Criterium conducts initial flow test at N-MGH gas field

Mr. Matthew Klukas reports CRITERIUM ENERGY ANNOUNCES POSITIVE PRELIMINARY GAS TEST RESULTS AT NORTH MENGOEPEH AND PROVIDES PRELIMINARY Q2 OPERATING RESULTS Criterium Energy Ltd. has conducted a successful preliminary flow test at the North Mengoepeh (N-MGH) gas field and is continuing preparations to test in Southeast Mengoepeh (SE-MGH). The company is providing preliminary operating results for the three-month period ended June 30, 2025. "We have recently made meaningful forward progress on our gas development program with positive initial results at N-MGH expected to be additive to our gas production volumes in 2026, should we complete a successful test at SE-MGH," said Matthew Klukas, president and chief executive officer of Criterium Energy. "A successful test of SE-MGH will underpin a gas sales agreement and pipeline development that will allow us to achieve first gas in early 2026, which would in turn support development of other gas assets in due course as we leverage initial successes to fund the next rounds. The positive test at N-MGH suggests the emergence of building gas potential for Criterium that can help grow our production and business over the near, mid and longer term while supporting the strong appetite and market for domestic natural gas in Indonesia." Second quarter 2025 operating update: Successful North Mengoepeh production test: MGH-20 tested 2.5 million cubic feet per day (mmcf/d) with associated oil (1), thus suggesting commercial flow rates from the N-MGH field. MGH-20 had been previously suspended in 2014. The gas resource contained in the N-MGH field, currently not included in the company's reserve or resource estimates, has the potential to increase total gas production as a near-term follow-up to SE-MGH. SE-MGH gas development remains an immediate focus: Development is advancing with re-entry operations continuing in preparation for an extended well test commencing this quarter. Bringing the 15 billion cubic feet (bcf) (3) of contingent resources into the reserves category will be critical to near-term and midterm value creation. Management reiterates its 2025 capital guidance of $3-million (U.S.) to $5-million (U.S.) required to advance the project to first gas. Diversifying the production profile by prioritizing repeatable, serial gas developments in the Tungkal PSC (production sharing contract) in the near term to midterm: The company expects to bring additional gas discoveries in the Tungkal PSC into development following SE-MGH and N-MGH, including Macan Gedang (contingent resources of 13 bcf (3)), Cerah (best case prospective resources of 26 bcf (3)) and MGH-43 (volumes under evaluation) over the next two to three years. Negotiated debt repayment holiday with lenders: In the face of lower oil prices, management successfully negotiated a pause in debt repayments with its lenders, which is expected to last through the balance of 2025 and allow the company to focus its resources on its gas development activities. Production remains up over 2024: The company achieved average field production in the Tungkal PSC of 890 barrels per day (bbl/d) (2) in Q2 (second quarter) 2025, up from 821 bbl/d (2) in Q2 2024. The increase reflects a successful 15-well workover campaign conducted through 2024, offset by reductions associated with pump failures in the Pematang Lantih field, which took approximately 60 to 80 bbl/d off-line in June. Criterium engaged a production technology specialist to audit its oil and gas facilities and wells, providing actionable items for continued production improvements. Operating costs stable: Direct operating costs remained steady for the quarter at $2.7-million (U.S.) ($33 (U.S.) per barrel (bbl)) (2). Sustained robust netbacks: Operating netbacks were relatively stable at $22 (U.S.) per bbl (4) in the second quarter despite an approximately $5 (U.S.) per bbl reduction in oil price. On average, the company received a premium of $3 (U.S.) per bbl premium to Brent in Q2 2025. Tungkal PSC gas development plan -- building and diversifying the producing portfolio For 2025, management intends to develop the company's gas assets with an eye to diversifying production beyond oil, backed by long-term gas sales agreements (GSAs) and financed from expected cash flow. Initially, the intent is to focus on the SE-MGH field, targeting production in Q1 (first quarter) 2026 from the Talang Akar formation (TAF), followed by the N-MGH field, which also produces from the TAF. The company recently conducted an initial flow test at the re-entered MGH-20 well in N-MGH, which flowed 2.5 mmcf/d through an 8/64ths-inch choke over a 24-hour period (1). Next steps include mobilizing the company's service rig, following completion of the extended well test at SE-MGH, to conduct an extended well test of MGH-20 and three additional wells on the N-MGH well