Tenaz Energy Corp. — Management Reports 2021

Apr 16, 2021

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following management’s discussion and analysis ("MD&A") of financial condition and results of operations for Altura Energy Inc. (the "Corporation" or "Altura") is dated April 14, 2021 and should be read in conjunction with the Corporation’s audited consolidated financial statements (the "financial statements") and related notes for the years ended December 31, 2020 and 2019, as well as the Corporation’s annual information form that is filed on SEDAR at www.sedar.com. These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.

This MD&A contains non-generally accepted accounting principles ("GAAP") measures and forward-looking statements. Readers are cautioned that the MD&A should be read in conjunction with Altura’s disclosure under the headings "Non-GAAP Measures" and "Forward-looking Information" included in the "Advisories" section at the end of this MD&A.

DESCRIPTION OF BUSINESS

Altura is a junior oil and gas exploration, development and production company with operations in central Alberta. Altura predominantly produces from the Rex member in the Upper Mannville group and is focused on delivering per share growth and attractive shareholder returns through a combination of organic growth and strategic acquisitions. Additional information regarding Altura is available on SEDAR and on its website at www.alturaenergy.ca. Altura’s common shares are listed for trading on the TSX Venture Exchange under the symbol "ATU".

ECONOMIC ENVIRONMENT

In March 2020, the World Health Organization declared a global pandemic due to the rapid outbreak of the coronavirus ("COVID-19"). The measures taken in response to the outbreak including quarantine and travel restrictions led to an unprecedented disruption to the global economy and significantly reduced worldwide demand for crude oil resulting in a buildup of supply and inventory.

The West Texas Intermediate ("WTI") benchmark price averaged six percent higher than the third quarter of 2020, and 53 percent higher than the second quarter of 2020. Altura primarily compares its oil price to the Western Canadian Select oil price ("WCS") at Hardisty, which increased two percent in the fourth quarter of 2020 relative to the third quarter of 2020 and increased 94 percent relative to the second quarter of 2020.

Global oil demand has improved steadily in the latter half of 2020 as economies have begun to reopen and governments have approved the rollout of COVID-19 vaccines. Although government authorities are easing restrictions, there is no certainty when demand levels will return to pre-COVID levels and therefore the situation remains dynamic. The ultimate duration and magnitude of the impact on the economy and financial effect on Altura is not known at this time; however, Altura is optimistic that the worst is behind us and economic conditions will continue to improve.

ALTURA ENERGY INC. | MD&A | 5

2020 GUIDANCE

2020 guidance is provided below along with a comparison to actuals. Previous 2020 guidance was updated in the Corporation’s press release dated November 19, 2020, and Altura's Third Quarter 2020 MD&A. Copies of the press releases and MD&A are available under Altura's profile on SEDAR at www.sedar.com or on Altura’s website at www.alturaenergy.ca.

	November 19, 2020
	Guidance	Actual
H2 2020 average production volumes (boe/d)	900 to 1,000	917
December 31,2020 net debt(1) ($000)	4,200	3,857

(1) Net debt is a non-GAAP measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Refer to the heading entitled "Non-GAAP Measures" included in the "Advisories" section at the end of the MD&A.

Altura's December 31, 2020 net debt of $3.9 million was lower than guidance by $0.3 million. The positive variance is primarily related to higher realized heavy crude oil and natural gas prices in the fourth quarter of 2020.

2021 OUTLOOK

The board of directors of the Corporation has approved a capital budget of $6.0 million for 2021, funded with forecasted cash flow from operating activities, credit facilities, and the 2021 asset dispositions. The budget includes drilling two (1.8 net) Rex wells and completing three (2.7 net) Rex wells at Leduc-Woodbend.

The 2021 capital expenditure budget targets an annual average production rate of 1,100 to 1,150 boe per day compared to 880 boe per day in 2020, representing more than 25 percent growth on an absolute and per share basis.

On January 29, 2021, Altura closed a disposition of a 0.6875% working interest in the Corporation's production, wells, lands and facilities for cash of $437,500 and two additional dispositions are expected to close on April 30, 2021 and June 30, 2021. Refer to the "Asset Disposition" section of this MD&A.

ASSET DISPOSITIONS

On December 4, 2019, Altura entered into a definitive agreement with an unrelated third party ("PrivateCo") for the sale of a 12.5 percent working interest in the Corporation's production, wells, lands and facilities for cash of $7.0 million through two transactions (the "Original Disposition Agreement"). The agreement provided for a third transaction if it was mutually agreed that drilling a second well in the Entice area was warranted, whereby Altura would divest an additional 4.0% of corporate assets for $3.0 million. If all three transactions closed, Altura would have sold a total working interest of 16.5% of corporate assets, including asset retirement obligations ("ARO"), for total consideration of $10.0 million.

The Original Disposition Agreement committed Altura to the following:

1. Drill, complete and equip or abandon a horizontal well in the Entice area of Alberta by March 31, 2020 (the "First Commitment Well").

2. Spud a second horizontal well by December 31, 2020 (the "Second Commitment Well"). On or before October 30, 2020, Altura and PrivateCo would meet and review the production information and other data from the first Entice well. If it was mutually agreed that the drilling of a second well at Entice is warranted, Altura would select a location for the drilling of a horizontal well in the Entice area. If not mutually agreed that the drilling of a second well at Entice was warranted, Altura would select a location for the drilling of a horizontal well in the Leduc-Woodbend area. If the Second Commitment Well was drilled in the Entice area, PrivateCo would pay 7.0 percent of well costs and earn a 12.5 percent working interest in the well. If the Second Commitment Well was drilled in the Leduc-Woodbend area, PrivateCo would pay 12.5 percent of well costs and earn a 12.5 percent working interest in the well.

3. Within 10 business days of delivering the second well location notice to PrivateCo, Altura and PrivateCo would enter into a purchase and sale agreement for the second transaction whereby Altura would divest of an additional 5.5 percent working interest in the Corporation's production, wells, lands and facilities as at that date for cash of $3.5 million (the "Second Transaction"). Proceeds would be used to fund the Second Commitment Well.

6 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

1. In the event the Second Commitment Well was drilled at Entice and both parties agreed to drill a third well at Entice, the agreement provided for a third transaction whereby Altura would divest of an additional 4.0 percent working interest in the Corporation's production, wells, lands and facilities as at that date for cash of $3.0 million. Proceeds would primarily be used to drill a third horizontal well at Entice on or before December 31, 2021. PrivateCo would pay 12.5 percent of well costs and earn a 16.5 percent working interest in the well.

First Transaction

December 4, 2019 Disposition

On December 4, 2019, Altura divested a 7.0 percent working interest for cash of $3,508,000. The agreement provided that Altura will pay PrivateCo's 7.0 percent interest in a well to be drilled by March 31, 2020 and a 7.0 percent interest in the completion of an additional well (the "Contract Liability"). Altura estimated the Contract Liability to be $368,000 as at December 31, 2019. Altura fulfilled the commitment in 2020 and $245,000 of the Contract Liability was netted against E&E asset additions and $123,000 of the Contract Liability was netted against property and equipment additions in the year ended December 31, 2020.

Altura recorded $85,000 to E&E asset dispositions, $3,942,000 to D&P asset dispositions and reduced the decommissioning liability by $470,000 associated with the 7% Asset Disposition and recorded a loss on disposition of $417,000 for the year ended December 31, 2019.

In the first quarter of 2020, Altura drilled, completed and equipped the First Commitment Well at Entice and fulfilled the commitment.

Second Transaction

On June 26, 2020, Altura amended the Original Disposition Agreement (the "First Amending Agreement") with PrivateCo, to divide the Second Transaction into four separate dispositions of a 1.375 percent working interest for $875,000 each. The four disposition stages were agreed to close on June 30, 2020, September 30, 2020, January 31, 2021 and June 30, 2021.

Given the economic environment caused by the COVID-19 pandemic, drilling risk profile and capital efficiency in LeducWoodbend and Entice, the parties agreed the Second Commitment Well will be drilled at Leduc-Woodbend at a time when economic conditions justify the expenditure. Estimated total gross drill, complete and equipping costs of the well is $2.3 million. Given that the parties agreed for the Second Commitment Well to be drilled in the Leduc-Woodbend area, PrivateCo will pay 12.5% of the well costs and earn a 12.5% working interest in the Second Commitment Well.

