SEDAR Interim Financial Statements

-1- LOTUS CREEK EXPLORATION INC. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) As at (Cdn$ thousands) March 31, 2026 December 31, 2025 ASSETS Current assets Accounts receivable $ 12,146 $ 6,868 Prepaid expenses and deposits 1,694 1,406 Risk management contracts (Note 12) - 381 13,840 8,655 Exploration and evaluation (Note 6) 4,697 4,528 Property, plant and equipment (Note 7) 116,845 109,614 Deferred tax asset (Note 11) 1,180 - Total assets $ 136,562 $ 122,797 LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 18,447 $ 11,201 Decommissioning liability (Note 9) 1,249 1,014 Risk management contracts (Note 12) 8,297 - 27,993 12,215 Debt (Note 8) 9,050 6,921 Deferred income tax liability (Note 11) - 151 Decommissioning liability (Note 9) 21,434 21,646 Risk management contracts (Note 12) 520 - Total liabilities 58,997 40,933 SHAREHOLDERS’ EQUITY Share capital (Note 10) 80,159 80,000 Contributed surplus 18 124 (Deficit) Retained earnings (2,612) 1,740 Total shareholders’ equity 77,565 81,864 Total liabilities and shareholders’ equity $ 136,562 $ 122,797 See accompanying notes to the Interim Condensed Consolidated Financial Statements Approved by the Board of Directors (signed) (signed) Scott Robinson Kathy Turgeon Chairman of the Board of Directors and Director Chair of the Audit Committee and Director -2- LOTUS CREEK EXPLORATION INC. INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited) For the three months ended March 31 (Cdn$ thousands) Share Capital Contributed Surplus (Deficit) Retained Earnings Total Equity Balance at December 31, 2024 $ - $ - $ (13) $ (13) Shares issued pursuant to the Arrangement (Note 10) 80,000 - - 80,000 Share-based compensation (Note 10) - 10 - 10 Net loss for the period - - (489) (489) Balance at March 31, 2025 $ 80,000 $ 10 $ (502) $ 79,508 Balance as at December 31, 2025 $ 80,000 $ 124 $ 1,740 $ 81,864 Stock option exercise (Note 10) 159 (148) - 11 Share-based compensation (Note 10) - 42 - 42 Net loss for the period - - (4,352) (4,352) Balance as at March 31, 2026 $ 80,159 $ 18 $ (2,612) $ 77,565 See accompanying notes to the unaudited Interim Condensed Consolidated Financial Statements -3- See accompanying notes to the unaudited Interim Condensed Consolidated Financial Statements LOTUS CREEK EXPLORATION INC. INTERIM CONDENSED CONSOLIDATED STATEMENT OF LOSS AND COMPREHENSIVE LOSS (unaudited) For the three months ended March 31 (Cdn$ thousands, except per share amounts) 2026 2025 REVENUE Petroleum and natural gas sales (Note 14) $ 22,158 $ 5,589 Royalties (2,508) (814) 19,650 4,775 Interest income - 70 Realized loss on settled risk management contracts (Note 12) (922) - Unrealized loss on outstanding risk management contracts (Note 12) (9,198) - 9,530 4,845 EXPENSES Operating 6,293 2,147 Transportation 296 168 Depletion, depreciation and amortization (Note 7) 5,931 1,330 General and administrative 1,252 829 Interest and financing charges 274 82 Transaction costs 7 647 Impairment (Note 7) 900 - Accretion (Note 9) 218 121 Share-based compensation (Note 10) 42 10 15,213 5,334 Loss before income taxes (5,683) (489) Deferred income tax recovery (Note 11) 1,331 - Net loss and comprehensive loss $ (4,352) $ (489) Net loss per share, basic and diluted (Note 11) $ (0.11) $ (0.02) -4- LOTUS CREEK EXPLORATION INC. INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) For the three months ended March 31 (Cdn$ thousands) 2026 2025 CASH FLOWS FR --- OM (USED IN) OPERATING ACTIVITIES Net loss $ (4,352) $ (489) Add items not involving cash: Unrealized loss on outstanding risk management contracts (Note 12) 9,198 - Depletion, depreciation and amortization (Note 7) 5,931 1,330 Impairment (Note 7) 900 - Accretion (Note 9) 218 121 Share-based compensation (Note 10) 42 10 Deferred income tax recovery (Note 11) (1,331) - Decommissioning liabilities settled (Note 9) (19) - Change in non-cash working capital (Note 15) (428) (1,415) 10,159 (443) CASH FLOWS FROM FINANCING ACTIVITIES Change in debt under credit facilities (Note 8) 2,129 - Exercise of stock options (Note 10) 11 - 2,140 - CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES Exploration and evaluation expenditures (Note 6) (169) (9,292) Property, plant and equipment expenditures (Note 7) (14,238) (294) Cash acquired in the Acquisition - 18,225 Change in non-cash working capital (Note 15) 2,108 5,483 (12,299) 14,122 Increase in cash and cash equivalents - 13,679 Cash and cash equivalents, beginning of period - - Cash and cash equivalents, end of period $ - $ 13,679 The following are included in cash flows from operating activities: Interest paid in cash $ 209 $ 184 Interest earned on cash $ - $ 70 See accompanying notes to the unaudited Interim Condensed Consolidated Financial Statements -5- LOTUS CREEK EXPLORATION INC. