Bonterra Energy : 2023 Q1

For the three months ended March 31, 2023

TSX: BNEwww.bonterraenergy.com

BONTERRA ENERGY REPORTS FIRST QUARTER 2023

FINANCIAL AND OPERATING RESULTS

HIGHLIGHTS

As at and for the three months ended	March 31,	December 31,	March 31,
($000s except $ per share)		2023	2022	2022
FINANCIAL
Revenue - realized oil and gas sales	77,263	87,154	91,542
Funds flow(1)(2)		29,342	41,145	47,092
Per share - basic		0.79	1.13	1.34
Per share - diluted		0.79	1.10	1.28
Cash flow from operations		24,018	35,494	40,942
Per share - basic		0.65	0.97	1.16
Per share - diluted		0.64	0.95	1.11
Net earnings		7,640	17,264	10,519
Per share - basic		0.21	0.47	0.30
Per share - diluted		0.20	0.46	0.29
Capital expenditures		60,223	12,642	32,169
Total assets		963,890	919,682	965,969
Net debt(3)		183,674	149,831	260,670
Bank debt		12,388	17,601	138,384
Shareholders' equity		488,762	479,839	405,148
OPERATIONS
Light oil	-bbl per day	7,068	6,764	7,356
	-average price ($ per bbl)	95.71	105.59	110.41
NGLs	-bbl per day	1,155	1,209	996
	-average price ($ per bbl)	54.54	59.38	63.02
Conventional natural gas	-MCF per day	31,448	30,101	29,609
	-average price ($ per MCF)	3.78	5.36	4.80
Total barrels of oil equivalent per day (BOE)(4)	13,464	12,989	13,287

1. Funds flow is not a recognized measure under IFRS. For these purposes, the Company defines funds flow as funds provided by operations including proceeds from sale of investments and investment income received excluding the effects of changes innon-cash working capital items and decommissioning expenditures settled.
2. Not included in funds flow for the three months ended March 31, 2023 is the use of $3.8 million (December 31, 2022 - $2.9 million, March 31, 2022- $Nil) of investment tax credits ("ITC") to settle federal income tax payable. These ITCs would decrease cash taxes owing and increase funds flow to $33,143,000 (December 31, 2022 - $44,084,000, March 31, 2022 - $47,092,000).
3. Net debt is not a recognized measure under IFRS. The Company defines net debt as current liabilities less current assets pluslong-term bank debt, subordinated debt, subordinated debentures and subordinated term debt.
4. BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 MCF: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

1 |P a g e

REPORT TO SHAREHOLDERS

I am pleased to provide an update for our stakeholders on Bonterra Energy Corp's. ("Bonterra" or the "Company") operating and financial results for the first three months of 2023. The period ending March 31, 2023 was very active operationally and as a result, we believe the Company is well positioned to build on our growing momentum through the balance of this year and beyond.

During the first quarter, our team successfully and efficiently invested $60.2 million into our winter drilling and completions program, which represents a significant portion of our full year 2023 budget, and drove a four percent increase in production over the previous quarter. We drilled 22 gross (20.6 net) operated wells and completed, equipped and tied-in 15 gross (14.2 net) operated wells in the quarter, with an additional seven (6.4 net) of the wells drilled but uncompleted coming on production in April. We also directed $3.7 million to the expansion of a wholly owned gas plant in order to eliminate current processing capacity limitations and support our ongoing growth trajectory. I am very proud to share that these efforts enabled Bonterra to achieve a new field estimate volume record in April, as production averaged 15,400 BOE per day for the month.

Our financial results benefited from the strong production volumes but were muted by lower realized commodity prices relative to both the previous quarter and the same period in 2022. We generated $29.3 million of funds flow ($0.79 per diluted share) in the quarter, with field and cash netbacks1of $34.90 per BOE and $24.21 per BOE, respectively. However, both funds flow and netbacks were lower than the previous quarter and the same period in 2022 attributable to lower commodity prices through Q1 2023. With global economic recessionary fears outstripping solid oil and gas fundamentals, there has been downward pressure on oil prices, while a warmer winter in North America reduced natural gas demand into a period of growing supply due to increased drilling activity, leading to a sharp price decline for natural gas.