June 30, 2020 Disposition

On June 30, 2020, Altura closed stage one of the First Amending Agreement and divested of a 1.375% working interest in the Corporation's production, wells, lands and facilities for cash of $871,000 after transaction costs. Altura recorded $342,000 to D&P asset dispositions, $3,000 to E&E asset dispositions, reduced the decommissioning liability by $79,000 associated with the asset disposition and recorded a gain on disposition of $605,000 for the year ended December 31, 2020.

September 30, 2020 Disposition

On September 30, 2020, Altura closed stage two of the First Amending Agreement and divested of a 1.375% working interest in the Corporation's production, wells, lands and facilities for cash of $875,000. Altura recorded $338,000 to D&P asset dispositions, $3,000 to E&E asset dispositions, reduced the decommissioning liability by $85,000 associated with the asset disposition and recorded a gain on disposition of $619,000 for the year ended December 31, 2020.

ALTURA ENERGY INC. | MD&A | 7

January 29, 2021 Disposition

On January 22, 2021, Altura amended the timing of stages three and four of the Second Transaction in the First Amending Agreement (the "Second Amending Agreement") with PrivateCo, which divided stage three into two dispositions. Altura closed stage 3a of the Second Amending Agreement on January 29, 2021 divesting of a 0.6875% working interest in the Corporation's production, wells, lands and facilities for cash of $437,500. Stage 3b is planned to close on April 30, 2021. The remaining stages as at December 31, 2020 pursuant to the Second Amending Agreement are as follows:

**Stage **	Closing Date	Disposition Interest	Cash Proceeds
Stage 3a	January 29, 2021	0.6875%	$437,500
Stage 3b	April 30, 2021	0.6875%	$437,500
Stage 4	June 30,2021	1.375%	$875,000
Total		2.75%	$1,750,000

Third Transaction

It was not mutually agreed that the drilling of the Second Commitment Well at Entice was warranted so the third transaction was terminated within the First Amending Agreement.

SELECTED ANNUAL INFORMATION

($000,exceptper share amounts) 2020	2019 2018
Petroleum and natural gas sales 8,615 Cash flow from operating activities 2,406 Adjusted funds flow(1) 2,502 Per share – basic(1) 0.02 Per share – diluted(1) 0.02 Net income (loss) (22,313) Per share – basic (0.20) Per share – diluted(2) (0.20) Capital expenditures 7,874 Propertyacquisitions/(dispositions),net (1,746)	25,757 16,847 12,994 9,787 13,994 8,256 0.13 0.08 0.13 0.07 2,215 2,693 0.02 0.02 0.02 0.02 12,884 33,456 (3,508) (24,089)
Total capital expenditures, net 6,128 Total assets 34,439 Net debt(1) 3,857 Common shares outstanding (000) End of period – basic 108,921 Weighted average for the period – basic 108,921 Weighted average for theperiod – diluted 108,921	9,376 9,367 55,053 54,023 563 4,805 108,921 108,921 108,921 108,921 109,886 110,412

(1) Adjusted funds flow, and net debt are non-GAAP measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Refer to the heading entitled "Non-GAAP Measures" included in the "Advisories" section at the end of the MD&A.

(2) Basic weighted average shares are used to calculate diluted per share amounts when the Corporation is in a loss position.

8 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

RESULTS OF OPERATIONS

Production

roduction	roduction
Three Months Ended December 31 Year Ended December 31 2020 2019 % Change 2020 2019 % Change
Heavy crude oil (bbls/d) 468 881 (47) Light crude & medium crude oil (bbls/d) - - - Natural gas (Mcf/d) 2,402 3,406 (29) Naturalgas liquids("NGLs") (bbls/d) 48 113 (58)	465 1,112 (58) 6 17 (65) 2,151 3,145 (32) 51 89 (43)
Total(boe/d) 916 1,561 (41)	880 1,742 (49)
Oil and naturalgas liquids % ofproduction 56% 64% (13)	59% 70% (16)

During the fourth quarter of 2020, Altura's production decreased 41 percent from the fourth quarter of 2019. The decrease is primarily attributed to natural declines at Altura's Leduc-Woodbend area due to minimal development activity in 2020 during the Covid-19 pandemic. Additionally, production declined in the fourth quarter of 2020 compared to the fourth quarter of 2019 due to Altura divesting of 9.75% of production in three working interest dispositions on December 4, 2019, June 30, 2020, and September 30, 2020, and due to one (0.9 net) well that was curtailed in March 2020 and remained shut-in until midDecember 2020 due to third-party facility constraints.

In 2020, Altura's production decreased 49 percent from 2019. The decreased production volumes relate to natural declines, coupled with curtailed production volumes in the second quarter of 2020 while oil prices were severely depressed and the three working interest dispositions on December 4, 2019, June 30, 2020 and September 30, 2020.

==> picture [492 x 197] intentionally omitted <==

----- Start of picture text -----

Quarterly Average Daily Production
2,500
2,000
1,500
1,000
500
0
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
Heavy crude oil Light crude & medium crude oil Natural gas NGLs
Boe/d
----- End of picture text -----

ALTURA ENERGY INC. | MD&A | 9

Petroleum and Natural Gas Sales

Three Months Ended December 31 Year Ended December 31 ($000) 2020 2019 % Change 2020 2019 % Change	Three Months Ended December 31 Year Ended December 31 ($000) 2020 2019 % Change 2020 2019 % Change	Three Months Ended December 31 Year Ended December 31 ($000) 2020 2019 % Change 2020 2019 % Change
Heavy crude oil 1,913 Light crude & medium crude oil - Natural gas 633 Naturalgas liquids 113	4,408 (57) - - 846 (25) 277 (59)	6,227 22,602 (72) 78 300 (74) 1,913 1,983 (4) 397 872 (54)
Petroleum and naturalgas sales 2,659	5,531 (52)	8,615 25,757 (67)

Petroleum and natural gas sales for the fourth quarter of 2020 decreased 52 percent to $2,659,000 compared to $5,531,000 in the fourth quarter of 2019. The decrease of $2,872,000 consists of $2,477,000 attributed to decreased production volumes and $395,000 attributed to lower realized crude oil prices, partially offset by higher natural gas prices. For 2020, petroleum and natural gas sales decreased 67 percent to $8,615,000 compared to $25,757,000 in 2019. The decrease of $17,142,000 consists of $14,316,000 attributed to decreased production volumes and $2,826,000 attributed to lower realized crude oil and NGL prices, partially offset by higher natural gas prices.

Petroleum and Natural Gas Sales

==> picture [467 x 189] intentionally omitted <==

----- Start of picture text -----

8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
Heavy crude oil Light crude & medium crude oil Natural gas NGLs
000
$
----- End of picture text -----

Altura sells its crude oil on a monthly index basis and natural gas production on a spot basis. The average realized price the Corporation receives for its crude oil and natural gas production depends on several factors, including the average benchmark prices for crude oil and natural gas, the US to Canadian dollar exchange rate and transportation and product quality differentials.

The average benchmark prices for crude oil are impacted by global and regional events that dictate the level of supply and demand for these commodities. The principal crude oil benchmarks that Altura compares its oil price to are the WTI oil price and the WCS oil price. The differential between WTI and WCS oil prices can widen due to several factors, including, but not limited to, downtime in North American refineries, rising domestic and international production, the US to Canadian dollar exchange rate, high inventory levels in North America and lack of pipeline infrastructure or takeaway capacity connecting key consuming oil markets.