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) As at and for the three months periods ended March 31, 2026 and 2025 (all tabular amounts in Cdn$ thousands, except as noted) 1. STRUCTURE OF THE BUSINESS Lotus Creek Exploration Inc. (the “Company” or “Lotus Creek”) was incorporated under the laws of the Province of Alberta on August 21, 2024 as 2640847 Alberta Ltd. On December 18, 2024, Articles of Amendment were filed to change the name of the Company to “Lotus Creek Exploration Inc.”. The principal undertakings of Lotus Creek are to carry on the business of acquiring, developing and holding interests in petroleum and natural gas properties and assets. Upon incorporation, the Company was a wholly-owned subsidiary of Gear Energy Ltd. (“Gear”) and had limited operations. On February 5, 2025, the Company, Gear and an unrelated third-party (the “Third-Party”) completed a plan of arrangement under the provisions of the Business Corporations Act (Alberta) (the “Arrangement”). Under the Arrangement, the Third-Party acquired Gear including all of its heavy oil assets (other than its Tucker Lake property). Gear's producing oil and gas properties in Central Alberta and Southeast Saskatchewan and its evaluation and exploration properties in Tucker Lake, Alberta (the “Lotus Creek Assets”) were acquired by Lotus Creek. Lotus Creek also received a portion of the purchase price paid by the Third-Party to fund its exploration and development activities. Lotus Creek issued 40.0 million common shares (the “Common Shares”) of the Company as consideration for the Lotus Creek Assets with such Common Shares distributed to the former holders of common shares of Gear pursuant to the Arrangement. On February 5, 2025, Lotus Creek commenced commercial operations on closing of the Arrangement. On February 11, 2025, the Common Shares began trading on the TSX Venture Exchange under the symbol “LTC”. The Company’s principal place of business is located at 900, 520 – 5th Avenue SW, Calgary, Alberta T2P 3R7. 2. BASIS OF PREPARATION These interim condensed consolidated financial statements (the “financial statements”) have bee --- n prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting using accounting policies aligned with International Financial Reporting Standards (“IFRS”). These financial statements are consistent with Lotus Creek’s consolidated financial statements as at and for the year ended December 31, 2025. The financial statements do not include all of the information required for annual financial statements and should be read in conjunction with the Audited Consolidated Financial Statements for the year ended December 31, 2025, which have been prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board (“IASB”). The financial statements were authorized for issue by the Board of Directors on April 27, 2026. 3. MATERIAL ACCOUNTING POLICIES Financial Instruments Lotus Creek enters into risk management contracts in order to manage its exposure to market risks from fluctuations in commodity prices, foreign exchange rates and interest rates in the normal course of operations. Lotus Creek has not designated any risk management contracts as effective hedges and thus has not applied hedge accounting. All risk management contracts are initially measured at fair value through profit or loss and are subsequently measured at fair value with changes in fair value recorded in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss). The fair values of these derivative instruments are based on an estimate of the amounts that would be paid or received to settle these instruments at the balance sheet date. For presentation purposes, the Company disaggregates gains and losses between realized and unrealized components, as described in Note 12. This presentation does not affect the recognition or measurement of derivative financial instruments under IFRS 4. CHANGES IN ACCOUNTING POLICIES The IASB issued amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures relating to settling financial liabilities using an electronic payment system and assessing contractual cash flow characteristics of financial assets. The amendments were adopted January 1, 2026 and do not have a material impact on the Company’s financial statements. -6- 5. FUTURE