Rubellite Energy : Q2 2023 Interim Report

Q2 2023

During the second quarter of 2023, Rubellite advanced its 2023 strategic priorities which include:

1. Deliver Robust Organic Production Growth Profile to Unlock Free Funds Flow;
2. Drive Top Quartile Capital Efficiencies;
3. Increase Reserve Based NAV, De-risk Inventory and Advance Secondary Recovery;
4. 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.

SECOND QUARTER 2023 HIGHLIGHTS

• Achieved second quarter conventional heavy oil sales production of 2,844 bbl/d, representing a 92% year-over-year increase and a 5% decrease from Q1 2023 due to a reduced working interest at Marten Hills after the project reached full payout and reduced activity during spring break-up.
• Invested $11.7 million in exploration and development capital expenditures(1), excluding land purchases, during the second quarter of 2023. Development drilling of $11.1 million related to the drilling of four (4.0 net) multi-lateral horizontal wells at Figure Lake, with three of the wells contributing to sales production by the end of the quarter. One (1.0 net) well at Figure Lake was spud on June 24, 2023 and was rig released on July 10, 2023. An additional $0.5 million of exploration capital was spent on step-out drilling activities in Figure Lake, with two (2.0 net) wells drilled in 2023 transferred to PP&E during the second quarter.
• Second quarter land spending of $0.2 million to acquire 1.0 net sections of land at Figure Lake, bringing the total for 2023 to $2.7 million for an additional 23.0 net sections of land at Figure Lake.
• Generated second quarter adjusted funds flow(1) of $12.0 million ($0.19 per share), a 161% increase year-over-year driven by production increases and a 24% increase from Q1 2023 on higher Western Canadian Select ("WCS") prices on a narrowing WCS differential.
• Generated net income of $3.4 million ($0.05/share) in the second quarter of 2023.
• Net debt(1) was $20.7 million at June 30, 2023, with a net debt to Q2 2023 annualized adjusted funds flow(1) ratio of 0.4 times.
• Rubellite had available liquidity(1) at June 30, 2023 of $27.7 million, comprised of the $40.0 million borrowing limit of Rubellite's first lien credit facility, less current borrowings of $12.3 million.

1. Non-GAAPfinancial measure, non-GAAP ratio or supplementary financial measure. See "Non-GAAP and Other Financial Measures" in this news release and in the MD&A.

OPERATIONS UPDATE

At Figure Lake, a total of four (4.0 net) multi-lateral wells were rig released during the second quarter and one (1.0 net) well was drilled over the end of the quarter and rig released in early July.

The drilling rig completed operations over the end of the first quarter on April 4, 2023, at the 10-19-63-17W4 pad (the "10-19 Pad") located on the Buffalo Lake Metis Settlement ("BLMS") before being shut down for spring break-up. Equipment was mobilized and drilling operations resumed on May 6, 2023 on an existing pad at 3-26-63-18W4 (the "3-26 Pad") where three (3.0 net) wells were drilled and rig released, and at a new adjacent pad located at 15-24-63-18W4 (the "15-24 Pad") where the first of eight (8.0 net) wells was spud on June 25, 2023 and rig released in early July. Given the infill drilling characterization of development in this central portion of the Figure Lake area, Rubellite intends to maintain continuous drilling operations on six to eight well pads for the remainder of 2023 to minimize rig moves and facility builds, and optimize the re-use of oil-based mud, thereby reducing costs and improving capital efficiencies.

The first of two (2.0 net) wells located on the BLMS lands on the 10-19 Pad recorded an IP(30) and IP(60) of 111 bbl/d and 87 bbl/d, respectively. The second well recorded an IP(30) of 47 bbl/d and IP (60) of 30 bbl/d. The underperformance of the second well is interpreted to be attributed to the dominance of flow from a perched water zone in an isolated structural low which was penetrated by one of the horizontal legs, resulting in higher water cuts (95% of the produced emulsion) as compared to the field average water cut of approximately 20%. Additional 2D trade seismic lines have been acquired and interpreted to refine the mapping to optimize future well placement. The Company intends to drill an additional two (2.0 net) wells on the BLMS lands to extend and de-risk the reservoir for subsequent development.

