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Corporate Divestiture: Edge Capital Ltd. – Lloydminster, AB & SK

October 5, 20227:20 AM BOE Report Staff

Edge Capital Ltd. along with its wholly owned subsidiaries; Edge LRM Operations Ltd. and Edge Crypto Mining Inc. (collectively “Edge” or the “Company”) has engaged Sayer Energy Advisors to assist it with a sale of the shares of the Company.

Edge is a debt free, junior oil and natural gas company with a focus on heavy oil operated assets in the Lloydminster area of Alberta and Saskatchewan.

In Saskatchewan, the Company’s operations are focused in the Big Gully, Dee Valley, Edam, Epping, Forest Bank, Golden Lake, Lashburn, Rush Lake, Silverdale, Standard Hill, Tangleflags and Hillmond areas. Edge’s operated properties in Alberta are located in the Baxter Lake and Lloydminster areas. The Company also has various non-operated interests throughout Alberta and British Columbia (the “Properties”).

The Company’s average daily production in the second quarter of 2022 consisted of approximately 260 barrels of oil and natural gas liquids per day and 306 Mcf/d of natural gas (311 boe/d).

Operating income net to Edge from the Properties in the second quarter of 2022 was approximately $1.3 million, or $5.2 million on an annualized basis.

As at August 31, 2022, Edge had no bank debt, estimated total positive working capital of $4.2 million, including $3.0 million in cash, and total tax pools of approximately $6.3 million (with $5.1 million in non-capital losses).

Edge has made capital spending on abandonment and reclamation obligations (“ARO”) a key priority since inception in February of 2020. The Company has completed $1.2 million of ARO work since May 1, 2020. Edge’s total deemed asset value between Alberta and Saskatchewan is a combined $7.5 million.

As of September 3, 2022, Edge’s net deemed asset value for its operated properties in Alberta was $1.4 million (deemed assets of $1.7 million and deemed liabilities of $321,608), with an LMR ratio of 5.36. Since May 2020, the Company’s LMR ratio in Alberta has increased from 1.70 to 5.36.

As of September 28, 2022, Edge’s net deemed asset value for its operated properties in Saskatchewan was $3.7 million (deemed assets of $5.8 million and deemed liabilities of $2.1 million), with an LMR ratio 2.75. Since May 2020, the Company’s LMR ratio in Saskatchewan has increased from 0.59 to 2.75.

Trimble Engineering Associates Ltd. (“Trimble”) prepared an independent reserves evaluation of Edge’s Properties (the “Trimble Report”). The Trimble Report is effective August 31, 2022 using Trimble’s forecast pricing as at July 1, 2022. Trimble estimated that, as of August 31, 2022, the Properties contained remaining proved plus probable reserves of 1.0 million barrels of oil and natural gas liquids and 559 MMcf of natural gas (1.1 million boe), with an estimated net present value of $15.6 million using forecast pricing at a 10% discount.

Edge Crypto Mining Inc. was formed to both monetize excess natural gas produced by Edge’s heavy oil wells in the Lloydminster area and as a methane reduction strategy as part of the Company’s commitment to environmental stewardship. Edge has a Bitcoin setup on the 12-26-050-1W4 well site. The Company is planning to add a second operation at the 14-26-050-1W4 well site in the fourth quarter of 2022.

Summary information relating to this divestiture is attached to this correspondence. More specific information is available at www.sayeradvisors.com. A package of more detailed confidential information will be sent to any party executing a Confidentiality Agreement (copy attached).

Proposals relating to this process will be accepted until 12:00 pm on Thursday, November 10, 2022.

For further information please feel free to contact: Ben Rye, Grazina Palmer, or myself at 403.266.6133.

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