ACCOUNTING PRONOUNCEMENTS In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements ("IFRS 18"), which will replace IAS 1 and includes requirements for all entities applying IFRS Accounting Standards for the presentation and disclosure of information in the financial statements. IFRS 18 will introduce new totals, subtotals, and categories for income and expenses in the statement of income, as well as requiring disclosure about management-defined performance measures and additional requirements regarding the aggregation and disaggregation of certain information. It will be effective on January 1, 2027, with earlier adoption permitted, and it must be adopted on a retrospective basis. The Company is currently evaluating the impact on its financial statements. 6. EXPLORATION AND EVALUATION ASSETS The following table reconciles Lotus Creek’s E&E assets: Cost ($ thousands) E&E Assets Balance, December 31, 2024 746 Additions 12,689 Acquisition 6,228 Transfers to property, plant and equipment (Note 7) (15,135) Balance, December 31, 2025 4,528 Additions 169 Balance, March 31, 2026 4,697 As at March 31, 2026, no indicators of impairment were identified related to Lotu --- s Creek’s E&E assets. As a result of this assessment, impairment tests were not performed. 7. PROPERTY, PLANT AND EQUIPMENT The following table reconciles Lotus Creek’s property, plant and equipment: Cost ($ thousands) Development and Production Assets Administrative Assets Total Balance, December 31, 2024 - - - Acquisition 64,070 76 64,146 Additions 29,334 57 29,391 Transfers from E&E assets (Note 6) 15,135 - 15,135 Change in decommissioning costs (Note 9) 11,229 - 11,229 Balance, December 31, 2025 119,768 133 119,901 Additions 14,075 163 14,238 Change in decommissioning costs (Note 9) (176) - (176) Balance, March 31, 2026 133,667 296 133,963 Depletion, depreciation and amortization Balance, December 31, 2024 - - - Depletion, depreciation and amortization 10,230 57 10,287 Balance, December 31, 2025 10,230 57 10,287 Depletion, depreciation and amortization 5,889 42 5,931 Impairment 900 - 900 Balance, March 31, 2026 17,019 99 17,118 Carrying amounts ($ thousands) Development and Production Assets Administrative Assets Total As at December 31, 2025 109,538 76 109,614 As at March 31, 2026 116,648 197 116,845 Management has determined that Lotus Creek’s asset base represents two Cash-Generating Units (“CGUs”). CGU A is comprised predominantly of Lotus Creek’s petroleum properties located in Western Alberta and CGU B is comprised of petroleum properties located in Southeast Saskatchewan. On March 26, 2026, Lotus Creek signed a non-binding letter of intent with an unrelated third party (the “Purchaser”) to negotiate an offer for the purchase of Lotus Creek’s assets located in Tableland, Saskatchewan (the “Tableland Assets”) or CGU B. The sale was not deemed to be probable as of March 31, 2026 given the letter of intent was non-binding, the sale was subject to board approval and -7- Lotus Creek was not actively marketing the Tableland Assets. Subsequent to March 31, 2026, Lotus Creek entered into a binding agreement to sell these assets to the Purchaser. The sale of the Tableland Assets closed on April 22, 2026 for $13.0 million (the “Transaction”). Based on the selling price, the Company determined that the carrying value of these assets exceeded their recoverable amount. As a result, Lotus Creek recognized an impairment of $0.9 million on CGU B for the three months ended March 31, 2026. See Note 17 Subsequent Events for details. As at March 31, 2026, no indicators of impairment were identified related to Lotus Creek’s CGU A. As a result of this assessment, an impairment test was not performed. 8. DEBT At March 31, 2026, Lotus Creek had the following credit facilities (collectively, the “Credit Facilities”): Facility Classification Borrowing base Maturity date ($ thousands) March 31, 2026 December 31, 2025 Revolving term facility Long term 30,000 30,000 May 31, 2027 Operating facility Long term 10,000 10,000 May 31, 2027 Total 40,000 40,000 At March 31, 2026 Lotus Creek had $9.1 drawn on the Credit Facilities (December 31, 2025 – $6.9 million) and outstanding letters of credit of $0.5 million (December 31, 2025 – $0.5 million). The Credit Facilities do not carry any financial covenants. Subsequent to March 31, 2026, Lotus Creek entered into a letter of credit for $0.8 million. The total stamping fees on the Credit Facilities, depending on Lotus Creek’s Debt to EBITDA ratio, range between 250 bps to 400 bps on Canadian bank prime borrowings and between 350 bps and 500 bps on US dollar denominated SOFR loans and Canadian dollar CORRA. The undra --- wn portion of the Credit Facilities is subject to a standby fee in the range of 87.5 bps to 125 bps. Subsequent to March 31, 2026, on April 21, 2026, the semi-annual borrowing base review was completed, extending the maturity date of the Credit Facilities to May 31, 2028, with no change to the Company’s 40.0 million borrowing base. The next borrowing base review is expected to be completed on or about November 30, 2026. 