Six (6.0 net) wells have now been placed on production at the 3-26 Pad and have exhibited an average IP(30) of 162 bbl/d (5 wells), IP(60) of 129 bbl/d (4 wells) and IP(90) of 114 bbl/d (3 wells), and continue to outperform the Figure Lake type curve(1). Wells not included in the preceding figures are either still recovering load fluid or have not been on production for sufficient days to be included.

RUBELLITE ENERGY INC.

Q2 2023

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Since the end of the second quarter, two additional wells have been spud on the 15-24 pad for a total of three to date. Two of the 15-24 Pad wells have been placed on production and recovered their oil-based mud load fluid, and are now in their IP30 periods exhibiting strong performance commensurate with the neighboring 9-23 Pad.

Rubellite plans to contract a second rig to start-up in the fourth quarter to drill a minimum of two (2.0 net) wells and up to three (3.0 net) wells to accelerate evaluation of the BLMS lands while maintaining the ongoing infill drilling program in the sweet spot at Figure Lake. Up to 16 (16.0 net) multi-lateral horizontal wells are expected to be drilled at Figure Lake in the second half of 2023 for a full year 2023 total of 25 - 26 (25.0 - 26.0 net) wells, as the property continues to be the primary focus of investment and development.

At Marten Hills, applications are being prepared to implement a bottom-up waterflood to enhance production and increase recoverable reserves beginning in 2024.

No new activity was planned or conducted on the Northern Exploration Program during the quarter due to limited all-season access; however, the Company has elected to drill a second earning well (0.5 net) at Dawson to earn an additional six sections (3.0 net) to follow up and delineate the 5-16-81-16W5 discovery well drilled in the first quarter.

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.sedarplus.ca."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, 2022 and a preparation date of March 9, 2023.

OUTLOOK AND GUIDANCE

Rubellite's board of directors has approved the addition of the second rig at Figure Lake to expand development capital spending(1) for the remainder of 2023, bringing total expected exploration and development capital spending for 2023 to $54 - $65 million. This includes $25 - $27 million to drill, complete, equip and tie-in 15 - 16 (15.0 - 16.0 net) multi-lateral development infill and step-out wells at Figure Lake. Forecast drilling activities are expected to be funded from adjusted funds flow and the Company's credit facility.

Factoring in type curve performance from the recent and future drilling program at Figure Lake, production sales volumes are expected to average between 2,900 - 3,100 bbl/d for 2023. Forecast production incorporates the future sales volume impact of the reduced working interest at Marten Hills effective May 1, 2023 related to reaching full payout during the first quarter, assumes no contribution from the Northern Exploration Program wells that were shut-in due to access for the remainder of 2023, and assumes minimal contribution to annual production volumes for wells drilled by the second rig in the fourth quarter.

During the second quarter of 2023, the Company's carbon tax obligations increased to $0.2 million ($0.65/boe) due to the effect of higher fuel gas usage and incinerated volumes associated with higher production combined with the annual step up in carbon tax pricing. When factoring in these incremental costs the 2023 guided range increased to $6.50/bbl - $7.00/bbl from $6.00/bbl - $6.50/bbl.

Capital spending, drilling activity and operational guidance for 2023 is as outlined in the table below:

	Full Year 2023 Guidance
Sales Production (bbl/d)	2,900 - 3,100
Development ($ millions)(1)(2)(3)	$47 - $52
Multi-lateral development wells (net)(1)(2)	25.0 - 26.0
Exploration spending ($ millions)(1)(4)	$7 - $13
Exploration wells (net)(4)	2.5 - 4.5
Heavy oil wellhead differential ($/bbl)(1)(5)	$6.00 - $7.00
Royalties (% of revenue)(1)	9.5% - 10.5%
Production & operating costs ($/boe)(1)(6)	$6.50 - $7.00
Transportation costs ($/boe)(1)	$7.50 - $8.00
General & administrative costs ($/boe)(1)	$5.50 - $6.00