10 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

The following table outlines the Corporation’s benchmark and realized petroleum and natural gas prices:

Three Months Ended December 31 2020 2019 % Change	Three Months Ended December 31 2020 2019 % Change	Year Ended December 31 2020 2019 % Change
Average Benchmark Prices WTI crude oil (US$/bbl)(1) 42.66 WCS differential (US$/bbl)(2) (9.30) US$/Cdn$ exchange rate 0.767 WCS (Cdn$/bbl) 43.42 AECO dailyspot($/GJ) 2.50	59.96 (29) (15.84) (41) 0.758 1 54.29 (20) 2.35 6	39.40 57.03 (31) (12.60) (12.76) (1) 0.746 0.754 (1) 35.59 58.77 (39) 2.11 1.67 26
Average Realized Prices Heavy crude oil ($/bbl) 44.45 Light crude & medium crude oil ($/bbl) - Natural gas ($/Mcf) 2.87 Naturalgas liquids($/bbl) 25.72	54.40 (18) - - 2.70 6 26.64 (3)	36.59 55.69 (34) 36.21 48.81 (26) 2.43 1.73 40 21.32 26.75 (20)
Average realizedprice($/boe) 31.56	38.50 (18)	26.74 40.50 (34)

(1) WTI represents posting price of West Texas Intermediate crude oil.

(2) WCS differential represents the difference between the average market price for the benchmark Western Canadian Select heavy crude oil and WTI.

For the fourth quarter of 2020, WTI decreased 29 percent to US$42.66 per barrel compared to the fourth quarter of 2019 and the differential between WTI and WCS narrowed 41 percent to US$9.30 per barrel. These changes resulted in Altura’s realized heavy crude oil price decreasing 18 percent to $44.45 per barrel from the fourth quarter of 2019.

In 2020, WTI decreased 31 percent to US$39.40 per barrel compared to 2019 and the differential between WTI and WCS narrowed one percent to US$12.60 per barrel, while Altura’s realized heavy crude oil price decreased 34 percent to $36.59 per barrel.

==> picture [493 x 210] intentionally omitted <==

----- Start of picture text -----

Oil Prices
70
60
50
40
30
20
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
WTI USD WCS CAD Altura's Heavy Crude Oil Price
$/Bbl
----- End of picture text -----

In the fourth quarter of 2020, Altura's realized natural gas price increased by six percent to $2.87 per Mcf from the fourth quarter of 2019 while the AECO daily spot price increased six percent to $2.50 per GJ. In 2020, Altura's realized natural gas price increased by 40 percent to $2.43 per Mcf from 2019 while the AECO daily spot price increased 26 percent to $2.11 per GJ. Altura's realized natural gas price increase in 2020 was higher relative to the increase in the AECO daily spot price due to a gas balance recovery on the NOVA pipeline that negatively impacted Altura's realized gas price in 2019.

ALTURA ENERGY INC. | MD&A | 11

Risk Management Contracts

Altura has a risk management program to reduce the volatility of crude oil and natural gas sales, increase the certainty of adjusted funds flow to protect development economics and to comply with its banking covenant. The Corporation’s risk management program is approved by Altura's Board of Directors.

ltura has a risk management program to reduce the volatility of crude oil and natural gas sales, increase the certainty of djusted funds flow to protect development economics and to comply with its banking covenant. The Corporation’s risk anagement program is approved by Altura's Board of Directors.	ltura has a risk management program to reduce the volatility of crude oil and natural gas sales, increase the certainty of djusted funds flow to protect development economics and to comply with its banking covenant. The Corporation’s risk anagement program is approved by Altura's Board of Directors.
Three Months Ended December 31 Year Ended December 31 ($000,exceptper boe) 2020 2019 %Change 2020 2019 % Change
Realized gain on financial instruments 125 76 64 Realizedgain on financial instrumentsper boe 1.48 0.53 179	1,454 216 >500 4.51 0.34 >500

For the three months and year ended December 31, 2020, the realized gain on financial instruments increased to $125,000 and $1,454,000 as compared to $76,000 and $216,000 in the same periods of 2019, respectively. The increases are attributed to the severe decline in crude oil prices in 2020 compared to 2019.

At December 31, 2020, Altura held the following crude oil and natural gas contracts:

Period Commodity Type of Contract Quantity Pricing Point	Contract Price Fair Value at December 31, 2020 ($000)
Jan 1/21ꟷJun 30/21 Crude Oil Fixed 100 Bbls/d WCS Jan 1/21ꟷJun 30/21 Crude Oil Fixed 100 Bbls/d WCS Jul 1/21ꟷSep 30/21 Crude Oil Fixed 200 Bbls/d WCS Oct 1/21ꟷDec 31/21 Crude Oil Fixed 100 Bbls/d WCS Oct 1/21ꟷDec 31/21 Crude Oil Fixed 100 Bbls/d WCS Jan 1/21ꟷMar/21 Natural Gas Fixed 1,000 GJ/d AECO 5A Apr 1/21ꟷJun 30/21 Natural Gas Fixed 1,000 GJ/d AECO 5A Jul 1/21ꟷSep 30/21 Natural Gas Fixed 1,000 GJ/d AECO 5A Oct 1/21ꟷDec 31/21 Natural Gas Fixed 1,000 GJ/d AECO 5A	CAD $32.25 (200) CAD $39.20 (74) CAD $36.70 (127) CAD $37.70 (40) CAD $39.70 (22) CAD $2.825 36 CAD $2.455 25 CAD $2.580 28 CAD$2.545 5
	(369)

At December 31, 2020, the crude oil and natural gas contracts were fair valued with an liability of $369,000 (December 31, 2019 - $432,000 liability) recorded on the balance sheet and an unrealized loss of $439,000 recorded in net income (loss) for the three months ended December 31, 2020 (2019 - $530,000 unrealized loss). For the year ended December 31, 2020, Altura recorded an unrealized gain of $63,000 in net income (loss) (2019 - $432,000 unrealized loss).

Subsequent to December 31, 2020, Altura entered into the following crude oil and natural gas contracts:

		Type of
Period	Commodity	Contract	Quantity	Pricing Point	Contract Price
Jan 1/22ꟷJan 31/22	Crude Oil	Fixed	200 Bbls/d	WCS	CAD $51.00
Jan 1/22ꟷJan 31/22	Natural Gas	Fixed	1,000 GJ/d	AECO 5A	CAD$2.720

12 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

Royalties

oyalties	oyalties
Three Months Ended December 31 ($000,except % andper boe) 2020 2019 % Change		Year Ended December 31 2020 2019 % Change
Crown royalties 66 Freehold and overridingroyalties 154	172 (62) 464 (67)	148 785 (81) 506 1,862 (73)
Royalty expense 220 Royalty expense as a % of sales 8.3% Royaltyexpenseper boe 2.61	636 (65) 11.5% (28) 4.43 (41)	654 2,647 (75) 7.6% 10.3% (26) 2.03 4.16 (51)

In the fourth quarter of 2020, royalty expense decreased to $220,000 (8.3 percent of sales) compared to $636,000 (11.5 percent of sales) in the fourth quarter of 2019. In 2020, royalty expense decreased to $654,000 (7.6 percent of sales) compared to $2,647,000 (10.3 percent of sales) in 2019. The decreases in royalty expense and royalty expense as a % of sales is due to lower sales revenue and a lower average royalty rate due to decreased commodity prices compared to the same periods in 2019.

==> picture [493 x 227] intentionally omitted <==

----- Start of picture text -----

Royalties
800 14.0%
700 12.0%
600 10.0%
500 8.0%
400 6.0%
300 4.0%
200 2.0%
100 0.0%
0 -2.0%
-100 -4.0%
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
Crown (LHS) Freehold and overriding (LHS) Royalty expense as a % of sales (RHS)
$000
% of sales
----- End of picture text -----

*LHS = refer to Y axis scale on Left Hand Side of graph

*RHS = refer to Y axis scale on Right Hand Side of graph

ALTURA ENERGY INC. | MD&A | 13

Operating

Three Months Ended December 31 Year Ended December 31 ($000,exceptper boe) 2020 2019 % Change 2020 2019 % Change	Three Months Ended December 31 Year Ended December 31 ($000,exceptper boe) 2020 2019 % Change 2020 2019 % Change
Operating 1,072 1,240 (14) Operating per boe 12.75 8.63 48	4,273 5,248 (19) 13.27 8.25 61

Operating expenses decreased $168,000 in the fourth quarter of 2020 to $1,072,000 as compared to $1,240,000 in the fourth quarter of 2019. In 2020, operating expenses decreased $975,000 to $4,273,000 compared to $5,248,000 in 2019. These decreases are due to lower production volumes in the three months and year ended December 31, 2020 compared to the same periods of 2019.