9. DECOMMISSIONING LIABILITY ($ thousands) Three months ended March 31, 2026 Year ended December 31, 2025 Balance, beginning of period 22,660 - Change in discount rates and estimates (329) 161 Additions 153 723 Acquisition - 11,743 Revaluation of acquired decommissioning liabilities (1) - 10,345 Liabilities settled (19) (1,007) Accretion 218 695 Balance, end of period 22,683 22,660 Expected to be incurred within one year 1,249 1,014 Expected to be incurred beyond one year 21,434 21,646 (1) These amounts relate to the revaluation of acquired decommissioning liabilities using the risk-free discount rate. At the date of acquisition, decommissioning liabilities were recorded at fair value using a credit adjusted risk-free discount rate. The undiscounted and unescalated amount of the expected cash flows required to settle the net decommissioning liability is estimated to be $30.3 million as at March 31, 2026 (December 31, 2025 – $30.2 million). The liability for the expected cash flows, as reflected in the financial statements, has been inflated at 2.00 per cent (December 31, 2025 – 2.00 per cent) and discounted using a risk-free rate of 3.88 per cent (December 31, 2025 – 3.85 per cent). Abandonments are expected to occur between 2026 and 2053 and related costs will be funded mainly from cash provided by Lotus Creek’s operating activities. Subsequent to March 31, 2026, on April 22, 2026 and in conjunction with the disposition of the Tableland Assets, decommissioning liabilities of approximately $4.8 million were assumed by the Purchaser upon closing of the Transaction. See Note 17 Subsequent Events for details. -8- 10. SHAREHOLDERS’ EQUITY Lotus Creek is authorized to issue an unlimited number of Common Shares. a) Share Capital Three months ended March 31, 2026 Year ended December 31, 2025 (thousands of shares and $ thousands) Shares Amount Shares Amount Balance, beginning of period 40,000 $ 80,000 - $ - Stock option exercise 105 159 - - Shares issued pursuant to the Arrangement (1) - - 40,000 80,000 Balance, end of period 40,105 $ 80,159 40,000 $ 80,000 (1) 39,999,999 Common Shares were issued pursuant to the Arrangement at a price of $2.00 per Common Share. For the three months ended March 31, 2026, 0.2 million stock options (December 31, 2025 – nil) were exercised for 0.1 million common shares (December 31, 2025 – nil). Of the total stock options exercised, 0.1 million stock options were exercised on a share-less basis (December 31, 2025 – nil). b) Stock Options Lotus Creek's stock option plan provides for the grant of options to purchase Common Shares of Lotus Creek to directors, officers, employees and consultants of Lotus Creek. Options under the option plan expire 30 business days following the date of vesting of the grant. The options either vest in twelve equal one-twelfth quarterly tranches starting on the first anniversary date of the grant date or fully vest on the third anniversary date of the grant date. The following table summarizes Lotus Creek’s stock option plan activity during the periods ended March 31, 20 --- 26 and December 31, 2025. Three months ended March 31, 2026 Year ended December 31, 2025 (thousands) Number of stock options Weighted average exercise price Number of stock options Weighted average exercise price Outstanding, beginning of period 2,604 $ 1.34 - $ - Granted 293 3.02 2,746 1.34 Exercised (192) 1.34 - - Forfeited (11) 1.34 (142) 1.34 Outstanding, end of period 2,694 1.52 2,604 1.34 Exercisable, end of period 7,070 $ 1.34 - $ - During the three months ended March 31, 2026, Lotus Creek has recorded an expense of $42 thousand (2025 – $10 thousand) to share-based compensation expense recognizing the stock option activity for the period based on the fair value of options issued, amortized using a graded vesting calculation. The following table summarizes a range of exercise prices, and the weighted average remaining contractual life for the options as at March 31, 2026: Exercise Price Number of