Hillcrest Energy Technologies Ltd. — Audit Report / Information 2020

Apr 29, 2022

Hillcrest Energy Technologies Ltd. (formerly Hillcrest Petroleum Ltd.)

FORM 51-101F1

For the Year Ended December 31, 2020

STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION

Hillcrest Energy Technologies Ltd. (formerly Hillcrest Petroleum Ltd.) Statement of Reserves Data and Other Oil & Gas Information For the Year Ended December 31, 2020

TABLE OF CONTENTS

PART 1 DATE OF STATEMENT Item 1.1 Relevant Dates

PART 2 DISCLOSURE OF RESERVES DATA

Item 2.1 Reserves Data (Forecast Prices and Costs) Item 2.2 Supplementary Disclosure (Constant Prices and Costs) Item 2.3 Reserves Disclosure Varies with Accounting Item 2.4 Future Net Revenue Disclosure Varies with Accounting

PART 3 PRICING ASSUMPTIONS

Item 3.1 Constant Prices Used in Supplemental Estimates Item 3.2 Forecast Prices Used in Estimates

PART 4 RECONCILIATIONS OF CHANGES IN RESERVES Item 4.1 Reserves Reconciliation

PART 5 ADDITIONAL INFORMATION RELATING TO RESERVES DATA Item 5.1 Undeveloped Reserves Item 5.2 Significant Factors or Uncertainties Item 5.3 Future Development Costs

PART 6 OTHER OIL AND GAS INFORMATION

Item 6.1 Oil and Gas Properties and Wells Item 6.2 Properties with no Attributed Reserves Item 6.2.1 Significant Factors or Uncertainties Relevant to Properties with No Attributed Reserves Item 6.3 Forward Contracts Item 6.4 Additional Information Concerning Abandonment and Reclamation Costs Item 6.5 Tax Horizon Item 6.6 Costs Incurred Item 6.7 Exploration and Development Activities Item 6.8 Production Estimates Item 6.9 Production History

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Hillcrest Energy Technologies Ltd. (formerly Hillcrest Petroleum Ltd.) Statement of Reserves Data and Other Oil & Gas Information For the Year Ended December 31, 2020

FORM 51-101F1 STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION

PART 1 DATE OF STATEMENT

The effective date of the information being provided in this statement is as at December 31, 2020, and for the year ended December 31, 2020. The preparation date of the information being provided in this statement is April 28, 2022.

For a glossary of terminology and definitions relating to the information included within this statement (including the aforementioned dates) readers are referred to National Instrument 51-101 (“NI 51-101”).

All dollar figures are Canadian Dollars, unless otherwise specified.

PART 2 DISCLOSURE OF RESERVES DATA

The following is a summary of the oil and natural gas reserves and net present values of future net revenue of Hillcrest Energy Technologies Ltd. and its subsidiaries (the “Company”) as evaluated by Trimble Engineering Associates Ltd, (“TEAL”), an independent qualified reserves evaluator appointed by the Company pursuant to NI 51-101.

Readers should note that the totals in the following tables may not add due to rounding.

The estimated future net revenue figures contained in the following tables do not necessarily represent the fair market value of the Company’s reserves. There is no assurance that the forecast price and cost assumptions contained in the TEAL report will be attained and variances could be material. Other assumptions relating to costs and other matters are included in the TEAL report. The recovery and reserves estimates attributed to the Company’s properties described herein are estimates only. The actual reserves attributed to the Company’s properties may be greater or less than those calculated.

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Hillcrest Energy Technologies Ltd. (formerly Hillcrest Petroleum Ltd.) Statement of Reserves Data and Other Oil & Gas Information For the Year Ended December 31, 2020

Item 2.1 Reserves Data (Forecast Prices and Costs)

1. Breakdown of Reserves (Forecast Case) - The following summarizes the aggregate gross and net reserves of the Company, which are all contained in the West Hazel field located in Saskatchewan:

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Hillcrest Energy Technologies Ltd.
Summary of Oil and Gas Reserves
As of December 31, 2020
Forecast Prices and Costs
Reserves
Natural Gas
(Non-associated and
Light and Medium Oil Heavy Oil Associated) Natural Gas Liquids
Gross Net Gross Net Gross Net Gross Net
Reserve Category (Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl)
Proved Developed
Producing P(DP) - - 28.6 21.3 - - - -
Proved Developed
Non-Producing
P(DNP) - - 31.2 22.6 - - - -
Proved Developed
P(D) - - 59.8 43.9 - - - -
Proved Undeveloped
P(UD) - - 213.6 182.9 - - - -
Proved P - - 273.4 226.8 - - - -
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Hillcrest Energy Technologies Ltd. (formerly Hillcrest Petroleum Ltd.) Statement of Reserves Data and Other Oil & Gas Information For the Year Ended December 31, 2020