On a per boe basis, operating expenses increased to $12.75 per boe and $13.27 per boe in the three months and year ended December 31, 2020 compared to $8.63 per boe and $8.25 per boe in the same periods of 2019, respectively. These increases are mainly due to increased well workover costs and higher fixed operating costs per boe as fixed costs were allocated to lower production volumes. Operating cost reductions remain a key focus for Altura in 2021.

==> picture [493 x 226] intentionally omitted <==

----- Start of picture text -----

Operating Expenses
1,800 18.00
1,600 16.00
1,400 14.00
1,200 12.00
1,000 10.00
800 8.00
600 6.00
400 4.00
200 2.00
- -
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
Operating (LHS) Per boe (RHS)
$000 $/boe
----- End of picture text -----

14 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

Transportation

Three Months Ended December 31 Year Ended December 31 ($000,exceptper boe) 2020 2019 % Change 2020 2019 % Change	Three Months Ended December 31 Year Ended December 31 ($000,exceptper boe) 2020 2019 % Change 2020 2019 % Change
Transportation 163 351 (54) Transportationper boe 1.93 2.45 (21)	755 2,214 (66) 2.34 3.48 (33)

Transportation costs for the three months and year ended December 31, 2020 decreased to $163,000 and $755,000 as compared to $351,000 and $2,214,000 in comparable prior periods, due to decreased production volumes, coupled with shorter hauls to sales terminals in central Alberta.

On a per boe basis, transportation expenses decreased to $1.93 per boe and $2.34 per boe in the three months and year ended December 31, 2020, respectively, compared to $2.45 per boe and $3.48 per boe in the same periods of 2019. The decreases are due to favorable contract negotiations and shorter hauls to sales terminals in central Alberta in the three months and year ended December 31, 2020.

==> picture [493 x 226] intentionally omitted <==

----- Start of picture text -----

Transportation Expenses
800 8.00
700 7.00
600 6.00
500 5.00
400 4.00
300 3.00
200 2.00
100 1.00
- -
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
Transportation (LHS) Per boe (RHS)
$000 $/boe
----- End of picture text -----

ALTURA ENERGY INC. | MD&A | 15

Operating Netback

perating Netback	perating Netback
Three Months Ended December 31 Year Ended December 31 ($/boe) 2020 2019 % Change 2020 2019 % Change
Petroleum and natural gas sales 31.56 38.50 (18) Royalties (2.61) (4.43) (41) Operating (12.75) (8.63) 48 Transportation (1.93) (2.45) (21)	26.74 40.50 (34) (2.03) (4.16) (51) (13.27) (8.25) 61 (2.34) (3.48) (33)
Operating netback(1) 14.27 22.99 (38) Realizedgain on financial instruments 1.48 0.53 179	9.10 24.61 (63) 4.51 0.34 >500
Operating netback after realized gain on financial instruments(1) 15.75 23.52 (33)	13.61 24.95 (45)

(1) Operating netback and operating netback after realized gain on financial instruments are non-GAAP measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Refer to the heading entitled "Non-GAAP Measures" included in the "Advisories" section at the end of this MD&A.

Altura’s operating netback was $14.27 per boe in the fourth quarter of 2020 compared to $22.99 per boe in the fourth quarter of 2019. In 2020, Altura’s operating netback was $9.10 per boe compared to $24.61 per boe in 2019. The decreases are a result of lower crude oil prices and higher operating costs, partially offset by lower transportation costs and lower royalties.

Altura's operating netback after realized gains on financial instruments was $15.75 per boe and $13.61 per boe for the three months and year ended December 31, 2020, respectively. The increase in realized gains on financial instruments compared to the same periods of 2019 is mainly due to WCS oil contracts that protected a portion of Altura's oil sales during the severe decline in oil prices in 2020.

==> picture [493 x 242] intentionally omitted <==

----- Start of picture text -----

Operating Netback [(1)]
30.00
25.00
20.00
15.00
10.00
5.00
-
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
(5.00)
Realized gain (loss) on financial instruments
Operating netback
Operating netback after realized gain (loss) on financial instruments
$/boe
----- End of picture text -----

• (1) Operating netback is a non-GAAP measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Refer to the heading entitled "Non-GAAP Measures" included in the "Advisories" section at the end of this MD&A.

16 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

General and Administrative ("G&A") Expenses

Three Months Ended December 31 Year Ended December 31 ($000,exceptper boe) 2020 2019 % Change 2020 2019 % Change	Three Months Ended December 31 Year Ended December 31 ($000,exceptper boe) 2020 2019 % Change 2020 2019 % Change
Gross G&A 504 544 (7) Capitalized G&A and overhead recoveries (110) (181) (39)	2,114 2,309 (8) (524) (685) (24)
Net G&A expenses 394 363 9 Net G&Aper boe 4.66 2.52 85	1,590 1,624 (2) 4.93 2.55 93

Net G&A expenses totaled $394,000 in the fourth quarter of 2020, compared to $363,000 for the fourth quarter of 2019. This increase is primarily due to decreased capitalized G&A associated with reduced capital spending in the period, partially offset by funds received from the Canada Emergency Wage Subsidy program and Canada Emergency Rent Subsidy program (the "Emergency Subsidy Programs").

In 2020, Altura's net G&A expenses were $1,590,000, a two percent decrease from 2019. Gross G&A decreased eight percent from 2019 mainly due to the Emergency Subsidy Programs, however, capitalized G&A decreased 24 percent from 2019 due to decreased capitalized G&A associated with reduced capital spending in 2020.

Altura received $81,000 and $243,000 in the three months and year ended December 31, 2020, respectively, under the Emergency Subsidy Programs.

Net G&A expenses increased to $4.66 per boe and $4.93 per boe for the three months and year ended December 31, 2020, respectively, compared to $2.52 per boe and $2.55 per boe in the same periods in 2019 due to decreased production volumes.

Altura's policy is to capitalize G&A costs that are directly attributable to investments of property and equipment or exploration and evaluation assets.

==> picture [493 x 226] intentionally omitted <==

----- Start of picture text -----

Net G&A Expenses
800 8.00
700 7.00
600 6.00
500 5.00
400 4.00
300 3.00
200 2.00
100 1.00
- -
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
Net G&A (LHS) Per boe (RHS)
$000 $/boe
----- End of picture text -----

ALTURA ENERGY INC. | MD&A | 17

Interest and Financing Expenses

nterest and Financing Expenses	nterest and Financing Expenses	nterest and Financing Expenses
Three Months Ended December 31 Year Ended December 31 ($000,exceptper boe) 2020 2019 % Change 2020 2019 % Change
Credit facility interest and financing expenses 115 49 135 Lease interest(cash and non-cash) 2 5 (60)	283 12	220 29 14 (14)
Interest and financing expenses 117 54 117 Interest and financingexpensesper boe(cash) 1.39 0.37 276	295 0.91	234 26 0.36 153

Interest and financing expenses totaled $117,000 and $295,000 in the three months and year ended December 31, 2020, respectively, compared to $54,000 and $234,000 in the same periods of 2019. The increase in both periods is primarily due to increased credit facility renewal fees. Altura's average interest rate in 2020 was 5.5 percent, compared to 5.6 percent in 2019.

Share-Based Compensation

hare-Based Compensation	hare-Based Compensation
Three Months Ended December 31 Year Ended December 31 ($000) 2020 2019 % Change 2020 2019 % Change
Share-based compensation 52 164 (68) Capitalized share-based compensation (7) (48) (85)	355 774 (54) (69) (198) (65)
Share-based compensation expense 45 116 (61)	286 576 (50)

Altura's share-based compensation is related to the granting of stock options and performance warrants. The Corporation estimates the fair-value of the incentive award based on a Black Scholes model for the determination of non-cash related share-based compensation and the expense is recorded over the expected life. Share-based compensation, net of capitalized amounts, totaled $45,000 and $286,000 in the three months and year ended December 31, 2020, respectively, compared to $116,000 and $576,000 in the same periods of 2019. The decrease in both periods reflects the expiry of all performance warrants in 2020 and decreased stock option expense due to no options granted in 2020.

Altura's policy is to capitalize share-based compensation costs that are directly attributable to investments of property and equipment or exploration and evaluation assets.