stock options (thousands) Weighted average remaining contractual life (years) $1.34 2,369 1.6 $1.44 32 1.9 $3.02 293 2.8 The Black-Scholes option-pricing model was used to determine the fair value of stock options granted using the following assumptions: Three months ended March 31, 2026 Year ended December 31, 2025 Risk free interest rate (%) 2.79 2.56 Average expected life (years) 2.1 2.1 Average expected volatility (%) (1) 14.6 14.6 Forfeiture rate (%) 10.0 10.0 (1) Lotus Creek estimated the expected volatility over the life of the options based on peer group average for junior oil and gas companies and historical Lotus Creek volatility since February 11, 2025. -9- c) Per Share Amounts (thousands, except per $ share amounts) Three months ended March 31, 2026 Three months ended March 31, 2025 Basic 40,026 24,444 Diluted 41,071 24,444 Net loss per share – basic and diluted (0.11) (0.02) When the impact is anti-dilutive, stock options are excluded from the calculation of diluted weighted average Common Shares. 11. INCOME TAXES The tax provision differs from the amount computed by applying the combined Canadian federal and provincial statutory income tax rates to income before deferred income tax expense as follows: ($ thousands) Three months ended March 31, 2026 Year ended December 31, 2025 (Loss) Income before income taxes (5,683) 1,904 Canadian statutory rate (1) 23.6% 23.6% Computed income tax expense (recovery) at statutory rates (1,341) 449 Effect on income tax of: Non-deductible items 10 29 Change in tax assets recognized - (327) Deferred income tax (recovery) expense (1,331) 151 (1) The statutory rate consists of the combined statutory tax rate for Lotus Creek. The deferred income tax asset (liability) is comprised of the following as at March 31, 2026 and December 31, 2025: ($ thousands) December 31, 2025 Recognized change through profit and loss March 31, 2026 Deferred income tax asset (liability): Non-capital losses carry forward 2,277 (1,365) 912 PP&E and E&E (7,686) 520 (7,166) Risk management contracts (90) 2,171 2,081 Decommissioning liability 5,348 5 5,353 Net deferred income tax asset (liability) (151) 1,331 1,180 Deferred income tax assets are recognized for tax loss and tax loss carry‐forwards to the extent that the realization of the related tax benefit through future taxable profits is probable. As at March 31, 2026, a deferred income tax asset of $1.3 million was recognized. As at December 31, 2025, a deferred income tax liability of $0.2 million was recognized and no deferred income tax asset was recognized. Included --- in this tax basis are estimated non-capital loss carry forwards that expire in the year 2045. 12. FINANCIAL INSTRUMENTS Classification and Measurement Lotus Creek’s financial instruments on the Consolidated Balance Sheets are carried at amortized cost with the exception of risk management contracts, which are carried at fair value. As at March 31, 2026 and December 31, 2025, no significant differences existed between the carrying value of financial instruments and their estimated fair values. Risk management contracts are transacted in active markets. Lotus Creek classifies the fair value of these transactions according to the following hierarchy based on the amount of observable inputs used to value the instrument. • Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis. • Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1. Prices in Level 2 are either directly or indirectly observable as of the reporting date. Level 2 valuations are based on inputs, including quoted forward prices for commodities, forward exchange rates, time value and volatility factors, which can be substantially observed or corroborated in the marketplace. • Level 3 – Valuations in this level are those with inputs for the asset or liability that are not based on observable market data. -10- Lotus Creek’s risk management contracts are classified as Level 2. Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy level. Market Risk Management Lotus Creek is exposed to a number of different financial risks arising from normal course business exposures, as well as the Company’s use of financial instruments. These risk factors include market risks relating to commodity prices, foreign currency risk and interest rate risk, as well as liquidity risk and credit risk. There have been no changes in the Company’s objectives, policies or risks surrounding financial instruments. Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of the business. The market price movements that could adversely affect the value of the Company’s financial assets, liabilities and expected future cash flows include commodity price risk (petroleum, natural gas and NGLs), and foreign currency exchange risk. (a) Commodity price and foreign currency exchange risk Lotus Creek is subject to commodity price risk on the delivery of petroleum, and to a lesser extent, natural gas and NGLs. These prices have a significant impact on its financial condition and can be subject to volatility as a result of a number of different external factors including supply and demand fundamentals, inventory levels, exchange rates, weather, economic and geopolitical factors and the imposition of tariffs. North American petroleum, natural gas and NGL prices are based upon US dollar denominated commodity prices. As a result, the price received by Canadian producers is affected by the Canadian/US dollar exchange rate. Lotus Creek can manage the risks associated with changes in commodity prices and foreign currency exchange by entering into a variety of risk management contracts. Lotus Creek uses or plans to use --- a variety of derivative instruments to reduce its exposure to fluctuations in commodity prices, foreign exchange rates, and interest rates. Lotus Creek has not designated its risk management contracts as effective hedges, and thus has not applied hedge accounting. All derivative financial instruments are measured at fair value through profit or loss in accordance with IFRS 9. For presentation purposes on the face of the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss), gains and losses on risk management contracts are disaggregated between “realized” and “unrealized” amounts, as defined below. This disaggregation represents a presentation distinction only and does not reflect a difference in recognition or measurement under IFRS. Realized gain (loss) on risk management contracts represents the net cash settlements received or paid during the period on derivative contracts that matured, were settled, or were terminated during the period. Unrealized gain (loss) on risk management contracts represents the change in fair value during the period of derivative contracts that remain outstanding at the reporting date, including the effect of new contracts entered into during the period and changes in relevant forward prices, differentials, and other valuation inputs. The following is a summary of all risk management contracts in place as at March 31, 2026: Financial WTI Crude Oil Contracts Term/ Remaining Term Contract Currency Volume Sold Swap bbl/d $/bbl Apr 1, 2026 Dec 31, 2026 Swap CAD 100 80.05 Apr 1, 2026 Dec 31, 2026 Swap CAD 100 77.80 Apr 1, 2026 Jan 31, 2027 Swap CAD 100 77.65 Apr 1, 2026 Aug 31, 2026 Swap CAD 100 85.10 Apr 1, 2026 Feb 28, 2027 Swap CAD 100 78.00 Apr 1, 2026 Dec 31, 2026 Swap CAD 100 83.00 Apr 1, 2026 Mar 31, 2027 Swap CAD 100 80.00 Apr 1, 2026 Aug 31, 2026 Swap CAD 100 86.10 Apr 1, 2026 Mar 31, 2027 Swap CAD 100 85.50 Jan 1, 2027 Dec 31, 2027 Swap CAD 100 81.60 Sep 1, 2026 Mar 31, 2027 Swap CAD 100 84.00 Apr 1, 2026 Jun 30, 2026 Swap CAD 100 94.05 Apr 1, 2026 Jun 30, 2026 Swap CAD 100 107.05 Jul 1, 2026 Dec 31, 2026 Swap CAD 100 93.25 Jan 1, 2027 Dec 31, 2027 Swap CAD 100 86.05 Apr 1, 2026 Jun 30, 2026 Swap CAD 100 129.25 Jan 1, 2027 Jun 30, 2027 Swap CAD 100 94.75 Apr 1, 2026 Apr 30, 2026 Swap CAD 400 140.50 Apr 1, 2027 Dec 31, 2027 Swap CAD 100 96.25 -11- Financial AECO Natural Gas Contracts Term/ Remaining Term Contract Currency Volume Sold Swap GJ/d $/GJ Apr 1, 2026 Dec 31, 2026 Swap CAD 650 3.00 As at March 31, 2026, the fair value associated with Lotus Creek’s risk management contracts was a liability of $8.8 million (December 31, 2025 – asset of $0.4 million). The following table summarizes the change in the net risk management contracts (liability) asset during the period ended March 31, 2026 and year ended December 31, 2025: ($ thousands) Three months ended March 31, 2026 Year ended December 31, 2025 Balance, beginning of period 381 - Unrealized (loss) gain on risk management contracts (9,198) 381 Balance, end of period (8,817) 381 Current (8,297) 381 Non-current (520) - The fair value of derivative financial instruments is highly sensitive to changes in underlying commodity prices. The following table shows the impact of changes in WTI on net income, holding all other variables constant, of risk management contracts in place as at March 31, 2026: Sensitivity of Commodity Price Risk Management Contracts as at March 31, 2026 ($ thousands) 10 per cent