With Bonterra's more active capital program in Q1, we recorded a modest planned increase to net debt at the end of the quarter relative to year end 2022, but recorded a 30 percent reduction in bank debt. However, with meaningfully lower capital spending and field activity in Q2 2023 combined with higher forecast average production, we anticipate reducing net debt in the second and third quarters of 2023 and expect that operating costs per BOE will be returning to lower levels in the second quarter.

A summary of our first quarter 2023 financial and operating results are provided below:

• Production in Q1 2023 averaged 13,464 BOE per day, four percent higher than Q4 2022, driven by an active,front-loaded capital program along with the reactivation of wells that had been shut-in during the previous quarter.
• Record production levels were realized subsequent to quarter end, with field estimate production volumes averaging 15,400 BOE per day2during the month of April, stemming from the success of the Company's Q1
  2023 drilling program.
• Funds flow3totaled $29.3 million ($0.79 per fully diluted share) in Q1 2023, compared to $41.1 million ($1.10 per fully diluted share) generated in Q4 2022, consistent with lower realized oil and gas sales of $77.3 million for the period due to reduced commodity prices, slightly offset by higher production.

1. Accounting for cash taxes, whereby investment tax credit receivable ("ITC") was used to settle federal income tax owing, has the effect of understating our funds flow for the quarter by $3.8 million. If those ITC's were included in funds flow, the Company's Q1 2023 cash netback would increase by $3.14 per BOE to $27.35 per BOE and funds flow would increase to $33.1 million ($0.89 per fully diluted share).

1. Non-IFRSmeasure. See advisories later in this press release.
2. April 2023 volumes were comprised of 8,200 bbl/d light and medium crude oil, 1,328 bbl/d NGLs and 35,284 mcf/d of conventional natural gas.
3. Non-IFRSmeasure. See advisories later in this press release.

2 |P a g e

• Production costs of $17.54 per BOE in Q1 2023 were comparable to Q1 2022 but increased nine percent from the previous quarter. As noted above, per unit operating costs are expected to normalize in the second quarter due to lower activity and higher forecast production volumes.
• Capital expenditures totaled $60.2 million in Q1 2023, 87 percent higher than the same quarter in 2022, and continued to track annual guidance. Bonterra directed $48.4 million to drilling, completions, equip and tie- in activities for the wells noted above, $3.7 million to expanding a wholly owned gas plant to alleviate processing capacity limitations, and an additional $8.1 million was allocated to related infrastructure, recompletions andnon-operated capital programs.
  oTo provide some perspective on the size and logistics of our Q1 program, the Company ran two drilling rigs, two completions teams and with ongoing infrastructure work, mobilized a workforce of over 300 people during the quarter. This highly successful program in terms of management and execution was also the largest Q1 capital program deployed in the Company's history.

• 1. Building on this, seven (6.4 net) remaining wells drilled in Q1 2023 were placed on production in early Q2 2023, contributing to the record field estimate production volumes realized in April.
• Bank debt reduced by 30 percent overyear-end 2022, totaling $12.4 million at March 31, as the Company continues to focus on enhancing financial flexibility and sustainability. Net debt2totaled $183.7 at March 31, 2023 as a result of increased capital investments and reduced cash flow from lower commodity prices during the period, leading to a net debt to twelve-month trailing cash flow ratio2of 1.1 times compared to 0.8 times at December 31, 2022.
• 1. On May 9th, 2023, Bonterra completed the renewal of our $110 million bank facility, which is structured as a normal course, reserve-based credit facility available on a revolving basis through April 30, 2024, with bi-annual borrowing base redeterminations and a maturity of April 30, 2025.
     We are pleased that the Company's banking syndicate remains supportive.

1. Bonterra's strong debt profile continues to support the reintroduction of a shareholder returns- based business model by the end of 2023.

Bonterra's commitment to responsible operations and strong governance continued through the first three months of 2023. We directed $4.2 million towards the abandonment of 46.2 net wells and 36 pipelines, and anticipate that by year end 2023, approximately 80 percent of all wells across Bonterra's portfolio that are not expected to provide future economic contribution will have been abandoned. We also released our second Sustainability Report, highlighting the Company's success across environmental, social and governance initiatives through 2022.

Currently, Bonterra is actively monitoring the wildfire situation near to our operations in the Pembina area within Brazeau County. We have approximately 2,400 boe/d awaiting reactivation once access becomes available. We wish to take this opportunity to thank all of our dedicated staff and the emergency responders for their tireless efforts dealing with the wildfire situation. The team at Bonterra is sending our thoughts and best wishes to all of those affected.