1. Net Present Value of Future Net Revenue (Forecast Case) – The following summarizes the future net revenue attributable to the Company’s proved reserves disclosed in section 1, estimated using forecast prices and costs before deducting future income tax expenses, if any, calculated without discount and using discounts as presented:

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Hillcrest Energy Technologies Ltd.
Summary of Net Present Values of Future Net Revenue
As of December 31, 2020
Forecast Prices and Costs - $CAD Dollars
Net Present Values of Future Net Revenue
Before Income Taxes
Discounted at (%/Year)
0 5 10 15 20
Reserve Category (M$) (M$) (M$) (M$) (M$)
Proved (DP) (579.6) (537.8) (500.5) (467.1) (436.9)
Proved (DNP) 623.1 559.0 504.3 457.2 416.5
Proved (UD) 1,522.8 1,308.8 1,118.3 948.7 797.4
Total Proved 1,566.3 1,330.0 1,122.1 938.8 777.0
Total Probable 2,013.8 1,775.4 1,573.7 1,402.2 1,255.7
Total Proved and Probable 3,580.1 3,105.4 2,695.8 2,341.0 2,032.7
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Hillcrest Energy Technologies Ltd. (formerly Hillcrest Petroleum Ltd.) Statement of Reserves Data and Other Oil & Gas Information For the Year Ended December 31, 2020

1. Additional Information Concerning Undiscounted Future Net Revenue (Forecast Case) – The following summarizes by reserve category (Proved, Probable or Possible) the elements using forecast pricing and costs of the undiscounted future net revenue and the per unit value of future net revenue before income tax:

Hillcrest Energy Technologies Ltd. Total Future Net Revenue (Undiscounted) As of December 31, 2020 Forecast Prices and Costs - $CAD Dollars

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Future Net Future
Revenue Net
Before Revenue
Operating Development ARO Income Income After
Reserve Revenue Royalties Costs Costs Costs Taxes Taxes TOTI
Category (M$) (M$) (M$) (M$) (M$) (M$) (M$) (M$)
Proved (DP) 1,208.4 307.1 863.8 - 617.1 (579.6) - (579.6)
Proved (DNP) 1,496.4 414.1 274.4 121.2 63.7 623.1 - 623.1
Proved (UD) 9,946.8 1,437.2 2,635.9 4,115.0 235.9 1,522.8 731.9 790.9
Total Proved 12,651.6 2,158.4 3,774.1 4,236.2 916.7 1,566.3 731.9 834.4
Total Probable 3,928.4 838.6 1,058.9 - 17.1 2,013.8 467.1 1,546.7
Total Proved and
Probable 16,580.0 2,997.0 4,833.0 4,236.2 933.8 3,580.1 1,199.0 2,381.1
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Item 2.2 Supplementary Disclosure (Constant Prices and Costs)

Not applicable

Item 2.3 Reserves Disclosure Varies with Accounting

Not applicable

Item 2.4 Future Net Revenue Disclosure Varies with Accounting

Not applicable

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Hillcrest Energy Technologies Ltd. (formerly Hillcrest Petroleum Ltd.) Statement of Reserves Data and Other Oil & Gas Information For the Year Ended December 31, 2020

Part 3 PRICING ASSUMPTIONS

Item 3.1 Constant Prices Used in Supplemental Estimates

Not applicable

Item 3.2 Forecast Prices Used In Estimates

1. The following summarizes the pricing assumptions by product used in estimating reserves data disclosed in Item 2.1:

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Hillcrest Energy Technologies Ltd.
Summary of Pricing and
Inflation Rate Assumptions
As of December 31, 2020
Forecast Prices and Costs
WTI Cushing Oil Exchange Rate
Year Price US$/BBL WCS CDN$/BBL Inflation Rate %/Yr US$/Cdn$
2021 48.00 46.00 2.00 0.76
2022 52.00 50.00 2.00 0.76
2023 56.00 54.00 2.00 0.76
Thereafter Esc 2.0% Esc 2.0% 2.00 0.76
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Hillcrest Energy Technologies Ltd. (formerly Hillcrest Petroleum Ltd.) Statement of Reserves Data and Other Oil & Gas Information For the Year Ended December 31, 2020

PART 4 RECONCILIATION OF CHANGES IN RESERVES

Item 4.1 Reserves Reconciliation

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Hillcrest Energy Technologies Ltd.
Reserves Reconciliation Summary
As of December 31, 2020
Total Proved and
Proved (DP) Total Proved Total Probable Probable
Heavy Oil Heavy Oil Heavy Oil Heavy Oil
Opening Balance 16.6 220.3 62.1 282.4
Production -26.3 -26.3 0 -26.3
Technical Revision 37.5 39.3 3.1 42.4
Drilling Extensions 0.0 38.5 12.0 50.5
Economic Factors 0.7 1.6 1.5 3.1
Closing Balance 28.6 273.4 78.7 352.2
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PART 5. ADDITIONAL INFORMATION RELATING TO RESERVES DATA

Item 5.1 Undeveloped Reserves

Undeveloped reserves are attributed for a 5 development wells, with 4 wells assumed to be drilled in 2021 and 1 assumed to be drilled in 2022.