Depletion, Depreciation and Amortization ("DD&A")

epletion, Depreciation and Amortization ("DD&A")	epletion, Depreciation and Amortization ("DD&A")
Three Months Ended December 31 Year Ended December 31 ($000,exceptper Boe) 2020 2019 % Change 2020 2019 % Change
DD&A 874 1,899 (54) DD&Aper Boe 10.38 13.22 (21)	3,854 9,495 (59) 11.96 14.93 (20)

Altura uses proved and probable oil and gas reserves to calculate DD&A expense. For the three months and year ended December 31, 2020, DD&A decreased to $869,000 and $3,849,000, respectively, compared to $1,899,000 and $9,495,000 in the same periods of 2019. The decreases are due to lower production volumes and the impairment recorded in the first quarter of 2020.

On a per unit basis, DD&A decreased to $10.38 per boe and $11.96 per boe in the three months and year ended December 31, 2020, compared to $13.22 per boe and $14.93 per boe in the same periods of 2019. The decreased per unit depletion is due to the impairment recorded in the first quarter of 2020.

Impairment

Impairment is recognized when the carrying value of an asset or group of assets exceeds its estimated recoverable amount, defined as the higher of its value in use or fair value less cost to sell. Any asset impairment that is recorded is recoverable to its original value less any associated DD&A expense should there be indicators that the recoverable amount of the asset has increased in value since the time of recording the initial impairment.

18 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

Exploration and Evaluation ("E&E")

For the year ended December 31, 2020, the Corporation determined that indicators of impairment existed with respect to its E&E assets which are all in the Entice area and Altura recognized an impairment charge of $4,795,000 (no impairment at December 31, 2019) on E&E assets.

For impairment testing, the estimated recoverable amount of E&E assets is the greater of (i) its value in use, and (ii) its fair value less cost to sell. The estimated recoverable amount for the Entice E&E assets of $260,000 was based on the probable oil and gas reserves and related cash flow from Altura’s December 31, 2020 reserve report prepared by its independent thirdparty reserve evaluators. The estimated recoverable amount was determined to be value in use and was based on before-tax discount rates specific to the underlying composition of reserve categories and risk profile residing in the Entice area, net of decommissioning obligations and included recoverable value for certain undeveloped land based on management's estimates as at December 31, 2020 which were established principally on relevant land sales. The discount rate used in the valuation was 55 percent.

Property and Equipment

December 31, 2020

At December 31, 2020, there were indicators of impairment reversal identified in Altura’s Leduc-Woodbend cash generating unit ("CGU") as a result of, amongst other factors considered by management, improved forecasted commodity prices for heavy crude oil since the last impairment test performed on March 31, 2020. Altura has only one CGU. An impairment test was performed on Developed and Producing assets ("D&P") assets and the Corporation recognized an impairment reversal of $11.2 million related to its Leduc-Woodbend CGU due to the estimated recoverable amount exceeding the carrying value.

The estimated recoverable amount of the CGU is the greater of (i) its value in use, and (ii) its fair value less cost to sell. The estimated recoverable amount for the Leduc-Woodbend CGU was based on the proved and probable oil and gas reserves and related cash flows from Altura’s December 31, 2020 reserve report prepared by its independent third-party evaluators. The estimated recoverable amount was determined to be value in use and was based on before-tax discount rates specific to the underlying composition of reserve categories and risk profile residing in the Leduc-Woodbend CGU, net of decommissioning obligations and included recoverable value for certain undeveloped land included in property and equipment related to this CGU based on an independent land evaluation at December 31, 2020. The discount rates used in the valuation ranged from 10 percent to 30 percent, with an overall weighted average discount rate of approximately 20 percent.

The initial impairment expense of $30.0 million on D&P and Right of Use ("ROU") assets recognized at March 31, 2020, net of the impairment reversal of $11.2 million at December 31, 2020 on D&P assets, resulted in a net impairment expense of $18.8 million recognized for the year ended December 31, 2020.

March 31, 2020

At March 31, 2020, the Corporation determined there to be indicators of impairment in its Leduc-Woodbend CGU due to the potential long-term impact of the COVID-19 pandemic which caused a significant decline in forecasted oil benchmark prices and due to a decline in Altura's market capitalization in the first quarter of 2020. In the three months ended March 31, 2020, the Corporation recognized an impairment charge of $30.0 million related to its Leduc-Woodbend CGU due to the carrying value exceeding the estimated recoverable amount.

The estimated recoverable amount of the CGU is the greater of (i) its value in use, and (ii) its fair value less cost to sell. The estimated recoverable amount for the Leduc-Woodbend CGU was based on the proved and probable oil and gas reserves and related cash flows from Altura’s December 31, 2019 reserve report prepared by its independent third-party reserve evaluators, updated using forecasted oil and gas commodity prices at April 1, 2020, revised forecasted operating cost assumptions and timing of forecasted future development costs and removed production from January 1, 2020 to March 31, 2020, as updated by the Corporation's internal reserve evaluator. The estimated recoverable amount was determined to be value in use and was based on before-tax discount rates specific to the underlying composition of reserve categories and risk profile residing in the Leduc-Woodbend CGU, net of decommissioning obligations and included recoverable value for certain undeveloped land included in property and equipment related to this CGU based on management's estimates as at March 31, 2020 which were established principally on relevant land sales. The discount rates used in the valuation ranged from 10 percent to 30 percent, with an overall weighted average discount rate of approximately 17 percent.

ALTURA ENERGY INC. | MD&A | 19

December 31, 2019

At December 31, 2019, the Corporation determined there to be indicators of impairment in its Leduc-Woodbend CGU due to Altura recording a loss on disposition of assets in December 2019 and due to a decline in market capitalization in the second half of 2019. An impairment test was performed on D&P assets. For the December 31, 2019 test, the D&P assets were assessed based on the recoverable amount estimated using a value in use calculation based on expected future cash flows generated from proved and probable oil and gas reserves using pre-tax discount rates ranging from 10 percent to 30 percent, with an overall weighted average discount rate of approximately 19 percent, based on the independent third-party reserve evaluators report. No impairment was recognized at December 31, 2019, as the estimated recoverable amount of the Leduc Woodbend CGU exceeded its carrying value.

Deferred Taxes

The Corporation recognized a deferred tax recovery of nil and $1,472,000 in the three months and year ended December 31, 2020, respectively, compared to deferred tax expenses of $33,000 and $746,000 in the same periods of 2019. The deferred tax recovery is due to the pre-tax loss recorded in the year ended December 31, 2020 which reduced the Corporation's deferred tax liability to nil. Altura has not recognized a deferred tax asset at December 31, 2020 as Management did not find it probable that the benefit will be realized.

Estimated tax pools at December 31, 2020 are as follows:

($000)
Canadian development expenses Canadian exploration expenses Canadian oil and gas property expenses Non-capital losses Undepreciated capital cost	13,161 3,082 - 18,481 8,292
	43,016

Altura has non-capital losses of $18.5 million at December 31, 2020 that expire between 2025 and 2040.

Net Income (Loss) and Adjusted Funds Flow

et Income (Loss) and Adjusted Funds Flow	et Income (Loss) and Adjusted Funds Flow	et Income (Loss) and Adjusted Funds Flow
Three Months Ended December 31 Year Ended December 31 ($000,exceptper share amounts andper boe) 2020 2019 % Change 2020 2019 % Change
Net income (loss) 10,823 (56) Per share – basic 0.10 - Per share – diluted 0.10 - Cash flow from operating activities 206 3,955 Adjusted funds flow(1) 818 2,963 Per share – diluted(1) 0.01 0.03 Adjusted funds flowper boe(1) 9.70 20.63	>500 - - (95) (72) (67) (53)	(22,313) 2,215 (>500) (0.20) 0.02 (>500) (0.20) 0.02 (>500) 2,406 12,994 (81) 2,502 13,994 (82) 0.02 0.13 (85) 7.77 22.01 (65)

(1) Adjusted funds flow is a non-GAAP measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Refer to the heading entitled "Non-GAAP Measures" included in the "Advisories" section at the end of this MD&A.