Increase in Commodity Price 10 per --- cent Decrease in Commodity Price WTI AECO WTI AECO Net income (decrease) increase (4,762) (30) 4,762 30 The sensitivities are hypothetical and based on management’s assessment of reasonably possible changes in commodity prices after the balance sheet date. The results of the sensitivity should not be considered to be predictive of future performance. Changes in the fair value of risk management contracts cannot generally be extrapolated because the relationship of change in certain variables to a change in fair value may not be linear. (b) Interest rate risk Lotus Creek has variable interest rates on its Credit Facilities, therefore, changes in interest rates could result in an increase or decrease in the amount Lotus Creek pays to service its debt. Lotus Creek had no risk management contracts that would be affected by interest rates in place at March 31, 2026 and December 31, 2025. (c) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company believes that it has access to sufficient capital through internally generated cash flows and external sources (bank credit markets and equity financing, if required) to meet current spending forecasts. Lotus Creek’s Credit Facilities are periodically reviewed by its lenders through scheduled borrowing base reviews at which time the borrowing base of such facilities can be adjusted. In the event that the borrowing base is reduced below the amount drawn, Lotus Creek would have 30 days to eliminate the borrowing base shortfall by repaying the amount drawn in excess of the adjusted borrowing base. If this occurs, alternative external sources of funding will be necessary. After examining the economic factors that could cause liquidity risk, the Company believes it will have sufficient liquidity to support its operations and meet its financial obligations for at least twelve months. There can be no assurance that future borrowing base reviews will not result in a material reduction in the borrowing base, and that the necessary funds will be available to meet Lotus Creek’s obligations as they become due. In addition, there can be no assurances that Lotus Creek’s Credit Facilities will be extended beyond the May 31, 2028 maturity date. The next borrowing base review is expected to be completed on or about November 30, 2026. All the accounts payable and accrued liabilities are due in less than one year. (d) Credit risk Lotus Creek is or may be exposed to third party credit risk through its contractual arrangements with its current or future joint venture partners, marketers of petroleum and natural gas and other parties. In the event such entities fail to meet their contractual obligations to Lotus Creek, such failures could have a material adverse effect. The Company manages the risk by reviewing the credit risk of these entities and by entering agreements only with parties that meet certain credit tests. The maximum credit risk that the Company is exposed to is the carrying value of accounts receivable and risk management contracts. -12- The majority of the credit exposure on accounts receivable at March 31, 2026 pertains to accrued revenue for March 2026 production volumes. Lotus Creek transacts with a number of oil and natural gas marketing companies. Marketing companies typically remit amounts to Lotus Creek by the 25th day of the month following production. The Company had three (December 31, 2025 – th --- ree) light oil marketing companies exceeding 10 per cent of the total outstanding balance at March 31, 2026. When determining whether amounts that are past due are collectable, management assesses the credit worthiness and past payment history of the counterparty, as well as the nature of the past due amount. Lotus Creek considers all amounts greater than 90 days to be past due. At March 31, 2026, $46 thousand (December 31, 2025 – $38 thousand) of accounts receivable are past due with all amounts collectible. 