Prairie Provident Announces Non-Binding Term Sheets for Preferred Share Investment and Debt Amendments to Strengthen Financial Position and Advance Drilling Program

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

CALGARY, Alberta, Oct. 21, 2025 (GLOBE NEWSWIRE) -- Prairie Provident Resources Inc. ("Prairie Provident" or the "Company") (TSX:PPR) is pleased to announce non-binding term sheets for a proposed preferred share financing (the "Proposed Financing") to raise US$18.9 million (approximately C$26.5 million at current exchange rates) of additional equity capital, and for complementary amendments to the agreements governing its senior secured credit facility ("First Lien Loan") and outstanding second lien notes ("Second Lien Notes") to extend maturities by 24 months, defer cash interest obligations through 2026, and adjust financial covenants (the "Debt Amendments").

The Company is actively working with the applicable counterparties to negotiate and finalize binding agreements for the Proposed Financing and Debt Amendments, completion of which is currently targeted for October 29, 2025. Completion is subject to the conditions described below, particularly the execution and delivery of definitive agreements satisfactory to the parties and receipt of all necessary approvals of the Toronto Stock Exchange ("TSX").

As more particularly described below, Prairie Provident has applied to the TSX pursuant to the 'financial hardship' provisions of section 604(e) of the TSX Company Manual for an exemption from any shareholder approval requirement that would otherwise apply in respect of the Proposed Financing and the Debt Amendments, on the basis that the Company is in serious financial difficulty and the Proposed Financing and related Debt Amendments are designed to improve its financial situation.

The additional capital resources and improved liquidity resulting from the Proposed Financing and Debt Amendments is critical to execution of the Company's business plan. As further outlined below, the Company intends to use the net proceeds of the Proposed Financing to satisfy existing payment obligations and significantly strengthen its working capital position, and to finance a development program to drill, complete and tie-in 4 new wells before year-end. Prairie Provident currently contemplates a further 5 to 6 new wells for 2026, subject to drilling and operating results, rig availability, commodity prices, and capital resources at the time.

The Proposed Financing and the Debt Amendments are inter-related and cross-conditional, each dependent on the completion of the other.

Proposed Financing

The term sheet for the Proposed Financing is with PGIM, Inc., as investment manager for a to-be-formed entity owned by existing limited partners of Prudential Capital Energy Partners, L.P. (the "Investor"), an affiliate of the Company's largest shareholder, PCEP Canadian Holdco LLC ("PCEP").

Preferred Shares

The Proposed Financing will involve a sale to the Investor or one or more of its affiliates (collectively, the "Purchaser") of the Canadian dollar equivalent of US$18.9 million of preferred shares ("Preferred Shares") in the capital of the Company's wholly-owned subsidiary, Prairie Provident Resources Canada Ltd. ("PPRC"), at an issue price of C$100 per share. The Preferred Shares will rank senior to all other classes of PPRC equity and carry an 8% annual yield, accruing daily and compounded annually. The original issue price plus the accrued yield (the "Payout Amount") will be payable by PPRC in United States dollars upon redemption or retraction of the Preferred Shares, or upon a liquidation or a corporate sale, business combination or sale of all or substantially all of the assets of the Company or PPRC (a "Liquidity Event").

The Preferred Shares will be redeemable by PPRC or retractable by the Purchaser for the Payout Amount at any time on or after March 31, 2031. On a redemption by PPRC, the Payout Amount must be paid in cash. If on a retraction by the Purchaser the full Payout Amount is not immediately satisfied, then PPRC's payment obligation in respect of the Payout Amount will constitute an unsecured, subordinated debt bearing interest at 8% per annum until paid, will not be repayable before two years from the retraction date, and will be guaranteed by the Company. In such event, Prairie Provident and PPRC will enter into such agreements as may be required by the Purchaser and under any applicable lending arrangements then in effect to evidence the debt, provide for the guarantee, and address intercreditor arrangements relative to the Company's secured creditors.