1. Non-GAAPfinancial measure, non-GAAP ratio or supplementary financial measure. See "Non-GAAP and Other Financial Measures" in this news release and in the MD&A.
2. Updated from previous guidance for development spending of $43 - $45 million for 23.0 net multi-lateral development wells.
3. Q2 2023 capital expenditures include $3.2 million for inventory procurement of casing, tubulars and facilities equipment for the remainder of the 2023 drilling program.
4. Updated from previous guidance for exploration spending of $11 - $13 million for 4.5 net exploration wells.
5. Updated from previous guidance of $7.00/bbl - $8.00/bbl.
6. Updated from previous guidance of $6.00/bbl - $6.50/bbl.

Susan Riddell Rose

President and Chief Executive Officer

August 10, 2023

RUBELLITE ENERGY INC.

Q2 2023

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SUMMARY OF QUARTERLY RESULTS

	Three months ended June 30,	Six months ended June 30,
	2023	2022	2023	2022
Financial
Oil revenue	18,863	15,632	35,967	26,508
Net income (loss) and comprehensive income (loss)	3,397	4,726	5,096	(4,546)
Per share - basic(1)	0.05	0.09	0.09	(0.09)
Per share - diluted(1)	0.05	0.08	0.09	(0.09)
Cash flow from operating activities	12,186	6,473	21,471	9,665
Adjusted funds flow(2)	11,998	4,597	21,680	8,432
Per share - basic(2)	0.19	0.09	0.35	0.15
Per share - diluted(2)	0.19	0.09	0.37	0.15
Net debt (asset)	20,676	(2,654)	20,676	(2,654)
Capital expenditures(2)	11,820	12,705	33,881	48,216
Exploration and development	11,668	9,868	31,180	31,642
Land and acquisitions	152	2,837	2,701	16,574
Wells Drilled(3) - gross (net)	4 / 4.0	7 / 5.8	13 / 12.5	18 / 15.3
Common shares outstanding(1) (thousands)
Weighted average - basic	61,830	54,725	58,464	49,357
Weighted average - diluted	62,432	55,797	59,042	49,357
End of period	61,839	54,725	61,839	54,725
Operating
Daily average oil sales production(4) (bbl/d)	2,844	1,478	2,917	1,365
Average prices
West Texas Intermediate ("WTI") ($US/bbl)	73.75	108.41	74.92	101.35
Western Canadian Select ("WCS") ($CAD/bbl)	78.74	122.09	74.05	111.55
Average realized oil price(1) ($/bbl)	72.88	116.21	68.13	107.28
Average realized oil price after risk management contracts(1) ($/bbl)	75.65	70.09	69.88	68.95

1. Per share amounts are calculated using the weighted average number of basic or diluted common shares.
2. Non-GAAPfinancial measure, non-GAAP ratio or supplementary financial measure. See "Non-GAAP and Other Financial Measures" in this interim report.
3. Well count reflects wells rig released during the period.
4. Conventional heavy oil sales production excludes tank inventory volumes.

ADVISORIES

This letter to shareholders and second quarter 2023 interim report refer to certain non-GAAP measures and metrics commonly used in the oil and natural gas industry and provides forward-looking information and statements. Further detailed information regarding these measures is provided in this report in "Management's Discussion and Analysis - NON-GAAPMEASURES " on pages 12 to 14 and "Management's Discussion and Analysis - FORWARD-LOOKINGINFORMATION AND STATEMENTS " on pages 15 and 16.

In addition to the disclosure set out in the Company's Management's Discussion and Analysis for the period ended June 30, 2023, we provide certain supplementary disclosure throughout this report in respect of certain specified financial measures (as such term is defined in National Instrument 51-112 - Non-GAAPand Other Financial Measures ) and in respect of certain oil and gas metrics.

RUBELLITE ENERGY INC.

