on October 5, 2021, the issuance of 680,485 Rubellite common shares ("Common Shares" or "Rubellite Shares") valued at $1.4 million, the return of 8.2 million Perpetual common shares exchanged in the Arrangement and valued at $2.8 million, and issuance to Perpetual of warrants to purchase 4.0 million Rubellite Shares at a price of $3.00 per share which are exercisable for a period of five years ("Rubellite Share Purchase Warrants").

On July 15, 2021, Rubellite sold a 3.0% to 5.0% gross overriding royalty on certain lands at Figure Lake to Freehold Royalties Ltd. for gross proceeds of up to $7.9 million.

On September 3, 2021, Rubellite completed a plan of arrangement under the ABCA involving Perpetual, the shareholders of Perpetual and Rubellite (the "Arrangement"). Pursuant to the Arrangement, among other things, each shareholder of Perpetual received Common Shares and warrants to purchase Common Shares at an exercise price of $2.00 per Common Share ("Arrangement Warrants"). Upon completion of the Arrangement the Common Shares and Arrangement Warrants were listed for trading on the Toronto Stock Exchange (the "TSX").

On October 5, 2021, Rubellite issued $83.5 million in Common Shares, all priced at $2.00 per Common Share, through a combination of: (i) $33.5 million received upon the exercise of the Arrangement Warrants; (ii) the issuance of Common Shares in exchange for subscription receipts previously issued under a $30 million brokered private placement to a number of arm's length investors, which funds were held in escrow since closing on July 13, 2021; and (iii) a $20 million non-brokered private placement of Common Shares.

DESCRIPTION OF THE BUSINESS

General

Rubellite is a Canadian energy company engaged in the exploration, development and production of conventional heavy crude oil from the Clearwater formation in Eastern Alberta, utilizing multi-lateral horizontal drilling technology. Rubellite has a pure play Clearwater asset base and is pursuing a robust organic growth plan focused on superior corporate returns and free adjusted funds flow generation while maintaining a conservative capital structure and prioritizing ESG excellence.

Employees

At December 31, 2021, Rubellite had 0 full time employees and 0 hourly consultants located in its head office and 0 full time employees and 4 hourly consultants in various field locations. In connection with the Acquisition, on July 15, 2021, Rubellite and Perpetual entered into a management and operating services agreement (the "MSA") pursuant to which Perpetual is providing management, operating and administrative services (the "Services") to Rubellite in respect of its assets, including the Clearwater Assets. The Services include, but are not limited to, regulatory reporting and submissions, administering land records, geological and geophysical support, executing drilling operations, marketing (arranging transport and hedging), accounting and tax filing, office administration, investor relations and business development support.

Business Plan

Rubellite Energy Inc. is a Canadian energy company engaged in the exploration, development and production of conventional heavy crude oil from the Clearwater formation in Eastern Alberta, utilizing multi-lateral horizontal drilling technology. The Company actively manages its portfolio of assets to capture and capitalize on opportunities, manage commodity price risk, and crystalize value as appropriate.

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The Company's strategic priorities for 2022 are as follows:

1. Deliver Robust Organic Production Growth Profile to Unlock Free Funds Flow;
2. Drive Top Quartile Capital Efficiencies;
3. Materially Grow Reserve-Based NAV and De-risk Locations;
4. Accretively Grow Clearwater Land Base and Prospect Inventory;
5. Maintain Pristine Balance Sheet and Manage Risk; and
6. Record Positive Performance Metrics to Validate ESG Excellence.

Clearwater Assets

Rubellite owns the Clearwater Assets, which are located in the Clearwater play. A description of the properties comprising the Clearwater Assets is below. Based on the McDaniel Report (as defined herein), the Clearwater Assets have booked proved and probable heavy crude oil reserves of 6.0 MMbbls with 40 (36.0 net) booked undeveloped drilling locations. Incorporating the results from its drilling programs, competitor activities and land acquisition activities, Rubellite has refined the characterization of its prospect inventory and updated the scope of opportunities captured on its growing land base. Rubellite has identified 550 drilling locations, primarily eight-legmulti-lateral wells, up from 370 locations, primarily six-legmulti-lateral wells, identified at its inception. Based on Rubellite and competitor drilling results to date, close to 240 locations are internally categorized as either low risk, development wells or step out locations within the mapped outline of existing proven zones where economic production rates have been verified. The remaining 310 prospect inventory locations are exploratory, representing the potential of mappable prospective Clearwater zones on Rubellite lands where economic production has not yet been established.