In the circumstances of a Liquidity Event, PPRC or the Company, as the case may be, will have a call right to acquire the Preferred Shares for the Payout Amount (the "Call Right"), and the Purchaser will have a put right to require that PPRC or the Company, as applicable, acquire the Preferred Shares for the Payout Amount (the "Put Right"), payable in either case at the Purchaser's option in cash or in common shares of Prairie Provident ("Common Shares") based on their market value at the time.

The Preferred Shares will be non-voting securities, except as required by applicable law.

Warrants

In consideration for arranging the Proposed Financing, the Purchaser will also be issued warrants (the "Warrants") entitling the holder to acquire, for no additional consideration, an aggregate of 379,024,000 Common Shares, representing approximately 23.3% of the number of Common Shares (1,627,090,156) currently outstanding on a fully-diluted basis assuming full exercise or conversion of all options, share units and warrants of the Company that are currently outstanding, or approximately 27% of the number of Common Shares (1,401,575,636) currently outstanding on an undiluted basis. The Warrants will be exercisable for the underlying Common Shares upon redemption or retraction of the Preferred Shares, or a Liquidity Event. Each Warrant will be exercisable for one Common Share, subject to adjustment in certain events (including as noted in the following paragraph).

Substitution Right

If requested by the Purchaser following closing of the Proposed Financing, Prairie Provident will seek all regulatory (including stock exchange) and shareholder approvals necessary to accommodate the Purchaser receiving, in substitution for the Preferred Shares issued on closing, preferred shares of the Company having substantially equivalent rights as the Preferred Shares, and will effect the substitution if all such approvals are obtained. If Prairie Provident does not seek such approvals upon request, does not obtain the necessary shareholder approvals, or does not effect the substitution if so approved, each Warrant will become exercisable for 1.5 shares instead of 1 share.

Investor Rights Agreement

The Company is party to an Investor Rights Agreement dated May 16, 2023 (the "Investor Rights Agreement") with PCEP and certain of its affiliates. PCEP currently holds more than 80% of the outstanding Common Shares, and such affiliates currently hold the Second Lien Notes.

Pursuant to the Investor Rights Agreement, PCEP and such affiliates have (i) pre-emptive rights to participate in future offerings of equity securities or securities that are convertible or exercisable for equity securities, and (ii) director nomination rights based on voting power and a maximum board size of five (three directors if they hold more than 50% of the Company's outstanding voting securities, two directors if they hold between 25% and 50% of the outstanding voting securities, and one director if they hold between 10% and 25% of the outstanding voting securities).

In connection with Proposed Financing, the Investor Rights Agreement will be amended to add the Purchaser (together with PCEP and those of its affiliates already party to the Investor Rights Agreement, the "Principal Holders") as a party entitled to the benefits thereof, and to provide the Principal Holders with (i) the right to nominate an additional director of the Company, (ii) the right to require that the Company undertake a strategic alternatives review process, (iii) a consent right with respect to any issue of additional shares by Prairie Provident, (iv) covenants substantially similar to those currently owed by the Company pursuant to the Second Lien Notes, to become operative if the Second Lien Notes cease to be outstanding, and (v) information rights substantially similar to those currently provided to the holders of the Second Lien Notes.

Debt Amendments

The term sheet for the Debt Amendments contemplate: (i) 24-month extensions to the maturity date of both the First Lien Loan (to March 31, 2028) and the Second Lien Notes (to September 30, 2028); (ii) allowance for the Company to defer all cash interest obligations on the First Lien Loan through 2026 (with cash interest obligations to resume March 31, 2027 for the quarter then ended), and instead capitalize such amounts as additional principal; (iii) adjustments to financial covenants to align with current expectations for the extended term to maturity; and (iv) accommodations to allow for the Proposed Financing to be completed. The lenders under the First Lien Loan and the holders of the Second Lien Notes are affiliates of PCEP.