13. CAPITAL MANAGEMENT Lotus Creek’s capital management objective is to maintain a structure that will allow it to: • Fund its development and exploration program; • Weather periods of low commodity prices in light of changes in economic conditions; and • Provide financial flexibility to execute on strategic opportunities. Lotus Creek considers its capital structure to include shareholders’ equity and net debt, which includes debt and working capital. As at March 31, 2026 and December 31, 2025, these amounts are as follows: ($ thousands) March 31, 2026 December 31, 2025 Debt (9,050) (6,921) Working capital deficit (1) (4,607) (2,927) Net debt (13,657) (9,848) Shareholders’ equity 77,565 81,864 Total capital 63,908 72,016 (1) Excludes risk management contracts and decommissioning liabilities. At certain times, Lotus Creek may incur debt as a result of planned capital development, timing of accounts payables, strategic acquisitions, or change in commodity prices. Lotus Creek manages its capital structure and adjusts it in response to changes in economic conditions, the risk characteristics of its underlying assets, and the appetite for risk associated with access to capital. This is achieved by issuing new shares or adjusting its net debt position through the management of capital expenditures. Adjusted funds from operations is defined as cash flows from (used in) operating activities before changes in non-cash operating working capital and decommissioning liabilities settled and adding back transaction costs, if any. Transaction costs, which primarily include legal fees and other related acquisition costs, are excluded to provide a measure representing cash flows generated by the Company’s routine business operations. Lotus Creek evaluates its financial performance primarily on adjusted funds from operations and considers it a key measure for management and investors as it demonstrates the Company’s ability to generate the adjusted funds from operations necessary to fund its capital program, settle decommissioning liabilities and repay debt. The following reconciles cash flows from (used in) operating activities to adjusted funds from operations: ($ thousands) Three months ended March 31, 2026 Three months ended March 31, 2025 Cash flows from (used in) operating activities 10,159 (443) Decommissioning liabilities settled 19 - Change in non-cash operating working capital 428 1,415 Add back: transaction costs 7 647 Adjusted funds from operations 10,613 1,619 -13- 14. PETROLEUM AND NATURAL GAS SALES Lotus Creek sells its production pursuant to variable-price contracts. The transaction price for these contracts is based on commodity prices adjusted for quality and other factors. The contracts to sell the Company’s petroleum, natural gas and NGLs have varying terms not longer than one year. The following table provides a summary of Lotus Creek’s revenue streams since commencement of commercial operations on February 5, 2025: ($ thousands --- ) Three months ended March 31, 2026 Three months ended March 31, 2025 Petroleum 19,221 4,670 Natural gas liquids 2,115 598 Natural gas 822 321 Total petroleum and natural gas sales 22,158 5,589 15. SUPPLEMENTAL DISCLOSURES CASH FLOW INFORMATION Cash Flow Statement Presentation The following table provides a detailed breakdown of the changes in non-cash working capital: ($ thousands) Three months ended March 31, 2026 Three months ended March 31, 2025 Accounts receivable (5,278) (2,168) Prepaid expenses (288) (328) Accounts payable and accrued liabilities 7,246 6,564 Total 1,680 4,068 Operating Activities (428) (1,415) Investing Activities 2,108 5,483 Total 1,680 4,068 16. COMMITMENTS AND CONTINGENCIES The following is a summary of Lotus Creek’s contractual obligations and commitments as at March 31, 2026: Payments due by period ($ thousands) 2026 2027 2028 Total Office leases (1) 245 232 - 477 Service agreements - 74 47 121 245 306 47 598 (1) Includes base rent and estimated operating costs. Subsequent to March 31, 2026, Lotus Creek entered into a service agreement with a commitment of $0.6 million over the periods 2026 to 2028. Lotus Creek is involved in litigation and claims arising in the normal course of operations. Management is of the opinion that pending litigation will not have a material impact on Lotus Creek’s financial position or results of operations. 17. SUBSEQUENT EVENT Subsequent to March 31, 2026, Lotus Creek entered into an asset purchase and sale agreement to which the Company agreed to dispose of the Tableland Assets to the Purchaser. The Transaction closed on April 22, 2026 for aggregate proceeds of $13.0 million. Proceeds include cash consideration of $12.5 million and $0.5 million held in escrow, subject to the final statement of adjustments. These assets, also known as CGU B, include Lotus Creek’s wholly owned subsidiary, Steppe Petroleum (USA) Inc. Decommissioning liabilities of approximately $4.8 million were also assumed by the Purchaser upon closing. Any difference between the final proceeds, subject to the final statement of adjustments, will be recognized in the period in which the Transaction closed.