PEA Pieridae Energy Limited

Pieridae Energy Limited (“Pieridae” or the “Company”) (TSX: PEA) announces that it has obtained the requisite shareholder approval to (i) issue the common shares issuable to its lender, Prudential, pursuant to the share purchase warrants granted to Prudential in June 2023 and (ii) repay in full the remaining principal amount, accrued interest and conversion fee owing to Erikson National Energy Inc. under the CAD$20 million bridge loan provided by Erikson on June 13, 2023, via the issuance of common shares of the Corporation, at any point prior to maturity of the Bridge Loan on December 13, 2024. Pieridae intends to repay a portion, or all, of the amounts drawn under the Bridge Term Loan with cash proceeds arising from potential non-core divestitures. Following the conclusion of any such divestitures, the Company plans to repay the remaining residual principal amount, if any, via the conversion of such amount into common shares, such conversion to occur at some point prior to maturity in December 2024.

As previously announced on June 13, 2023, Pieridae Energy Limited’s wholly owned subsidiary, Pieridae Alberta Production Ltd. (“PAPL” or the “Borrower”), successfully completed a debt refinancing transaction, resulting in new credit facilities with Prudential Private Capital (“Prudential”) and Voya Investment Management, totaling USD$150 million (the “Financing”). The Financing consisted of (1) a USD $120 million 45-month senior secured credit facility (the “Senior Facility”) that bears interest at Secured Overnight Financing Rate (“SOFR”) + 6.75%, consisting of (i) a USD $25 million revolving loan, (ii) a USD $85 million amortizing term loan, and (iii) a USD $10 million delayed-draw amortizing term loan; and (2) a USD $30 million 51-month subordinated term loan (the “Subordinated Notes”) that bears interest at a 13% fixed rate. 

In addition, at the time of completion of the Financing, Pieridae issued 18,596,322 common share purchase warrants (the “Warrants”) to Prudential (the “Holder”) as additional consideration for the Subordinated Notes. Each Warrant is exercisable to purchase one common share (a “Common Share”) in the capital of the Corporation at an exercise price of $0.49 per Common Share (the “Exercise Price”) (the Exercise Price being equal to the market price of the Common Shares at the time of issuance of the Warrants). As an alternative to payment of the aggregate Exercise Price of the Warrants upon exercise, the Warrants permit the Holder to exercise the Warrants, on a net basis without the exchange of any funds (the “Cashless Exercise”), such that the Holder receives, in lieu of the number of Common Shares purchasable upon exercise of Warrants otherwise than pursuant to a Cashless Exercise (the "Total Share Number"), the Total Share Number less the number of Common Shares equal to the quotient obtained by dividing (a) the product of the Total Share Number and Exercise Price by (b) the five day volume weighted average trading price of the Common Shares on the Toronto Stock Exchange prior to but excluding the date of the Cashless Exercise of the Warrants. The expiration date of the Warrants is June 13, 2030. The Warrants represent 9.9% of the issued and outstanding common shares of PEL on a fully diluted basis and 11.7% of basic shares currently outstanding. Prior to the Financing, the Holder did not own any of Pieridae’s Common Shares; following exercise of the Warrants, the Holder will become an insider of the Corporation, owning more than 10% of the Corporation’s issued and outstanding Common Shares.

Concurrently with the completion of the Financing, the Corporation also secured a CAD $20 million senior secured 18-month term loan (the “Bridge Term Loan”) from Erikson National Energy Inc., an affiliate of Third Eye Capital Corporation (“TEC”), the proceeds of which were contributed to PAPL for general corporate purposes and repayment of indebtedness. As disclosed at the time the Bridge Term Loan was obtained, the Corporation agreed with TEC to seek disinterested shareholder approval to amend the Bridge Term Loan credit agreement to permit the conversion of the Bridge Term Loan into Common Shares of the Corporation.