Conditions to Completion

The Company has not yet finalized or entered into binding agreements for the Proposed Financing or Debt Amendments, which are expected to be 'sign-and-close' transactions at which agreements are entered into upon, but not before, closing. In addition to negotiating the definitive terms of such agreements, and the execution and delivery thereof between the parties, completion of the Proposed Financing and Debt Amendments will be conditional on the Purchaser completing its due diligence review in respect of Prairie Provident, and the receipt of all necessary approvals of the TSX – including TSX acceptance of the Company's reliance on the 'financial hardship' exemption described below.

Background to the Transactions

The Company's development focus over the past 12 months has been the emerging Basal Quartz/Ellerslie play on its Michichi lands in Central Alberta, where it drilled, completed and tied-in 5 horizontal Basal Quartz (BQ) wells in late 2024 and the first half of 2025, delineating its land base and better defining drilling inventory and opportunities. Prairie Provident's other activities over the period included the reactivation and optimization of approximately 20 existing wells in other core areas and the discharge of abandonment and reclamation obligations pursuant to regulatory requirements.

Although production increased over the period as a result of the additional BQ wells drilled, the Company does not have the capital resources to invest in growth, with base production levels and corresponding cash flow insufficient to both meet current obligations and fund development. As Prairie Provident does not have access to further borrowings under the First Lien Loan, which is fully drawn, operating cash flows are its only source of capital absent external financing.

Operating cash flows for the year have been adversely affected by commodity price weakness and natural production declines, which the Company has been able to only partially offset through workovers and optimization work on base wells. BQ drilling results, which were financed though C$20.7 million of total equity financings completed in Fall 2024 and Spring 2025, have been positive and lay the groundwork for future development in the play. Operating cash flows at current production levels are, however, insufficient to internally finance such development. Additional capital is required.

Additional capital is also needed to address the Company's significant working capital deficit, which in the absence of a sustained increase in development-driven production revenue has deteriorated and become unsustainable, with aged payables straining supplier and service provider relationships.

The Proposed Financing and Debt Amendments will together provide the additional capital and liquidity needed to retire past due payables and finance the planned fall drilling program, as well as to address certain non-recurring but near-term obligations that cannot be deferred. More particularly, of the net proceeds of the Proposed Financing (after transaction expenses) approximately C$8 million will be directed towards the retirement of payables, approximately C$13 million is budgeted for the drilling and completion of 4 wells before year-end, approximately C$1 million will be used to pay all remaining amounts owed on certain Company infrastructure, and approximately C$3.5 million is budgeted for certain abandonment work required to be completed during the upcoming winter season. The remainder will be used for working capital purposes.

The additional capital provided by the Proposed Financing, together with the maturity date extensions and opportunity for cash interest deferral through 2026 on the First Lien Loan provided by the Debt Amendments, will upon closing immediately and significantly improve the Company's financial condition. Thereafter, based on internal modelling and forecasts, Prairie Provident believes that successful execution of the larger drilling program and retirement of liabilities made possible by the scale of the Proposed Financing, and resulting production revenues and cost savings going forward, together with the complementary liquidity relief from the Debt Amendments through 2026, should enable the Company to become and remain cash flow positive. Key assumptions in the Company's modelling in this regard are a WTI benchmark price of US$65.00/bbl, AECO strip pricing, and an exchange rate of USD 0.725 to CAD 1.00.

Absent the additional capital from the Proposed Financing, and the maturity date extensions and cash interest deferral from the Debt Amendments, Prairie Provident faces a significant working capital deficit and liquidity and capital resource constraint that stalls its business and threatens its viability. The Company believes that the Proposed Financing and Debt Amendments will provide a path to stabilization and growth.

The Proposed Financing and Debt Amendments are not expected to materially affect control of Prairie Provident, as the Purchaser under the Proposed Financing is an affiliate of PCEP, and the Debt Amendments do not involve any change or prospective change in holdings of voting securities.