OUTLOOK

As one of Canada's longest standing and most resilient junior oil and gas companies, Bonterra has established a strong position from which to build. In addition to benefiting from a moderate annual production decline rate, an extensive inventory of economically viable undrilled locations, and a strategic hedging program to reinforce economics, we maintain our focus on enhancing financial flexibility and undertaking safe, responsible and efficient operations to achieve measured growth. We are pleased to reaffirm our previously announced guidance for 2023.

Given our increasingly robust financial and operating position, along with a proven track record of operational execution, Bonterra intends to carve a new path forward towards the implementation of a sustainable dividend- paying business model by the end of 2023. In support of this strategy, we will continue to actively pursue accretive acquisitions that can bolster production, expand the drilling inventory, contribute to free cash flow generation, attract new institutional investors and further enhance the balance sheet. Based on our current projections at strip pricing,

3 |P a g e

we forecast that Bonterra will have minimal bank debt and be in a position to fund our capital expenditures and dividends, while still generating free cash flow.

We are supporting these efforts and seeking to enhance stability during periods of continued market volatility by laying on hedges that can help protect future cash flows and diversify our commodity price exposure. Approximately 30 percent of Bonterra's expected crude oil and natural gas production through the end of December 2023 has some pricing protection with hedges.

Finally, on behalf of the entire Bonterra team, we want to again recognize and thank Mr. George Fink, former founder, CEO and Director, for his contributions, vision and leadership of Bonterra over the past 25 years. Although he will not stand for re-election at the Company's upcoming shareholder meeting on May 18, 2023 (the "AGM"), the Board has conferred on Mr. Fink the honorary title of Director Emeritus, which will take effect immediately following his formal retirement from the Board, and enable Bonterra to continue benefitting from his insight, advice and guidance. I invite all of our shareholders and interested guests to join us for the upcoming AGM in Calgary as our first in-person shareholder meeting since the pandemic began in 2020.

With another successful quarter behind us, I would like to thank all of our stakeholders and shareholders for your ongoing support; our committed Board of Directors for their invaluable guidance; and each of our valued employees for your hard work and dedication to forging a bright new future for Bonterra.

Patrick Oliver

President and Chief Executive Officer

4 |P a g e

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following report dated May 11, 2023 is a review of the operations and current financial position for the three months ended March 31, 2023 for Bonterra Energy Corp. ("Bonterra" or "the Company") and should be read in conjunction with the unaudited condensed financial statements and the audited financial statements including the notes related thereto for the fiscal year ended December 31, 2022 presented under International Financial Reporting Standards (IFRS), as well as Bonterra Annual Information From ("AIF"), each of which is filed on SEDAR at www.sedar.com

Use of Non-IFRS Financial Measures

Throughout this Management's Discussion and Analysis (MD&A) the Company uses the terms "field netback", "cash netback" and "net debt" to analyze operating performance, which are not standardized measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. These measures are commonly used in the oil and gas industry and are considered informative by management, shareholders and analysts. These measures may differ from those made by other companies and accordingly may not be comparable to such measures as reported by other entities.

The Company calculates cash and field netback by dividing various financial statement items as determined by IFRS by total production for the period on a barrel of oil equivalent basis. The Company calculates net debt as long-term debt plus working capital deficiency (current liabilities less current assets).

Frequently Recurring Terms

Bonterra uses the following frequently recurring terms in this MD&A: "WTI" refers to West Texas Intermediate, a grade of light sweet crude oil used as benchmark pricing in the United States; "MSW Stream Index" or "Edmonton Par" refers to the mixed sweet blend that is the benchmark price for conventionally produced light sweet crude oil in Western Canada; "AECO" is the benchmark price for natural gas in Alberta, Canada; "bbl" refers to barrel; "NGL" refers to natural gas liquids; "MCF" refers to thousand cubic feet; "MMBTU" refers to million British Thermal Units; "GJ" refers to gigajoule; "LNG" refers to liquefied natural gas; and "BOE" refers to barrels of oil equivalent. Disclosure provided herein in respect of a BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 MCF: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Numerical Amounts

The reporting and the functional currency of the Company is the Canadian dollar.

5 |P a g e