20 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

Net Income (Loss)

In the fourth quarter of 2020, net income increased to $10.8 million compared to a net loss of $56,000 in the fourth quarter of 2019. The increased net income primarily reflects an impairment reversal, lower DD&A, no loss on property disposition and decreased royalties, transportation and operating costs, partially offset by lower production volumes and decreased crude oil prices.

==> picture [459 x 467] intentionally omitted <==

ALTURA ENERGY INC. | MD&A | 21

In 2020, net income decreased to a net loss of $22.3 million compared to net income of $2.2 million in 2019. The decreased net income primarily reflects impairment and decreased sales revenue from lower production volumes and decreased crude oil prices, partially offset by gains on financial instruments, lower royalties, operating costs, transportation costs and DD&A, a gain on property dispositions and a recovery of deferred taxes.

==> picture [492 x 488] intentionally omitted <==

22 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

Adjusted Funds Flow

In the fourth quarter of 2020, adjusted funds flow decreased by $2,145,000 to $818,000 compared to $2,963,000 in the fourth quarter of 2019. The decrease primarily reflects decreased sales revenue from lower production volumes and decreased crude oil prices and higher interest and financing costs, partially offset by a gain on realized financial instruments, and lower royalties, transportation and operating costs.

==> picture [493 x 488] intentionally omitted <==

ALTURA ENERGY INC. | MD&A | 23

In 2020, adjusted funds flow decreased by $11,492,000 to $2,502,000 compared to $13,994,000 in 2019. The decrease primarily reflects decreased sales revenue from lower production volumes and decreased crude oil prices, partially offset by a realized gain on financial instruments, and lower royalties, operating costs, and transportation costs.

==> picture [493 x 488] intentionally omitted <==

24 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

Capital Expenditures

Capital Expenditures	Capital Expenditures
Three Months Ended December 31 Year Ended December 31 ($000) 2020 2019 % Change 2020 2019 % Change
Geological and geophysical 3 29 (90) Land 52 36 44 Drilling and completions (9) 609 (101) Workovers 6 439 (99) Equipping and tie-in (9) 201 (104) Facilities and pipelines (4) 53 (108) Other 66 161 (59)	6 70 (91) 717 857 (16) 6,298 6,439 (2) 111 1,720 (94) 327 1,800 (82) 30 1,407 (98) 385 591 (35)
Capital expenditures 105 1,528 (93) Propertydispositions - (3,508) (100)	7,874 12,884 (39) (1,746) (3,508) (50)
Total capital expenditures 105 (1,980) (105)	6,128 9,376 (35)

Capital expenditures were allocated as follows:

Capital expenditures were allocated as follows:	Capital expenditures were allocated as follows:
Three Months Ended December 31 Year Ended December 31 ($000) 2020 2019 % Change 2020 2019 % Change
Exploration and evaluation 18 111 (84) Propertyand equipment,net 87 (2,091) (104)	4,008 1,167 243 2,120 8,209 (74)
Total capital expenditures 105 (1,980) (105)	6,128 9,376 (35)

In 2020, Altura invested $3.9 million in property and equipment at Leduc-Woodbend. In March 2020, Altura halted all discretionary capital expenditures in response to the impacts of COVID-19 on the global economy. Prior to the COVID-19 pandemic, Altura invested $3.3 million at Leduc-Woodbend which included the completion of a horizontal oil well in January 2020 that was drilled in the third quarter of 2019 and the drilling of a horizontal oil well (93% working interest) in January 2020 at Leduc-Woodbend that was completed in February 2021.

In 2020, Altura incurred $4.0 million in E&E asset additions. E&E asset additions included land acquisition costs and drilling, completing, and equipping a horizontal well targeting the Pekisko Formation in the Entice area.

In 2020, Altura has closed two asset dispositions for cash proceeds of $1,746,000 as discussed in the "Asset Disposition" section of this MD&A on page 6.

Decommissioning Liability

At December 31, 2020, Altura's decommissioning liability was $5.8 million (December 31, 2019 - $5.4 million) for the future abandonment and reclamation of Altura’s properties. The estimated decommissioning liability includes cost assumptions to abandon wells or reclaim the property, the time frame in which such costs will be incurred as well as annual inflation factors used to calculate the undiscounted total future liability. The future liability has been inflated at 1.5 percent (December 31, 2019 – 1.4 percent) and discounted at the Bank of Canada's long-term risk-free bond rate of 1.2 percent (December 31, 2019 – 1.8 percent).

Abandonment cost estimates are derived from both third-party industry and government sources and operational knowledge of the properties.

Accretion expense is the increase in the decommissioning liability resulting from the passage of time. For the three months and year ended December 31, 2020, accretion expense totaled $19,000 and $66,000 (2019 - $24,000 and $104,000), respectively.

The Corporation’s Liability Management Rating ("LMR") with the Alberta Energy Regulator ("AER") was 5.08 at April 3, 2021. The LMR is the ratio of the Corporation's deemed assets to its deemed liabilities and is updated monthly. An LMR rating less than 1.0 would require the Corporation to pay a deposit to the AER. Additionally, Altura's revolving operating demand loan includes a covenant requiring the Corporation to maintain a Licensee Liability Rating ("LLR") in Alberta, Saskatchewan and British Columbia, in each case, of no less than 2.0. Altura's LLR with the AER was 5.08 at April 3, 2021, consistent with its LMR.

ALTURA ENERGY INC. | MD&A | 25

Altura was approved for abandonment and reclamation funding of $508,000 under the Alberta Site Rehabilitation Program ("SRP"). The grant funding consists of $373,000 under Period 1 and $135,000 under Period 3. The Corporation utilized $213,000 of the grants in the fourth quarter of 2020 to abandon five inactive wells and reclaim three wells that were previously abandoned, settling $192,000 of net asset retirement obligations. Altura recorded the $192,000 government subsidy in other income for the year ended December 31, 2020.

CAPITAL RESOURCES AND LIQUIDITY

Net debt as at December 31, 2020 and December 31, 2019 is summarized as follows:

et debt as at December 31, 2020 and December 31, 2019 is summarized as follows:
($000) December 31, 2020	December 31,2019
Current assets (1,307) Current liabilities 5,608	(2,110) 3,168
Working capital deficit 4,301 Fair value of financial instruments (369) Current portion of lease liabilities (50) Currentportion of decommissioningliability (25)	1,058 (432) (48) (15)
Net debt(1) 3,857 Net debt to annualized adjusted funds flow(1)(2) 1.18	563 0.05

(1) Net debt and annualized adjusted funds flow are non-GAAP measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Refer to the heading entitled "Non-GAAP Measures" included in the "Advisories" section at the end of this MD&A.

(2) Refer to Note 16 "Capital Management" in the financial statements regarding net debt to annualized adjusted funds flow.

The Corporation’s policy is to maintain a strong capital base to maintain investor, creditor and market confidence and to sustain the future development of the business. Altura's net debt of $3.9 million as at December 31, 2020 increased from $0.6 million at December 31, 2019 due to capital expenditures in 2020 exceeding adjusted funds flow. The increased net debt and decreased adjusted funds flow in the fourth quarter of 2020 resulted in net debt to annualized adjusted funds flow increasing to 1.18 times at December 31, 2020 compared to 0.05 times at December 31, 2019.

Working Capital

Altura targets to maintain sufficient unused credit facility capacity to satisfy working capital deficiencies. The Corporation had a working capital deficit of $4.3 million at December 31, 2020 compared to a working capital deficit of $1.1 million at December 31, 2019. At December 31, 2020, the major components of Altura’s current assets were accounts receivable (83 percent) to be received from its oil and gas marketers in respect to December production and joint interest partners. Altura routinely assesses the financial strength of its marketers and joint interest partners and has determined all past due accounts receivable to be collectible. Current liabilities largely consist of bank debt (71 percent), and trade and joint interest payables (13 percent) and accrued liabilities (6 percent) related to the Corporation’s operations. The Corporation manages its working capital using a combination of its cash flow from operating activities and advances under its revolving operating demand loan and, if applicable, funds from debt and equity issuances and asset divestitures. Altura invests its excess cash, if any, in a short-term interest-bearing account with its lender.