Item 5.2 Significant Factors or Uncertainties Affecting Reserves Data

See notes to the Company’s financial statements for the year ended December 31, 2020, for a discussion of some of the important economic factors and significant uncertainties likely to affect the components of oil and gas information and the reserves data disclosed herein. In addition, such components may be affected by material fluctuations in commodity prices, material changes in current taxation or royalty rates and/or federal regulations governing the conduct of oil and gas activities.

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Hillcrest Energy Technologies Ltd. (formerly Hillcrest Petroleum Ltd.) Statement of Reserves Data and Other Oil & Gas Information For the Year Ended December 31, 2020

Item 5.3 Future Development Costs

Development costs associated with Proved and Proved + Probable reserves are: 2021 $3,410,000 2022 $ 826,200

Development costs are expected to be funded through either equity or debt funding, likely supported by cash flow from production.

PART 6. OTHER OIL AND GAS INFORMATION

Item 6.1 Oil and Gas Properties and Wells

The Company currently has five (5) developed wells and five (5) locations in West Hazel, Saskatchewan

Item 6.2 Properties with no Attributed Reserves

Not applicable

Item 6.2.1 Significant Factors or Uncertainties Relevant to Properties with No Attributed Reserves

Not applicable

Item 6.3 Forward Contracts

Not applicable

Item 6.4 Additional Information Concerning Abandonment and Reclamation Costs

The Company’s abandonment and reclamation costs are ascertained by estimating the costs using current techniques to fulfill the current obligations in regard to wells that are under appraisal or pending development. The Company routinely estimates and provides for asset retirement obligations with respect to all property interests, including oil and natural gas properties, in its consolidated financial statements in accordance with Canadian generally accepted accounting principles (See Notes to Consolidated financial statements for the year ended December 31, 2020).

At December 31, 2020, the Company reported its liability for asset retirement obligations as $388,190 (undiscounted liability of $365,658). The costs were estimated based on an abandonment price per foot of well depth in the area of production less salvage value. The oil and gas properties had estimated abandonment dates between 2024 and 2028.

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Hillcrest Energy Technologies Ltd. (formerly Hillcrest Petroleum Ltd.) Statement of Reserves Data and Other Oil & Gas Information For the Year Ended December 31, 2020

Item 6.5 Tax Horizon

Based on current reserves, the Company currently does not estimate that income taxes are likely to become payable before 2021, subject to current assumptions of production levels, operating and capital expense deductions, commodity prices and currently available operating loss carry forwards. There are no income taxes associated with the estimated future net cash flows estimated from current proved reserves based on the Company’s basis in its assets and net operating loss carry forwards available to offset taxable income within its consolidated group.

Item 6.6

Costs Incurred

In the year ending December 31, 2020, the Company made the following expenditures (whether capitalized or charged to expense):

In Thousand Canadian dollars	Canada
	2020
	($)
Property acquisition costs – proved properties	-
Development costs – proved properties	1,157.5
Property acquisition costs – proved properties	-
Pipeline engineering and design costs	-
Exploration costs	-
	1,157.5

Item 6.7 Exploration and Development Activities

No exploration or development activity was undertaken in 2020.

Development costs above are associated with re-activating production form the previously shut-in field.

Item 6.8 Production Estimates

The gross volume of production estimated for the year ended December 31, 2021 included in future net revenue calculations for gross proved reserves and gross probable reserves estimated under Item 2.1 is 63,874 bbl.

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Hillcrest Energy Technologies Ltd. (formerly Hillcrest Petroleum Ltd.) Statement of Reserves Data and Other Oil & Gas Information For the Year Ended December 31, 2020

Item 6.9 Production History

The West Hazel field was shut in prior to 2019.

Quarterly oil production (bbl) during 2019 was: Q1 3,731 Q2 5,467 Q3 11,343 Q4 11,130 Total 31,671 Quarterly oil production (bbl) during 2020 was: Q1 10,062 Q2 4,893 Q3 8,601 Q4 10,958 Total 34,514 Average unit per bbl value metrics ($CDN/bbl) for 2019 were: Price received $53.80 Royalties $13.75 Production Costs $36.67 Netback $3.38 Average unit per bbl value metrics ($CDN/bbl) for 2020 were: Price received $32.54 Royalties $7.19 Production Costs $25.57 Netback $(0.22)

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