TSX Approvals and Financial Hardship Exemptions

Completion of the Proposed Financing and Debt Amendments is conditional upon receipt of all necessary approvals of the TSX. Pursuant to TSX rules, the Proposed Financing and Debt Amendments would ordinarily require approval of the Company's disinterested shareholders:

1. under section 501(c) of the TSX Company Manual, because the value of the consideration to be received by insiders pursuant to the Proposed Financing and Debt Amendments exceeds 10% of the current market capitalization of the Company, on the basis that (a) the Purchaser, the lenders under the First Lien Loan, and the holders of the Second Lien Notes are affiliates of PCEP and each is therefore deemed to be an "insider" of the Company for purposes of the TSX Company Manual, (b) total interest of approximately C$3.6 million and C$0.6 million, respectively, on the First Lien Loan and Second Lien Notes, totaling an amount equal to approximately 12% of the Company's current market capitalization, accrued over the 6-month period ending September 30, 2025, with TSX aggregating transactions with insiders or other related parties over any 6-month period for purposes of section 501, and (c) the Proposed Financing and Debt Amendments involve the following terms and features:
   1. the Preferred Shares will carry an annual yield of 8% or approximately C$2.1 million per annum on the issue price (approximately 6% of the Company's current market capitalization), and absent an earlier Liquidity Event are expected to remain outstanding until at least March 31, 2031 when the Preferred Shares become redeemable by PPRC or retractable by the Purchaser;
   2. the Payout Amount, which will be payable in cash or in Common Shares, will be not less than the Canadian dollar equivalent of US$18.9 million (approximately C$26.5 million at current exchange rates) as the original issue price of the Preferred Shares (approximately 75.7% of the Company's current market capitalization);
   3. the Purchaser will receive 379,024,000 Warrants exercisable, without payment of additional consideration, for an equivalent number of Common Shares (subject to adjustment in certain events), which number equals approximately 27% of the number of Common Shares currently outstanding on an undiluted basis; and
   4. after giving effect to 24-month extensions to the First Lien Loan and Second Lien Notes pursuant to the Debt Amendments, total interest thereon through the new maturity dates (assuming continuity of CAD/USD exchange rates and benchmark interest rates) will be approximately C$20.8 million and C$5.1 million, respectively (totaling approximately 74% of the Company's current market capitalization);
2. under section 604(a)(ii) of the TSX Company Manual, because the Proposed Financing and Debt Amendments will together provide consideration to insiders that in aggregate exceeds 10% of the current market capitalization of the Company, on the basis that (a) the Purchaser, the lenders under the First Lien Loan, and the holders of the Second Lien Notes are affiliates of PCEP and each is therefore deemed to be an "insider" of the Company for purposes of the TSX Company Manual, and (b) the Proposed Financing and Debt Amendments involve the terms and features referred to in paragraphs 1(c)(i) through 1(c)(iv) above;
3. under sections 607(g)(i) and 607(g)(ii) of the TSX Company Manual, because the Proposed Financing will make issuable by the Company a number of Common Shares that is greater than 25% of the number of Common Shares currently outstanding (on an undiluted basis) at an issue price that is less than the market price, and a number of Common Shares to insiders that is greater than 10% of the number of Common Shares currently outstanding (on an undiluted basis), on the basis that (a) the Purchaser is an affiliate of PCEP and therefore deemed to be an "insider" of the Company for purposes of the TSX Company Manual, and (b) the Proposed Financing involves an issue or potential issue of Common Shares as outlined in paragraphs 1(c)(ii) and 1(c)(iii) above; and
4. under section 607(i) of the TSX Company Manual, because the Warrants have an exercise price that is less than the current market price of the Common Shares, on the basis that they are exercisable without payment of additional consideration upon redemption or retraction of the Preferred Shares, or a Liquidity Event.

Prairie Provident has applied to the TSX pursuant to the 'financial hardship' provisions of section 604(e) of the TSX Company Manual for an exemption from any such shareholder approval requirement, on the basis that the Company is in serious financial difficulty and the Proposed Financing and related Debt Amendments are designed to improve its financial situation.