pad, all of which are currently shut-in. With the positive indications from the MGH-20 well test, Criterium intends to test and develop the N-MGH field with gas production expected from two wells (MGH-20 and MGH-32). Commercial production rates will be confirmed following extended flow tests to be conducted in H2 (second half) 2025. Should the company successfully complete a flow test of SE-MGH and with the potential additional volume from N-MGH, management would elect to develop the initial Tungkal gas fields via a pipeline, tying in to nearby gas infrastructure at the Teluk Rendah gas plant. Development via pipeline has several advantages, including attracting a higher gas price and maintaining the ability to increase production from adjacent fields with minimal capital. It is expected that funding for the pipeline will be provided by a third party underpinned by a GSA. During the next 12 months, key milestones anticipated for gas development in the Tungkal PSC field include: Completing the extended well test on the existing SE-MGH well in Q3 2025, which had previously tested at eight mmcf/d (5), to confirm deliverability and gas composition; Following completion of the extended well test at SEM-01 the company expects to enter into a GSA with the buyer/offtaker expected to begin required site preparations; Mobilizing the company's rig to conduct extended well testing at MGH-20 and MGH-32 in N-MGH; Subject to successfully completing testing in Q3 (third quarter) 2025, first gas sales from SE-MGH are anticipated in Q1 2026, at which time the company will progress to further development opportunities within its existing portfolio. The estimated capital expenditure required to reach first gas for SE-MGH is approximately $3-million (U.S.) to $5-million (U.S.) net to Criterium. Initial production is expected to range between five mmcf/d (3) to seven mmcf/d (3) (900 to 1,250 barrels of oil equivalent per day (boe/d) (6)), with potential to increase shortly after with the parallel development of N-MGH, which initially tested 2.5 mmcf/d ()1. Pricing will be determined by the successful execution of a GSA, but recent historical contracts in South Sumatra have ranged between $5 (U.S.) to $7 (U.S.) per million British thermal units (mmBtu) (7) on a long-term fixed take-or-pay basis. A development plan for N-MGH will be confirmed after the completion of the extended well tests of MGH-20 and MGH-32 in H2 2025. Subsequently, Criterium intends to develop the Macan Gedang gas asset, where the Macan Gedang-1 well encountered gas in the Gumai formation and tested at five mmcf/d (8), with the intention of bringing production on line in late 2026 or early 2027. The company's most recent resource report dated March 14, 2025, and prepared by ERCE Australia Pty. Ltd., with an effective date of Dec. 31, 2024, indicated a 2C gas resource at Macan Gedang of 13 bcf. Macan Gedang can be produced via Modular LNG technology or by tying into the existing local pipeline infrastructure, and management is reviewing both options in parallel. In addition to SE-MGH, N-MGH and Macan Gedang, the Tungkal PSC contains additional discovered gas. Specifically: (i) the Cerah-1 well, drilled in 2008 encountered gas shows in the Gumai formation but was not tested at the time due to low gas prices and lack of nearby infrastructure (best case prospective resources in Cerah are expected to be 26 bcf recoverable (3)); and (ii) gas was also encountered in the Gumai formation during the drilling of the MGH-43 infill well, which is still being evaluated. With the strong and growing demand for gas in Indonesia, management believes development of these assets to be increasingly commercially viable and aligned with the company strategy of shifting production to natural gas. Indonesian gas sales agreements and Criterium's strategy With a backdrop of growing energy demand and energy security a top priority for Indonesia, domestic GSAs offer significant benefits to Criterium as they provide a stable long-term fixed price. The fixed nature of these contracts means Criterium's gas production is not subject to external price fluctuations as it is with oil sales, which helps build a more steady cash flow profile and gives greater confidence in future capital planning. These advantages, combined with favourable capital efficiency for the gas projects at SE-MGH currently projected to be brought on line for approximately $4,000 (U.S.) per flowing barrel of oil equivalent (boe), will reduce the company's unit operating cost by 40 to 50 per cent to $16 (U.S.) to $18 (U.S.) per boe (9). Criterium's emphasis on gas development is aligned with the company's strategic approach to grow stable and sustainable production by investing in projects with short-cycle return due to favourable markets and nearby accessible infrastructure. This strategy is aligned with the government of Indonesia's objectives, and