The following property descriptions are as at December 31, 2021 unless otherwise noted and reserves quoted are as reported in the McDaniel Report.

Ukalta

The Ukalta area is currently Rubellite's main producing area and at year end 2021 was comprised of 12 (12.0 net) producing wells and 15,463 acres (92% undeveloped) of Clearwater rights. The 12 wells are a mix of 6-leg and 8-leg open hole multi-lateral horizontal wells, six (6.0 net) of which were drilled and placed on production in the fourth quarter of 2021. Nine of the 12 producing wells contributed to sales production in the fourth quarter of 2021, while three of the new drills were still recovering base-oil load fluid from the drilling operation at year end. Ukalta wells produced at approximately 339 bbl/d of heavy crude oil through the fourth quarter of 2021, representing 57% of Rubellite's production. The McDaniel Report identifies 11 (11.0 net) Proven Undeveloped and 15 (15.0 net) Proven plus Probable Undeveloped locations in this area. Based on Rubellite's land holdings at the end of January 2022, Rubellite has further identified additional scope to the play of up to 71 unbooked drilling locations within the same lower Clearwater sand target currently producing heavy crude oil in 11 of the existing wells. Two additional unproven zones have been tested and are currently under evaluation.

Since year end 2021, Rubellite has added 9,600 acres of undeveloped land to augment the drilling inventory in this core producing area.

Figure Lake

The Figure Lake area formed Rubellite's main exploration area at inception. At year end 2021 the corporation had acquired 54,688 net acres (96% undeveloped). At the Acquisition there was 1 (1.0 net) producing well making 25 bbl/d. The well was drilled in 2019 by a previous operator and is a 3 leg open hole multi-lateral well and is interpreted to have been drilled with as much as 50% of the well out of the zone. As such, the well proved the reservoir is capable of production and may be indicative of the potential productivity for the area. In connection with the Acquisition, Rubellite entered into an agreement with Freehold Royalties Partnership whereby it sold a 3% to 5% gross overriding royalty on certain Clearwater Assets at Figure Lake for gross proceeds of up to $7.9 million to be paid upon the terms of a drilling commitment agreement. Approximately $5.4 million of Rubellite's costs for the drilling of four commitment wells and approximately $0.2 million per well for twelve additional wells on the Figure Lake royalty lands will be funded by the Figure Lake GORR Financing. The four Figure Lake commitment wells were drilled in the third quarter of 2021 prior to the effective date of the Arrangement.

The four (4.0 net) commitment wells consisted of two (2.0 net) wells drilled from the same surface location as the original lead well which came on production in Q4 2021 and two (2.0 net) exploratory tests from a pad approximately 12km to the north of the south pad. Success on the main pad has since been followed up with two (2.0 net) additional wells, rig released and brought online in late December 2021. Two (2.0 net) additional wells have been drilled on the south pad since year end 2021.

A total of five (5.0 net) wells contributed 179 boe/d to sales volumes through Q4 2021, including four (4.0 net) wells that were drilled in 2021 and had recovered their base-oil load fluid, representing 30% of Rubellite's production. The McDaniel Report identifies 17 (17.0) net development wells, 6 of which are in the proven undeveloped category and 17 in the proven plus probable undeveloped category in this area. Rubellite has further identified 133 unbooked development/step-out drilling locations and 44 exploratory drilling locations on lands in the Figure Lake area.

Marten Hills

Rubellite has entered into contractual arrangements and is in the process of earning 960 acres (17% undeveloped) in the Marten Hills area. The Acquisition included two (1.0 net) wells drilled in the second quarter of 2021 and through early July. The Marten Hills wells produced at approximately 75 bbl/d of heavy crude oil through the fourth quarter of 2021, representing 13% of Rubellite's production. Rubellite further plans to drill 4 (2.0 net) wells in the first quarter of 2022 to complete the earning. All six wells are designed as 8-leg open hole multi-laterals.

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