Q2 2023

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MANAGEMENT'S DISCUSSION AND ANALYSIS

The following is management's discussion and analysis ("MD&A") of Rubellite Energy Inc.'s ("Rubellite", the "Company" or the "Corporation") operating and financial results for the three and six months ended June 30, 2023, as well as information and estimates concerning the Corporation's future outlook based on currently available information. This discussion should be read in conjunction with the Corporation's unaudited condensed interim consolidated financial statements and accompanying notes as at June 30, 2023 and for the three and six months ended June 30, 2023 and 2022 as well as the audited financial statements and accompanying notes for the years ended December 31, 2022 and 2021. Disclosure, which is unchanged from the December 31, 2022 MD&A has not been duplicated herein. The Corporation's financial statements are prepared in accordance with Canadian generally accepted accounting principles ("GAAP") which require publicly accountable enterprises to prepare their financial statements using International Financial Reporting Standards ("IFRS"). The date of this MD&A is August 10, 2023.

This MD&A contains certain specified financial measures that are not recognized by GAAP and used by management to evaluate the performance of the Corporation 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" for further information on the definition, calculation and reconciliation of these measures. This MD&A also contains forward-looking information. See "Forward-Looking Information". Readers are also referred to the other advisory sections at the end of this MD&A for additional information.

NATURE OF BUSINESS: Rubellite is a Canadian energy company headquartered in Calgary, Alberta and 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 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 www.sedarplus.caand found at www.rubelliteenergy.com.

Rubellite's common shares are publicly traded on the Toronto Stock Exchange under the symbol "RBY".

SECOND QUARTER 2023 OPERATIONAL AND FINANCIAL HIGHLIGHTS

• Second quarter conventional heavy oil sales production averaged 2,844 bbl/d, down 5% from first quarter of 2023 (Q1 2023 - 2,990 bbl/ d) as a result of the reduced working interest at Marten Hills upon conversion to a lower working interest at payout of the carried interest wells drilled along with reduced capital activity during spring break-up. Sales production from the second quarter of 2023 was up 92% from the second quarter of 2022 (Q2 2022 - 1,478 bbl/d). As of June 30, 2023, there were 71 (63.3 net) wells contributing to sales production, as compared to 65 (58.5 net) wells on production at the end of the first quarter of 2023.
• Adjusted funds flow(1) in the second quarter was $12.0 million ($0.19 per share), a 24% increase from the first quarter of 2023 (Q1 2023
  - $9.7 million), driven by the growth in revenue on a 14% increase in Western Canadian Select ("WCS") benchmark prices. Adjusted funds flow per boe was $46.35/boe, up 29% from $36.00/boe in the first quarter of 2023.
• Exploration and development capital expenditures(1), excluding land purchases, for the second quarter totaled $11.7 million. Development expenditures of $11.1 million, related to the drilling of four (4.0 net) multi-lateral horizontal wells at Figure Lake, with three of the wells contributing to sales production by the end of the quarter. One (1.0 net) well at Figure Lake was spud on June 25, 2023 and was rig released July 10, 2023. An additional $0.5 million was spent on step-out drilling activities in Figure Lake, with two (2.0 net) wells drilled in 2023 transferred to PP&E during the second quarter. As of June 30, 2023, Rubellite has drilled two (2.0 net) wells as part of the Figure Lake extension onto the Buffalo Lake Metis Settlement ("BLMS") lands as part of the Company's commitment to drill four wells prior to February 14, 2024.
• Second quarter land spending of $0.2 million brought total land spending for 2023 to $2.7 million for an additional 23.0 net sections of land at Figure Lake.
• Operating netbacks(1) in the second quarter were $13.3 million, or $51.38/boe (Q1 2023 - $11.7 million or $43.58/boe), reflecting the increase in Western Canadian Select ("WCS") benchmark prices, partially offset by higher royalties and production and operating costs. After the realized gain on risk management contracts of $0.7 million, or $2.77/boe (Q1 2023 - loss of $0.2 million or $0.77/boe), operating netbacks after risk management contracts were $14.0 million or $54.15/boe (Q1 2023 - $11.9 million or $44.35/boe). Second quarter operating netbacks after realized losses on risk management contracts were 36% higher on a per boe basis than the second quarter of 2022 (Q2 2022 - $5.4 million or $39.85/boe) despite lower benchmark pricing with losses on risk management contracts in the comparative period and higher production combining with lower royalties, production and operating expenses and transportation costs per boe.
• Cash costs(1) were $5.9 million or $22.73/boe in the second quarter of 2023, in line with expectations (Q1 2023 - $6.0 million or $22.15/ boe; Q2 2022 - $3.0 million or $22.18/boe). On a per boe basis, the reduction in costs were driven by efficiencies over a higher production base partially offset by the impact of cost inflation, incremental carbon tax obligations and higher G&A and interest costs.
• Net income for the second quarter of 2023 was $3.4 million attributable to a $4.6 million deferred tax recovery, partially offset by $6.8 million of E&E expense.
• As at June 30, 2023, net debt(1) was $20.7 million, a decrease from $28.2 million as at December 31, 2022.
• Rubellite had available liquidity (see "Liquidity, Capitalization and Financial Resources - Capital Management") at June 30, 2023 of $27.7 million, comprised of the $40.0 million borrowing limit of Rubellite's first lien credit facility ("Credit Facility Borrowing Limit"), less current borrowings of $12.3 million.