builds Criterium's attractiveness as a trusted partner and operator. Bulu transaction update Criterium remains committed to the original transaction dated May 21, 2024, however, given the significant delays experienced in closing, the company has taken an increasingly active role in the development of the Lengo gas field. In June, 2025, Criterium notified KrisEnergy (Satria) Ltd., the operator of the Bulu PSC, of numerous breaches and deficiencies of the joint operating agreement (JOA), in regard to the lack of development of the Lengo gas field. Should the deficiencies not be remedied, Criterium intends to take further action allowable under the JOA to permit development to proceed. Outlook Based on its capital program outlined in the news release dated Feb. 13, 2025, Criterium believes it has the potential to double current production by the end of Q1 2026, leveraging expected stable oil production and its continuing gas development program, which it expects to finance from cash flow. The estimated capital expenditure required to reach first gas is approximately $3-million (U.S.) to $5-million (U.S.) net to Criterium. Management believes there is potential to further step up production by duplicating its SE-MGH development strategy, by focusing on making relatively modest capital expenditures to generate improved, near-term returns. Management continues to monitor and assess cash flow impact and margin implications of the volatile global commodity pricing triggered by the rapidly shifting macroeconomic environment. However, management firmly believes this environment validates the company's strategy focused on acquiring undercapitalized assets in an energy hungry Southeast Asian market. With a portfolio that contains contingent resources heavily weighted to natural gas, which attracts stable long-term pricing in domestic markets, combined with operating cost reductions realized in 2024, the company is primed to materially increase and diversify production in the near term. About Criterium Energy Ltd. Criterium is Canadian-based upstream energy company focused on the consolidation and sustainable development of assets in Southeast Asia that can deliver scalable growth and cash flow generation. This region is expected to contain a population approaching 800 million people within the next 25 years, driving world-leading economic growth and record energy demand. With international operating expertise and a local presence, Criterium intends to contribute responsible, safe and secure sources of energy to help meet this demand. The company is committed to maximizing total shareholder return by executing across three strategic pillars that include: (1) fostering a successful and sustainable reputation; (2) leveraging innovation and technology arbitrage; and (3) achieving operational excellence with an unwavering commitment to safety. (1) MGH-20 gas test results: 24-hour test of 2.1 mmcf/d through 4/64ths-inch choke, FTHP 500 pounds per square inch (psi) and 24 hours at 2.5 mmcf/d through 8/64ths-inch choke, FTHP 360 psi. Liquid carryover was recovered with a total of 309 bbl of oil and water recovered. Oil recovered had an API of 30.3 and a pour point of 40 C. (2) Estimate based on field production reports. (3) 2024 report: reserve report commissioned by Criterium and prepared by ERCE, an independent reserves evaluator and auditor, dated March 14, 2025, with effective date of Dec. 31, 2024, which was prepared in accordance with the definitions, standards and procedures contained in the Canadian National Instrument 51-101, Standards of Disclosure of Oil and Gas Activities. The reserve report will be made available on Criterium's SEDAR+ profile. (4) Non-IFRS (international financial reporting standards) financial measure or ratio that does not have any standardized meaning as prescribed by international financial reporting standards, and therefore may not be comparable with calculations of similar measures or ratios for other entities. (5) SE-MGH gas test duration was approximately five days and produced through 40/64ths-inch choke. (6) Barrel of oil equivalent is determined by converting a volume of natural gas to barrels using the ratio of 5,615 cubic feet to one barrel. Barrels of oil equivalents may be misleading, particularly if used in isolation. A boe conversion ratio of 5,615 cubic feet to one 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. (7) Recent sales agreements in South Sumatra may not be indicative of future pricing for the SE-MGH and solely relying on non-public information such as gas sales agreements may be misleading. (8) Macan Gedang gas test duration was approximately two days and produced 4.6 mmcf/d through a 48/64ths-inch choke. (9) Management estimates for resource, capital costs and operating costs for SE-MGH are based on the costs presented in the 2024 report prepared by ERCE Australia. We seek Safe Harbor.