Bonterra Energy Corp. — M&A Activity 2021

Jan 14, 2021

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‐ Positioned for Success as a Stand Alone Entity REJECT the Hostile Bid

Dear Fellow Bonterra Shareholder,

Bonterra Energy Corp. (“Bonterra” or the “Company”) continues to recommend Shareholders REJECT the offer by Obsidian Energy Ltd. (“Obsidian”) to acquire all of the issued and outstanding common shares of Bonterra (the “Hostile Bid”) in exchange for Obsidian shares.

Since its launch, Obsidian’s Hostile Bid has proven to be unsuccessful, with Bonterra shareholders overwhelmingly advising they will not tender their shares. Rather than acknowledge the views of Bonterra shareholders and withdraw the Hostile Bid, Obsidian has instead chosen to extend the tender date of the Hostile Bid from January 4[th] to January 25[th] , 2021. In addition, Obsidian has reduced the minimum number of outstanding Bonterra shares that must be tendered to complete the Hostile Bid from the customary 66 2/3 percent down to over 50 percent. This change indicates that Obsidian does not expect the higher tender condition can be achieved due to the lack of Bonterra shareholder support of the Hostile Bid.

Bonterra is positioned for success as a stand‐alone entity and remains focused on generating strong and sustainable free cash flow which can be directed to debt reduction and capital spending when supported by commodity prices.

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Bonterra’s strategic plan is expected to grow production by approximately 30%, returning the average annual production to pre‐ COVID levels of 13,000 BOE per day in 2021. The bank syndicate supports Bonterra’s strategic plans and has extended the maturity date of its senior credit facility to the end of 2021 at the current borrowing base.

BDC's commitment of $45 million strengthens Bonterra's liquidity and provides options and funding for development drilling and abandonment programs that will help create significant value for shareholders. EDC has joined Bonterra's banking syndicate through its commitment of $38.4 million, demonstrating strong alignment with the Company's current capital providers and management.

REJECT THE HOSTILE BID

X The Hostile Bid is highly opportunistic

The Hostile Bid is timed to deprive Bonterra shareholders of recent positive market changes and value‐increasing initiatives achieved to date by Bonterra, including the Export Development Canada ("EDC") and Business Development Bank of Canada ("BDC") funding and its go‐forward strategic plan.

X The Hostile Bid is highly conditional on obtaining required consents and approvals

The Hostile Bid is conditional on obtaining all necessary third‐party consents and approvals that may be required, including the consent of each of Obsidian's and Bonterra's lenders, and there is no certainty such approvals could be obtained. On October 29, 2020, Obsidian announced the extension of its syndicated credit facility to January 29, 2021, a negative signal given the short period of the extension. This raises doubts about Obsidian's ability to obtain any additional future financing.

X Obsidian is struggling financially

Obsidian's ability to operate as a profitable going concern entity is in question. Obsidian's auditor noted in the last set of audited financial statements that "substantial doubt exists about the Company's ability to continue as a going concern", meaning there is uncertainty whether Obsidian has sufficient liquidity over the next 12 months to settle its liabilities as they become due, in order to avoid an extremely negative outcome for its shareholders.

According to its financial statements, Obsidian has limited liquidity to grow operations, and has been posting negative free cash flow for every quarter since December 31, 2017.

The Bonterra Board UNANIMOUSLY recommends that Shareholders REJECT the Hostile Bid

TAKE NO ACTION

Bonterra will deploy $45 million of BDC funding towards value enhancing initiatives through drilling and ARO initiatives.

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(1) Bonterra 2021‐2022 plans are preliminary in nature
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The Site Rehabilitation Program (“SRP”) and other provincial programs are expected to allow Bonterra to reduce its inactive well count by approximately 60% over the next two years under current approvals. Overall, these programs are expected to reduce annual spending commitments under Alberta’s Area Based Closure program from $3.3 million down to $2.0 million starting in 2023.

The BDC, EDC and SRP funding positions Bonterra to significantly de‐lever over the next two years.

YEAR 2020 WTI OIL PRICE USD/bbl 39.27 BNE REALIZED PRICE(1) CAD/bbl 41.41 ANNUAL PRODUCTION boe/d 10,600 LIQUIDS % 65% FUNDS FLOW MM$C 30 CAPEX incl. ABANDONMENTS MM$C (49) DEBT/CASH FLOW (AFTER TAX) ratio 10.4x	2021 50.00 54.12 13,200 65% 74 (72) 4.2x	2022 50.00 54.12 13,700 67% 91 (53) 3.0x	2022
			55.00 60.53 13,700 67% 108 (59) 2.4x

(1) Price Assumptions: Edmonton light differential: ‐US$5.25; FX: 0.78 CAD/US; Quality adjustment ‐C$3.25/bbl; BNE Realized Gas $2.75/mcf; BNE Realized Liquids: 50% of realized oil

Bonterra shareholders representing more than 33% of the Company's outstanding common shares were contacted and have confirmed they support Bonterra’s go forward plan as a stand‐alone entity and will not tender their common shares to the Hostile Bid.

Bonterra is proud of its established history of creating long‐term sustainability and growth for shareholders. With significant recent funding advancements from the BDC, EDC and additional abandonment capital from the SRP, the Company is well‐positioned to continue generating sustained value. Bonterra has the assets and the people to continue pursuing profitable development of its high‐quality, Cardium light oil asset base in order to generate long‐term net asset value growth as the economy recovers from the COVID‐19 pandemic.

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Sincerely, Bonterra Energy Corp.

REJECT THE HOSTILE BID

Obsidian’s cash shortfalls have been accumulating in long‐term debt. Adding to its financial difficulties, as at September 30, 2020, Obsidian reported asset retirement obligations (undiscounted and uninflated) ("ARO") of $605 million, which represents over 107% of its current enterprise value (16.5 times its market capitalization), whereas Bonterra reported ARO of $156 million, which represents less than 45% of its current enterprise value (2.8 times its market capitalization).

The Bonterra Board

UNANIMOUSLY recommends that Shareholders REJECT the Hostile Bid by taking no action. DO NOT TENDER your Shares .

ASSISTANCE

Strategic Advisor and Information Agent

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If you have any questions or require assistance, please contact Laurel Hill Advisory Group at:

North America Toll Free: 1‐877‐452‐7184 Outside North America: 1‐416‐304‐0211 Email: assistance@laurelhill.com