CEO.CA Chairman's Briefing

VANCOUVER, Aug. 23, 2018 /CNW/ - PentaNova Energy Corp. (the "Company") (TSXV: PNO) announces it has filed its financial and operating results for the three and six months ended June 30, 2018. All dollar values in this news release and the Company's financial disclosures are in United States dollars, unless otherwise stated. All production figures are measured in barrels of oil equivalent ("boe").

Financial Statements

Revenues for the periods presented were obtained from the working interest in the Llancanelo, Mariposa, and Sur Rio Deseado assets which represent 90 and 92 days of production during Q1 2018 and Q2 2018, respectively.

Highlights

Llancanelo

The Llancanelo net production recorded for each of the periods is for the 39% working interest held during Q1 2018 and Q2 2018. Subsequent to the closing of the Roch acquisition on October 27, 2017, which included an additional 10% working interest in Llancanelo, the Company's Llancanelo net production increased to 39% working interest.

During Q2 2018, the Llancanelo concession produced a total of 41,057 net boe (105,302 gross boe) compared to 43,827 net boe (111,024 gross boe) in Q1 2018, representing roughly a 5% decrease in production. This equated to average daily production of 451 net boe/d in Q2 2018 compared to 481 net boe/d in Q1 2018. The reduction in production can be attributed to scheduled maintenance that required certain wells on the concession to be shut in during the maintenance period.

Impairment Loss

During the six months ended June 30, 2018, the Company recognized impairments relating to the Llancanelo Asset of $25.0 million. These impairments were the result of the difference between the period‐end net book value and management's assessment of the recoverable amount of the Llancanelo Asset as of June 30, 2018 on account of the formal notification received from YPF regarding the relinquishment of the Company's working interest in the Llancanelo Asset and the termination of the YPF Farm‐In. Following completion of the write‐down, the Llancanelo Asset had a carrying value of approximately $10.6 million.

Mariposa

The Company holds a net working interest in the Estancia La Mariposa block of 18%, entitling it to 18% of the oil, natural gas and condensate sales, while the operator carries 100% of the capital expenditures and field operating costs. The net revenue figures associated with the Mariposa Asset are presented net of any applicable royalties and certain operating costs of transportation, treatment and processing. Oil and natural gas production is sold on behalf of the Company, for which the Company receives proceeds from the operator, net of the aforementioned royalties and operating costs. The net revenue generated from this asset has not been included in any "per barrel" pricing herein. Mariposa revenue, net of royalties, of $189,049 and $351,606 were realized in Q2 2018 and Q1 2018, respectively. These revenue amounts were derived from net production of 11,653 boe and 16,210 boe during the respective periods. Reduction of net revenue in Q2 2018 is the result of decreased production from the Mariposa Asset due to a workover campaign on some of the wells that was carried out by the operator during the quarter.

Financial Results & Balances

• The Company had a working capital deficiency of $12.6 million as of June 30, 2018
• Impairment loss of $25.0 million was recognized during the three months ended June 30, 2018

Forward-Looking Information

Estimates of reserves and resources in this news release are deemed to be forward-looking information as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated, and that the reserves described can be profitably produced in the future.

This news release contains certain "forward-looking statements" or "forward-looking information" (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Such forward-looking statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or are events or conditions that "will", "would", "may", "could" or "should" occur or be achieved. This news release contains forward-looking statements, pertaining to, among other things, the following: estimates of recoverable reserves volumes and the future net revenues associated with those reserves; the rationalization of the asset portfolio of the Company; future acquisitions; cost reductions and head count and financial commitment reductions; possible financing alternatives, including a share consolidation; the Mandate; the goals of the board and management relating to the Mandate and the Company generally; and changes in the plans of the previous management team, including to plans in respect of the development of the Company's reserves. Statements regarding future production, capital expenditures and development plans are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These risks include, but are not limited to, inflation or lack of availability of goods and services, environmental risks, drilling risks, regulatory changes and certain other known and unknown risks detailed from time to time in the Company's public disclosure documents, copies of which are available on the Company's SEDAR profile at www.sedar.com..

Although the Company believes that the material factors, expectations and assumptions expressed in such forward-looking statements are reasonable based on information available to it on the date such statements were made, no assurances can be given as to future results, levels of activity and achievements and such statements are not guarantees of future performance. The Company's actual results may differ materially from those expressed or implied in forward-looking statements and readers should not place undue importance or reliance on the forward-looking statements. Statements including forward-looking statements are made as of the date they are given and, except as required by applicable securities laws, the Company disclaims any intention or obligation to publically update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

Any "financial outlook" contained in this news release, as such term is defined by applicable securities laws, is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes

Reserves Advisory

The Company's reserves estimates have been prepared and evaluated in accordance with NI 51-101 and the COGE Handbook. Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. There is at least a 90% probability that the quantities actually recovered will equal or exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. There is at least a 50% probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable reserves.

It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves or resources. Future net revenue values, whether calculated without discount or using a discount rate, are estimated values only and do not represent fair market value. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The reserve estimates provided herein are estimates only and there is no assurance that the estimated reserves will be recovered. Actual oil reserves may be greater than or less than the estimates provided herein.

BOE Conversion Advisory

The term "boe" is used in this news release. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of gas to one barrel of oil (6 Mcf : 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.  In this news release, we have expressed boe using this standard conversion ratio of 6 Mcf : 1 bbl.

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

SOURCE PentaNova Energy Corp.

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