1. Non-GAAPfinancial measure, non-GAAP ratio or supplementary financial measure. See "Non-GAAP and Other Financial Measures".

OPERATIONS UPDATE

At Figure Lake, a total of four (4.0 net) multi-lateral wells were rig released during the second quarter and one (1.0 net) well was drilled over the end of the quarter and rig released in early July.

RUBELLITE ENERGY INC.

Q2 2023

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The drilling rig completed operations over the end of the first quarter on April 4, 2023, at the 10-19-63-17W4 pad (the "10-19 Pad") located on the Buffalo Lake Metis Settlement ("BLMS") before being shut down for spring break-up. Equipment was mobilized and drilling operations resumed on May 6, 2023 on an existing pad at 3-26-63-18W4 (the "3-26 Pad") where three (3.0 net) wells were drilled and rig released, and at a new adjacent pad located at 15-24-63-18W4 (the "15-24 Pad") where the first of eight (8.0 net) wells was spud on June 25, 2023 and rig released in early July. Given the infill drilling characterization of development in this central portion of the Figure Lake area, Rubellite intends to maintain continuous drilling operations on six to eight well pads for the remainder of 2023 to minimize rig moves and facility builds, and optimize the re-use of oil-based mud, thereby reducing costs and improving capital efficiencies.

The first of two (2.0 net) wells located on the BLMS lands on the 10-19 Pad recorded an IP(30) and IP(60) of 111 bbl/d and 87 bbl/d, respectively. The second well recorded an IP(30) of 47 bbl/d and IP (60) of 30 bbl/d. The underperformance of the second well is interpreted to be attributed to the dominance of flow from a perched water zone in an isolated structural low which was penetrated by one of the horizontal legs, resulting in higher water cuts (95% of the produced emulsion) as compared to the field average water cut of approximately 20%. Additional 2D trade seismic lines have been acquired and interpreted to refine the mapping to optimize future well placement. The Company intends to drill an additional two (2.0 net) wells on the BLMS lands to extend and de-risk the reservoir for subsequent development.

Six (6.0 net) wells have now been placed on production at the 3-26 Pad and have exhibited an average IP(30) of 162 bbl/d (5 wells), IP(60) of 129 bbl/d (4 wells) and IP(90) of 114 bbl/d (3 wells), and continue to outperform the Figure Lake type curve(1). Wells not included in the preceding figures are either still recovering load fluid or have not been on production for sufficient days to be included.

Since the end of the second quarter, two additional wells have been spud on the 15-24 pad for a total of three to date. Two of the 15-24 Pad wells have been placed on production and recovered their oil-based mud load fluid, and are now in their IP30 periods exhibiting strong performance commensurate with the neighboring 9-23 Pad.