26 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

Credit Facilities

The Corporation has a revolving operating demand loan (the "Operating Loan") with a Canadian bank (the "Lender") with a borrowing base of $6.0 million. Additionally, Altura has a $3.0 million term loan from its Lender through the Business Credit Availability Program ("BCAP") Guarantee from the Export Development Bank of Canada ("EDC") (the "Term Loan"), providing $9.0 million of total credit facilities.

Altura's bank debt at December 31, 2020 and December 31, 2019 is summarized as follows:

Altura's bank debt at December 31, 2020 and December 31, 2019 is summarized as follows:	Altura's bank debt at December 31, 2020 and December 31, 2019 is summarized as follows:
($000) December 31, 2020 December 31,2019
Operating Loan 985 Term Loan 3,000	- -
Bank debt 3,985	-

The Operating Loan is revolving, payable on demand and contains customary material adverse change clauses. As the borrowing base of the Operating Loan is based on the Lenders’ interpretation of Altura’s estimated proved and probable oil and natural gas reserves and forecasted commodity prices, there can be no assurance as to the amount of available limit that will be determined at each scheduled review.

The Term Loan is a non-revolving term facility to be used exclusively to provide additional liquidity to finance Altura's business operations. It can be used to pay operating expenses, G&A expenses, interest on the Operating Loan, lease payments and pay down temporary advances on Altura's Operating Loan. The Term Loan cannot be used to repay or refinance permanent reductions to the Operating Loan or to make shareholder contributions, shareholder loans, share buy backs, or pay any bonuses or increase executive compensation.

The Term Loan is payable on demand by Altura's Lender and is non-revolving, therefore amounts repaid cannot be reborrowed and contains customary material adverse change clauses. The Term Loan has a five-year maturity with no less than 50% of amounts outstanding due on August 27, 2024 and the remaining balance due on August 27, 2025.

The interest rate on the Operating Loan and the Term Loan (collectively the "Credit Facilities") is the Lender's prime rate plus 4.5 percent per annum.

Altura is subject to certain reporting and financial covenants including:

• the Corporation is required to maintain a working capital ratio of at least 1:1, but for the purposes of the covenant, the Credit Facilities and the fair value of any commodity contracts are excluded and the unused portion of the Operating Loan is added to current assets;

• the Corporation will, at all times, maintain hedging agreements covering no less than 30 percent of Altura's forecasted total production for no less than the succeeding nine-month period, on a rolling basis whereby at least fifty percent of the hedged volumes (on a barrels of oil equivalent basis) must be crude oil hedges (Western Canadian Select);

• the Corporation will maintain a Licensee Liability Rating ("LLR") in Alberta, Saskatchewan and British Columbia, in each case, of no less than 2.0; and,

• Altura was restricted to incur capital expenditures in excess of $500,000 above the budget provided to the Lender from August 27, 2020 to January 31, 2021.

As at December 31, 2020, the working capital ratio as defined was 5.00:1 (December 31, 2019 – 4.0:1) and the Corporation was compliant with all covenants, including the hedging covenant and LLR covenant.

As at December 31, 2020, $4.0 million (December 31, 2019 - $nil) was drawn on the Credit Facilities and the Corporation had an outstanding letter of credit for $50,000 (December 31, 2019 - $160,000).

The next review date for the Credit Facilities has been scheduled for May 31, 2021 but may be set at an earlier or later date at the sole discretion of the Lender.

Liquidity Risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Corporation believes that it has access to sufficient capital through internally generated cash flows and external sources (bank

ALTURA ENERGY INC. | MD&A | 27

credit markets and equity financing, if required) to meet current spending forecasts. However, future liquidity depends on the ability of the Corporation to access debt markets and generate cash flow from operations, which are also impacted by the availability under Altura's Credit Facilities and additional equity. Various industry risk factors, including uncertainty around improvements in global commodity prices and pipeline and transportation capacity constraints in Western Canada, may adversely affect the Corporation’s future liquidity as pertains to these operational and financing requirements. All the accounts payable and accrued liabilities are due in less than one year and amounts outstanding on the Credit Facilities are due on demand.

Shareholders’ Equity

At December 31, 2020 there were 108,920,974 common shares outstanding, and 6,085,000 stock options outstanding. The number of common shares remain unchanged from December 31, 2019. Altura's performance warrants totaling 9,749,879 were not exercisable and expired in 2020. Additionality, 435,000 stock options were forfeited and 3,250,000 stock options expired in 2020.

At April 14, 2021 the number of common shares and stock options outstanding remain unchanged from December 31, 2020.

Capital Resources

The Corporation provided its 2021 capital expenditure budget of $6.0 million on January 29, 2021. The budget includes drilling two (1.8 net) Rex wells and completing three (2.7 net) Rex wells at Leduc-Woodbend. Altura expects to have adequate liquidity to fund the budget through a combination of cash flow from operating activities, available funding from its Credit Facilities and proceeds from closing stages 3 and 4 of the Second Transaction of Altura's December 2019 asset disposition as discussed in the "Asset Disposition" section of this MD&A on page 6.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

Altura has contractual obligations in the normal course of operations including operating agreements, transportation commitments, royalty obligations, lease rental obligations and employee agreements. These obligations are of a recurring, consistent nature and impact Altura’s cash flows in an ongoing manner.

Altura has an agreement to close additional asset dispositions in 2021 totaling a 2.75 percent working interest in the Corporation's production, wells, lands and facilities for cash of $1.75 million, as discussed in the "Asset Dispositions" section of the MD&A on page 6.

The Original Disposition Agreement included a drilling commitment related to the Second Transaction, whereby Altura committed to the drilling of a horizontal well in either the Entice area or the Leduc-Woodbend area on or before December 31, 2020. Given the economic environment on June 26, 2020, drilling risk profile and capital efficiency in each of the areas, the parties agreed the well will be drilled at Leduc-Woodbend at a time when commodity prices support well economics. Estimated total gross drill, completion and equipping costs of the well is $2.3 million. PrivateCo will pay 12.5% of the well costs and earn a 12.5% working interest in the well and the optional third funding transaction contemplated by the Original Disposition Agreement will not be executed by PrivateCo.

Altura has a second commitment with a royalty company to drill one horizontal well by January 31, 2022 in the LeducWoodbend area pursuant to a drilling commitment agreement. The Corporation is subject to a non-performance penalty of $157,500 if the commitment is not fulfilled.

The well commitment in the Original Disposition Agreement and the well commitment in the drilling commitment agreement can both be fulfilled with drilling one well in the Leduc-Woodbend area.

