HIGHWOOD ASSET MANAGEMENT LTD. ANNOUNCES SALE OF WILSON CREEK ASSETS

Executive Summary

• Highwood Asset Management Ltd. has entered into a definitive agreement to sell its Wilson Creek assets to Obsidian Energy Ltd. for up to $112 million CAD.
• The transaction includes a $105 million upfront cash payment plus up to $7 million in contingent quarterly payments tied to WTI prices, with an expected closing around June 30, 2026.
• Proceeds will primarily reduce net debt to approximately $15 million, with remaining capital allocated to balance sheet strengthening, an upcoming Normal Course Issuer Bid (NCIB), and strategic growth in the Brazeau portfolio and early-stage projects.

Key Details

• Transaction Structure & Parties: Definitive asset purchase and sale agreement between Highwood Asset Management Ltd. (TSXV: HAM) and Obsidian Energy Ltd. for the sale of Wilson Creek assets.
• Upfront Consideration: $105 million CAD payable in cash upon closing, subject to customary closing adjustments.
• Contingent Consideration: Up to $7 million CAD payable in quarterly installments between Q3 2026 and Q2 2027, contingent on WTI oil prices.
• Closing & Effective Dates: Effective date of April 1, 2026; expected closing on or about June 30, 2026, subject to regulatory approvals and customary conditions.
• Use of Proceeds: Primary use is to reduce outstanding debt, targeting ~$15.0 million in net debt post-closing. Remaining capital provides optionality for accelerated growth in Brazeau, early-stage portfolio development, strategic acquisitions, and shareholder returns.
• Asset Performance & ROI: Wilson Creek assets were acquired in August 2023 for ~$35 million net consideration and generated ~$26 million in Asset Level Free Cash Flow through March 31, 2026, crystallizing a pre-tax return on invested capital of >200%.
• Post-Closing Valuation & Reserves: Retained reserves carry a before-tax net present value (BTNPV10) of ~$153 million on a PDP basis and ~$306 million on a 1P basis. Implied net asset value is ~$9.00 per share (PDP) and ~$19.00 per share (1P) based on ~15.2 million basic shares.
• Strategic Portfolio Shift: Divestiture concentrates capital toward long-duration, high-margin assets in Brazeau. Brazeau production has grown from ~4,000 boe/d to >6,000 boe/d since August 2023, with strong recycle ratios (PDP: 1.4x; 1P: 2.0x; 2P: 3.3x) and a corporate free cash flow breakeven below US$45 WTI.
• Future Development & Initiatives: Waterflood initiatives have commenced at Brazeau to lower base declines and extend reserve life. Highwood plans to deploy capital to Mannville stack lands before year-end, explore strategic options for lithium/critical mineral/rare earth assets, and implement an inaugural NCIB in H2 2026.
• Advisors: RBC Capital Markets (Lead Financial Advisor), DLA Piper (Legal Counsel), ATB Capital Markets (Financial Advisor to Special Committee), Blake, Cassels & Graydon LLP (Legal Counsel to Special Committee), CIBC Capital Markets (Strategic Advisor).