Rubellite plans to contract a second rig to start-up in the fourth quarter to drill a minimum of two (2.0 net) wells and up to three (3.0 net) wells to accelerate evaluation of the BLMS lands while maintaining the ongoing infill drilling program in the sweet spot at Figure Lake. Up to 16 (16.0 net) multi-lateral horizontal wells are expected to be drilled at Figure Lake in the second half of 2023 for a full year 2023 total of 25 - 26 (25.0 - 26.0 net) wells, as the property continues to be the primary focus of investment and development.

At Marten Hills, applications are being prepared to implement a bottom-up waterflood to enhance production and increase recoverable reserves beginning in 2024.

No new activity was planned or conducted on the Northern Exploration Program during the quarter due to limited all-season access; however, the Company has elected to drill a second earning well (0.5 net) at Dawson to earn an additional six sections (3.0 net) to follow up and delineate the 5-16-81-16W5 discovery well drilled in the first quarter.

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.sedarplus.ca. "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, 2022 and a preparation date of March 9, 2023.

OUTLOOK AND GUIDANCE

Rubellite's board of directors has approved the addition of the second rig at Figure Lake to expand development capital spending(1) for the remainder of 2023, bringing total expected exploration and development capital spending for 2023 to $54 - $65 million. This includes $25 - $27 million to drill, complete, equip and tie-in 15 - 16 (15.0 - 16.0 net) multi-lateral development infill and step-out wells at Figure Lake. Forecast drilling activities are expected to be funded from adjusted funds flow and the Company's credit facility.

Factoring in type curve performance from the recent and future drilling program at Figure Lake, production sales volumes are expected to average between 2,900 - 3,100 bbl/d for 2023. Forecast production incorporates the future sales volume impact of the reduced working interest at Marten Hills effective May 1, 2023 related to reaching full payout during the first quarter, assumes no contribution from the Northern Exploration Program wells that were shut-in due to access for the remainder of 2023, and assumes minimal contribution to annual production volumes for wells drilled by the second rig in the fourth quarter.

During the second quarter of 2023, the Company's carbon tax obligations increased to $0.2 million ($0.65/boe) due to the effect of higher fuel gas usage and incinerated volumes associated with higher production combined with the annual step up in carbon tax pricing. When factoring in these incremental costs the 2023 guided range increased to $6.50/bbl - $7.00/bbl from $6.00/bbl - $6.50/bbl.

Capital spending, drilling activity and operational guidance for 2023 is as outlined in the table below:

	Full Year 2023 Guidance
Sales Production (bbl/d)	2,900 - 3,100
Development spending ($ millions)(1)(2)(3)	$47 - $52
Multi-lateral development wells (net)(1)(2)	25.0 - 26.0
Exploration spending ($ millions)(1)(4)	$7 - $13
Exploration wells (net)(4)	2.5 - 4.5
Heavy oil wellhead differential ($/bbl)(1)(5)	$6.00 - $7.00
Royalties (% of revenue)(1)	9.5% - 10.5%
Production and operating costs ($/boe)(1)(6)	$6.50 - $7.00
Transportation costs ($/boe)(1)	$7.50 - $8.00
General and administrative costs ($/boe)(1)	$5.50 - $6.00

1. Non-GAAPfinancial measure, non-GAAP ratio or supplementary financial measure. See "Non-GAAP and Other Financial Measures".
2. Updated from previous guidance for development spending of $43 - $45 million for 23.0 net multi-lateral development wells.
3. Q2 2023 capital expenditures include $3.2 million for inventory procurement of casing, tubulars and facilities equipment for the remainder of the 2023 drilling program.
4. Updated from previous guidance for exploration spending of $11 - $13 million for 4.5 net exploration wells.
5. Updated from previous guidance of $7.00/bbl - $8.00/bbl.
6. Updated from previous guidance of $6.00/bbl - $6.50/bbl.

RUBELLITE ENERGY INC.

Q2 2023

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