As at the date hereof, the full CAD$20 million has been drawn by the Corporation under the Bridge Term Loan. However, neither Erikson nor the Corporation is obligated to deliver the conversion notice at any prescribed time, and thus, the total amount owing to Erikson to repay the Bridge Term Loan will continue to increase until the maturity date of the Bridge Term Loan on December 13, 2024, as interest will continue to accrue, reflecting a total amount due and owing to Erikson, at maturity, of CAD$30,058,521 (the “Maximum Conversion Amount”), inclusive of accrued interest and conversion fee. The number of Common Shares required to be issued to satisfy the payment in full of the Maximum Conversion Amount, at the expiration of the Bridge Term Loan, should a notice of conversion be issued by Erikson or the Corporation at such time, depends on the five-day volume weighted average price of the Common Shares (the “Conversion Price”) at the time the notice of conversion is issued. Thus, based on a sensitivity analysis reflecting a range of Conversion Prices from $0.40 to a low of $0.15, the Corporation has obtained shareholder approval to issue the number of Common Shares required to repay, in full, the Maximum Conversion Amount of the Bridge Term Loan on December 13, 2024, such Maximum Conversion Amount comprised of the sum of (i) the principal amount of CAD$20 million, (ii) accrued interest thereon of CAD$6 million and (iii) the conversion fee of CAD$4 million. For illustrative purposes only, below is a table that sets forth the number of Common Shares that would be needed to settle the Maximum Conversion Amount based on a range of volume weighted average prices of the Corporation’s common shares:

Date of Conversion	Share Price of Pieridae Common Shares on TSX		Common Shares to be Issued to Satisfy Payment of Principal and Accrued Interest	Common Shares to be Issued to Satisfy Payment of Conversion Fee	Total Common Shares to be Issued	Dilution Based on Erikson Conversion(1)	Dilution Based on Erikson Conversion + Exercise of PCEP Warrants(2)
December 13, 2024	$0.40		65,146,304	10,000,000	75,146,304	47%	47%
December 13, 2024	$0.35		74,452,917	11,428,571	85,881,490	54%	54%
December 13, 2024	$0.30		86,861,738	13,333,333	100,195,072	63%	63%
December 13, 2024	$0.25		104,234,086	16,000,000	120,234,086	76%	76%
December 13, 2024	$0.20		130,292,607	20,000,000	150,292,607	94%	94%
December 13, 2024	$0.15		173,723,477	26,666,667	200,390,143	126%	126%

Notes:

	(1)	Equal to the quotient of Total Common Shares to be Issued / Number of Issued and Outstanding Common Shares (159,087,336 as at December 6, 2023), as per TSX policies.
	(2)	Equal to the quotient of ((Total Common Shares to be Issued) + (Common Shares to be Issued upon exercise of PCEP Warrants)) / Number of Issued and Outstanding Common Shares (159,087,336 as at December 6, 2023), as per TSX policies. As the PCEP Warrants have a strike price of CAD$0.49, the above table does not reflect dilution when such PCEP Warrants are “in-the-money”, as that would require a share price of $0.50 or higher. There are 5,000,000 warrants issuable for 5,000,000 shares at a strike price of $0.70 that expire March 31, 2026 held by Erickson and there are 18,596,322 warrants issuable for 18,596,322 shares at a strike price of $0.49 that expire June 13, 2030 held by Prudential.

In addition, the terms of the Bridge Term Loan provide that the Corporation has up to 60 days to issue the Common Shares required to repay the Maximum Conversion Amount, which exceeds the 45 days permitted by the policies of the Toronto Stock Exchange (“TSX”).

As the Bridge Term Loan could not have been completed without the completion of the Financing, and vice versa, under the policies of the TSX, both are viewed as connected transactions, notwithstanding the fact that TEC and Prudential are arm’s length parties. Accordingly, since the issuance of the 18,596,322 Common Shares issuable under the Warrants and the issuance of the Common Shares to Erikson, under all of the sensitivity analyses referenced above, to satisfy payment of the Maximum Conversion Amount, will exceed 25% of the issued and outstanding Common Shares, shareholder approval was required. Shareholder approval was also required to permit the issuance of the Common Shares to occur 60 days after the conversion notice is submitted.

In addition, the issuance of the Common Shares to Erikson to satisfy the Maximum Conversion Amount (i) is expected to exceed TSX insider participation limits (calculated as 10% of issued and outstanding shares prior to the issuance) and (ii) will result in Erikson beneficially owning more than 20% of the issued and outstanding Common Shares of the Corporation, resulting in Erikson becoming a “control person” of the Corporation, ranging from Erikson owning, if the Maximum Conversion Amount is settled, 42% of the issued and outstanding shares (on a fully diluted basis) at a Conversion Price of $0.40 to 62% of the issued and outstanding shares (on a fully diluted basis) at a Conversion Price of $0.15. Creation of a new control person also requires shareholder approval, on a disinterested basis, under the policies of the TSX.

Lastly, as Erikson was an insider of the Corporation at the time the Bridge Term Loan was completed, payment of the 20% conversion fee to Erikson was required under Part V of the TSX Company Manual. The Board of Directors of the Corporation reviewed the conversion fee payable to Erikson and concluded that it was in the best interests of the Corporation to complete the Refinancing, including the Bridge Term Loan (which included the conversion fee).