The Company has insufficient liquidity to meet current obligations on a timely basis, and its current cash does not support needed capital investment, absent which production revenue will further decline. As noted above, the Proposed Financing and Debt Amendments will together provide the additional capital and liquidity needed to address past due payables and finance the planned fall drilling program, as well as to address certain non-recurring but near-term obligations that cannot be deferred. The immediacy of these needs does not afford Prairie Provident sufficient time to seek shareholder approval in the circumstances. The Company's operations depend on supplier and service provider relationships that are strained by the aging of payables, and the fall drilling program must be commenced as soon as possible to bring on new production revenues. Delay would not only prejudice Prairie Provident's finances and operations but also increase weather-related risks and cost pressures on drilling operations.

Prairie Provident expects that, as a consequence of its 'financial hardship' application, the TSX will place the Company under a remedial delisting review, which is normal practice when a listed issuer seeks to rely on this exemption. Although the Company believes that it will be in compliance with all continued listing requirements of the TSX upon conclusion of a delisting review, no assurance can be provided as to the outcome of that review and, therefore, on Prairie Provident's continued qualification for listing on the TSX.

There is no certainty that the TSX will approve the Proposed Financing or the Debt Amendments, or accept the Company's application to rely on the financial hardship exemption with respect to any related shareholder approval requirements.

A committee (the "Committee") of Prairie Provident's board of directors (the "Board") comprised of Matthew Shyba, an independent director who is unrelated to any of PCEP, the Purchaser, the lenders under First Lien Loan, and the holders of the Second Lien Notes, and is free from any interest in the Proposed Financing or Debt Amendments, reviewed the transaction terms and, in the circumstances, recommended that the Company make application to the TSX under the 'financial hardship' provisions. Following review and consideration of the Committee recommendation, the Board unanimously endorsed the making of the application, and determined that Prairie Provident is in serious financial difficulty and that the Proposed Financing and Debt Amendments are reasonable in the circumstances and designed to improve the Company's financial situation.

Insofar as the Purchaser, the lenders under the First Lien Loan, and the holders of the Second Lien Notes are all affiliates of PCEP, which is a control person of Prairie Provident under applicable securities laws, each such lender and holder is itself a 'related party' of the Company within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101") and, accordingly, the Proposed Financing and related Debt Amendments will each constitute a 'related party transaction' for the Company under MI 61-101. Prairie Provident has determined that the Proposed Financing and related Debt Amendments will be exempt from the formal valuation and minority approval requirements of MI 61-101 pursuant to the 'financial hardship' exemptions contained, respectively, in sections 5.5(g) and 5.7(1)(e) thereof, based on the Committee and Board determinations referred to in the previous paragraph.

Any material change report filed by the Company in respect of the Proposed Financing or Debt Amendments will include such further information as may be prescribed under MI 61-101 and will be filed on SEDAR+ under the Company's issuer profile at www.sedarplus.ca. Any such material change report will be filed less than 21 days before closing of the Proposed Financing and Debt Amendments, as timely reduction of aged payables and execution of the capital development program with funding from the Proposed Financing requires that the transactions (with the Proposed Financing being conditional on the Debt Amendments) be completed as soon as reasonably possible.

This news release does not constitute an offer to sell, or the solicitation of an offer to buy, any securities. The securities referred to in this news release have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act“), or any U.S. state securities laws, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons or persons in the United States (as those terms are defined in Regulation S under the U.S. Securities Act) except in compliance with, or pursuant to an available exemption from, the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws.

ABOUT PRAIRIE PROVIDENT

Prairie Provident is a Calgary-based company engaged in the exploration and development of oil and natural gas properties in Alberta, including a position in the emerging Basal Quartz trend in the Michichi area of Central Alberta.

For further information, please contact:

Dale Miller, Executive Chairman
Phone: (403) 292-8150
Email: info@ppr.ca

Forward-Looking Statements

This news release contains certain statements (“forward-looking statements”) that constitute forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking statements relate to future performance, events or circumstances, are based upon internal assumptions, plans, intentions, expectations and beliefs, and are subject to risks and uncertainties that may cause actual results or events to differ materially from those indicated or suggested therein. All statements other than statements of current or historical fact constitute forward-looking statements. Forward-looking statements are typically, but not always, identified by words such as “anticipate”, “believe”, “expect”, “intend”, “plan”, “budget”, “forecast”, “target”, “estimate”, “propose”, “potential”, “project”, “continue”, “may”, “will”, “should” or similar words suggesting future outcomes or events or statements regarding an outlook.

Without limiting the foregoing, this news release contains forward-looking statements pertaining to: completion of the Proposed Financing and Debt Amendments and their expected effect on the Company's financial position; the target closing date of October 29, 2025; the intended use of proceeds from the Proposed Financing; the number of wells intended to be drilled by the Company before year-end 2025; budgeted costs for drilling and completing new 2025 wells and completing certain abandonment work required to be completed during the upcoming winter season; the number of additional wells contemplated for 2026; and the Company's ability to become and remain cash flow positive.

Forward-looking statements are based on a number of material factors, expectations or assumptions of Prairie Provident which have been used to develop such statements, but which may prove to be incorrect. Although the Company believes that the expectations and assumptions reflected in such forward-looking statements are reasonable, undue reliance should not be placed on forward-looking statements, which are inherently uncertain and depend upon the accuracy of such expectations and assumptions. Prairie Provident can give no assurance that the forward-looking statements contained herein will prove to be correct or that the expectations and assumptions upon which they are based will occur or be realized. In particular, the Company can give no assurance that binding agreements for the Proposed Financing and Debt Amendments will be finalized with the respective counterparties, that requisite TSX approvals for the Proposed Financing and Debt Amendments will be received at all or on a timely basis, or that the Proposed Financing and Debt Amendments will otherwise be successfully completed. Actual results or events will differ, and the differences may be material and adverse to the Company. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: results from drilling and development activities; consistency with past operations; the quality of the reservoirs in which Prairie Provident operates and continued performance from existing wells (including with respect to production profile, decline rate and product type mix); satisfactory access to infrastructure in areas of new production; the accuracy of the estimates of Prairie Provident’s reserves volumes; future commodity prices; future operating and other costs; future USD/CAD exchange rates; future interest rates; availability of external financing and internally generated cash flow to fund Prairie Provident’s current and future plans and expenditures, with external financing on acceptable terms; the impact of competition; the general stability of the economic and political environment in which Prairie Provident operates; the general continuance of current industry conditions; the timely receipt of any required regulatory approvals; the ability of Prairie Provident to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability of the operator of the projects in which Prairie Provident has an interest in to operate the field in a safe, efficient and effective manner; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration; the timing and cost of pipeline, storage and facility construction and expansion, and the ability of Prairie Provident to secure adequate product transportation; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Prairie Provident operates; and the ability of Prairie Provident to successfully market its oil and natural gas production.

The forward-looking statements included in this news release are not guarantees of future performance or promises of future outcomes and should not be relied upon. Such statements, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward- looking statements including, without limitation: reduced access to external debt financing; higher interest costs or other restrictive terms of debt financing; changes in realized commodity prices; changes in the demand for or supply of Prairie Provident’s products; the early stage of development of some of the evaluated areas and zones; the potential for variation in the quality of the geologic formations targeted by Prairie Provident’s operations; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; the imposition of new or additional tariffs or other restrictive trade measures or countermeasures affecting trade between Canada and the United States; changes in development plans of Prairie Provident or by third party operators; increased debt levels or debt service requirements; inaccurate estimation of Prairie Provident’s oil and reserves volumes; limited, unfavourable or no access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and such other risks as may be detailed from time-to-time in Prairie Provident’s public disclosure documents (including, without limitation, those risks identified in this news release and Prairie Provident’s current Annual Information Form dated March 31, 2025 as filed with Canadian securities regulators and available from the SEDAR+ website (www.sedarplus.ca) under Prairie Provident’s issuer profile).

The forward-looking statements contained in this news release speak only as of the date of this news release, and Prairie Provident assumes no obligation to publicly update or revise them to reflect new events or circumstances, or otherwise, except as may be required pursuant to applicable laws. All forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

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