Pieridae has received permission from the TSX to rely on the exemption provided in section 604(d) of the TSX Company Manual that allows shareholder approval to be obtained by written consent executed by holders of more than 50% of Pieridae’s outstanding Common Shares, excluding Common Shares held, directly or indirectly, by Erikson, rather than at a meeting of shareholders.

Pieridae has received written consent from holders of more than 50% of its issued and outstanding Common Shares, excluding Common Shares held by Erikson, approving (i) the issuance of Common Shares in excess of 25% dilution, (ii) the creation of Erikson as a control person, (iii) the payment of the conversion fee of 20% to Erikson in connection with the conversion of the Bridge Term Loan and (iv) the issuance of the Common Shares to satisfy the Maximum Conversion Amount occurring up to 60 days after the delivery of the notice of conversion.

Accordingly, Pieridae has satisfied all shareholder approval requirements required by the TSX in connection with the Financing and the repayment of the Bridge Term Loan via the issuance of Common Shares.

ABOUT PIERIDAE

Pieridae is a Canadian energy company headquartered in Calgary, Alberta. The Company is a significant upstream producer of conventional natural gas, NGLs, condensate and sulphur from the Canadian Foothills of Alberta and northeast British Columbia. Pieridae’s vision is to provide responsible, affordable natural gas and derived products to meet society’s energy security needs. Pieridae’s common shares trade on the TSX under the symbol “PEA”.

For further information, visit www.pieridaeenergy.com, or please contact:

Darcy Reding, President & Chief Executive Officer	Adam Gray, Chief Financial Officer
Telephone: (403) 261-5900	Telephone: (403) 261-5900

Investor Relationsinvestors@pieridaeenergy.com

Forward-Looking StatementsCertain statements contained herein may constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities laws (collectively "forward-looking statements"). Words such as "may", "will", "should", "could", "anticipate", "believe", "expect", "intend", "plan", "potential", "continue", "shall", "estimate", "expect", "propose", "might", "project", "predict", "forecast" and similar expressions may be used to identify these forward-looking statements.

Forward-looking statements involve significant risk and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements including, but not limited to, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of resources estimates, environmental risks, competition from other producers, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits or synergies from acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources and the risk factors outlined under "Risk Factors" and elsewhere herein. The recovery and resources estimate of Pieridae's reserves provided herein are estimates only and there is no guarantee that the estimated resources will be recovered. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.

Forward-looking statements are based on a number of factors and assumptions which have been used to develop such forward-looking statements, but which may prove to be incorrect. Although Pieridae believes that the expectations reflected in such forward-looking statements are reasonable, undue reliance should not be placed on forward-looking statements because Pieridae can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which Pieridae operates; the timely receipt of any required regulatory approvals; the ability of Pieridae to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability of the operator of the projects which Pieridae has an interest in, to operate the field in a safe, efficient and effective manner; the ability of Pieridae to obtain financing on acceptable terms; the ability to replace and expand oil and natural gas resources through acquisition, development and exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of Pieridae to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Pieridae operates; timing and amount of capital expenditures, future sources of funding, production levels, weather conditions, success of exploration and development activities, access to gathering, processing and pipeline systems, advancing technologies, and the ability of Pieridae to successfully market its oil and natural gas products.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Pieridae's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), and at Pieridae's website (www.pieridaeenergy.com). Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, management cannot assure that actual results will be consistent with these forward-looking statements. Investors should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and Pieridae assumes no obligation to update or review them to reflect new events or circumstances except as required by Applicable Securities Laws.

Forward-looking statements contained herein concerning the oil and gas industry and Pieridae's general expectations concerning this industry are based on estimates prepared by management using data from publicly available industry sources as well as from reserve reports, market research and industry analysis and on assumptions based on data and knowledge of this industry which Pieridae believes to be reasonable. However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performance characteristics. While Pieridae is not aware of any misstatements regarding any industry data presented herein, the industry involves risks and uncertainties and is subject to change based on various factors.

Additional Reader AdvisoriesBarrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Abbreviations

Natural Gas		Oil
mcf	thousand cubic feet	bbl/d	barrels per day
mcf/d	thousand cubic feet per day	boe/d	barrels of oil equivalent per day
mmcf/d	million cubic feet per day	WCS	Western Canadian Select
AECO	Alberta benchmark price for natural gas	WTI	West Texas Intermediate

Neither TSX nor its Regulation Services Provider (as that term is defined in policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.