28 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

SUMMARY OF QUARTERLY INFORMATION

2020 Quarters Ended Q4 Q3 Q2 Q1	2020 Quarters Ended Q4 Q3 Q2 Q1	2019 Q4 Q3 Q2 Q1	2019 Q4 Q3 Q2 Q1
OPERATING Average daily production Heavy crude oil (bbls/d) 468 512 Light crude & medium crude oil (bbls/d) - 16 Natural gas (Mcf/d) 2,402 2,118 NGLs(bbls/d) 48 38	213 667 - 8 1,154 2,926 30 87	881 1,150 - - 3,406 3,733 113 108	1,016 1,404 - 68 2,914 2,510 88 47
Total (boe/d) 916 919 Average realized sales price Heavy crude oil ($/bbl) 44.45 40.19 Light crude & medium crude oil ($/bbl) - 43.79 Natural gas ($/Mcf) 2.87 2.45 NGLs($/bbl) 25.72 25.83	435 1,250 21.39 33.06 - 20.85 2.06 2.20 6.46 22.02	1,561 1,880 54.40 55.31 - - 2.70 0.95 26.64 24.42	1,591 1,939 62.83 51.62 - 48.97 1.30 2.06 24.23 37.16
Average realized price ($/boe) 31.56 29.87 ($/boe) Petroleum and natural gas sales 31.56 29.87 Royalties (2.61) (2.63) Operating expenses (12.75) (13.85) Transportation expenses (1.93) (2.51)	16.36 24.46 16.36 24.46 0.28 (1.96) (16.27) (12.19) (2.46) (2.49)	38.50 37.12 38.50 37.12 (4.43) (4.20) (8.63) (6.92) (2.45) (2.93)	43.89 42.71 43.89 42.71 (4.08) (3.98) (9.56) (8.18) (4.92) (3.70)
Operating netback(1) 14.27 10.88 Realizedgain(loss)on financial instruments 1.48 0.51	(2.09) 7.82 16.60 5.53	22.99 23.07 0.53 (0.22)	25.33 26.85 1.23 -
Operating netback after realized gain (loss) on financial instruments(1) 15.75 11.39 General and administrative (4.66) (5.71) Exploration expense - - Interest and financingexpense(cash) (1.39) (1.21)	14.51 13.35 (7.98) (3.50) - - (1.42) (0.17)	23.52 22.85 (2.52) (2.16) - - (0.37) (0.27)	26.56 26.85 (2.94) (2.64) - (0.12) (0.50) (0.29)
Adjusted funds flowper boe(1) 9.70 4.47	5.11 9.68	20.63 20.42	23.12 23.80
FINANCIAL($000, except per share) Petroleum and natural gas sales 2,659 2,526 Cash flow from operating activities 206 505 Adjusted funds flow(1) 818 378 Per share – basic(1) 0.01 - Per share – diluted(1) 0.01 - Net income (loss) 10,823 (360) Per share – basic 0.10 - Per share – diluted(2) 0.10 -	647 2,783 512 1,183 204 1,102 - 0.01 - 0.01 (1,247) (31,529) (0.01) (0.29) (0.01) (0.29)	5,531 6,420 3,955 3,181 2,963 3,532 0.03 0.03 0.03 0.03 (56) 298 - - - -	6,353 7,453 3,568 2,290 3,346 4,153 0.03 0.04 0.03 0.04 1,044 929 0.01 0.01 0.01 0.01
($000) Capital expenditures 105 469 Property acquisitions (dispositions) - (875) Total assets 34,439 23,789 Net debt(1) 3,857 4,560 Shareholders’ equity 22,898 12,023 Common shares outstanding (000) Weighted average for the period - basic(2) 108,921 108,921 Weighted average for the period - diluted(2) 108,921 108,921 Shares outstanding, end of period 108,921 108,921	218 7,082 (871) - 24,517 26,895 5,335 6,183 12,309 13,456 108,921 108,921 108,921 108,936 108,921 108,921	1,528 3,553 (3,508) - 55,053 61,202 563 5,130 44,856 44,748 108,921 108,921 109,097 109,517 108,921 108,921	6,350 1,453 - - 59,719 55,704 5,109 2,105 44,251 42,983 108,921 108,921 110,503 110,430 108,921 108,921

(1) Adjusted funds flow, net debt, and operating netback are non-GAAP measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Refer to the heading entitled "Non-GAAP Measures" included in the "Advisories" section at the end of this MD&A.

(2) Basic weighted average shares are used to calculate diluted per share amounts when the Corporation is in a loss position.

Quarter over quarter changes in revenue from the first quarter of 2019 are the result of changes in oil and gas volumes sold as well as changes in Altura's average realized price. Production volumes declined in the second quarter of 2019 as no new

ALTURA ENERGY INC. | MD&A | 29

wells were brought on production and well run-time efficiency decreased due to pump failures. Two wells were brought on production in the third quarter of 2019, increasing average production volumes. Average production volumes declined in the fourth quarter of 2019 from no new wells being brought on production and a disposition of a 7% working interest in Altura's assets.

Average production volumes declined in the first quarter of 2020 from natural declines and increased down-time associated with repairs and maintenance activity. In the second quarter of 2020, Altura curtailed production volumes as a result of the severe decline in oil prices associated with the COVID-19 pandemic. Average production volumes increased in the third quarter of 2020 as Altura restarted the majority of its wells that were curtailed in the second quarter of 2020 and were held flat in the fourth quarter of 2020.

Realized crude oil prices declined significantly in the first half of 2020 compared to 2019 due to the COVID-19 pandemic but improved steadily in the latter half of 2020 as economies have begun to reopen and the rollout of approved COVID-19 vaccines.

Capital expenditures in the first three quarters of 2019 included drilling three and completing two horizontal wells at LeducWoodbend and one vertical well in a new area. Additionally, capital investment in 2019 included an electrification project at Altura's multi-well battery and associated pad sites, pipeline construction, and a solution gas compressor. In the second, third and fourth quarters of 2019, Altura changed its artificial lift system on 11 wells to improve run-time efficiencies and limit operating and capital workover events. In the fourth quarter of 2019, Altura completed a disposition of a 7% working interest in Altura's assets for cash of $3.5 million. In the first quarter of 2020, Altura completed a horizontal oil well (93% working interest) that was drilled in the third quarter of 2019, drilled a horizontal oil well (93% working interest) at Leduc-Woodbend and drilled and completed a horizontal well (93% working interest) targeting the Pekisko Formation at Entice. In the second quarter of 2020, Altura closed a disposition of a 1.375% working interest for $871,000 and closed a disposition of a 1.375% working interest for $875,000 in the third quarter of 2020.

In the first and second quarters of 2019, Altura recorded net income of $0.9 million and $1.0 million, respectively, from increased production volumes and higher crude oil prices. Net income decreased in the second half of 2019 due to lower heavy crude oil production volumes. In the first quarter of 2020, Altura recorded a net loss of $31.5 million, due to impairment and lower heavy crude oil production volumes and decreased crude oil prices. Altura recorded net losses of $1.2 million and $0.4 million in the second and third quarters of 2020, respectively, due to low realized oil prices, partially offset by gains on asset dispositions. In the fourth quarter of 2020, Altura recorded net income of $10.8 million, mainly due to an impairment reversal of $11.4 million.

OFF BALANCE SHEET ARRANGEMENTS

Altura does not have any off-balance sheet arrangements that would result in a material change to its financial position, performance or adjusted funds flow during the reporting periods.

RELATED PARTY TRANSACTIONS

Other than the payment of compensation to key management personnel and the board of directors, the Corporation has not entered into any related party transactions.

CRITICAL ACCOUNTING ESTIMATES

The Corporation’s financial and operating results incorporate certain estimates including:

• estimated revenues, royalties and operating expenses on production as at a specific reporting date but for which actual revenues and expenses have not yet been received;

• estimated capital expenditures on projects that are in progress;

30 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

• estimated DD&A that are based on estimates of proved and probable oil and gas reserves that the Corporation expects to recover in the future, estimated future salvage values and forecasted future development costs;

• estimated value of decommissioning liabilities that are dependent upon estimates of future costs, timing of expenditures and the risk-free rate;

• estimated income and other tax liabilities requiring interpretation of complex laws and regulations. All tax filings are subject to audit and potential reassessment after the lapse of considerable time;

• estimated share-based compensation expense using the Black-Scholes option pricing model; and

• estimated recoverable amounts are based on estimates of proved and probable oil and gas reserves and the related cash flows and estimated discount rates. Estimated proved and probable oil and gas reserves and the related cash flows are based on significant assumptions which include forecasted oil and gas commodity prices, forecasted production, forecasted royalty costs, forecasted operating costs and forecasted future development costs. Certain undeveloped land is also included in the estimated recoverable amount and significant judgement is used in estimating the recoverable amount including recent sales of similar properties in the same general area, recent exploration and discovery activity in the general area, and the remaining term of the undeveloped land.

The Corporation has hired individuals and consultants who have the skills required to make such estimates and ensures that individuals or departments with the most knowledge of the activity are responsible for the estimates. Further, past estimates are reviewed and compared to actual results, and actual results are compared to budgets in order to make more informed decisions on future estimates.

In March 2020, the World Health Organization declared COVID-19 to be a pandemic. Responses to the spread of COVID-19 resulted in a sudden decline in economic activity and a significant increase in economic uncertainty. In addition, oil prices declined dramatically due to the global oil price war and decline in demand due to COVID-19. Global oil demand has improved steadily in the latter half of 2020 as economies have begun to reopen and the government has approved the rollout of COVID-19 vaccines. Although the government authorities are easing restrictions, there is no certainty when demand levels will return to pre-COVID levels and therefore the situation remains dynamic and the ultimate duration and magnitude of the impact on the economy and financial effect on Altura is not known at this time. These events have resulted in a volatile and challenging economic environment which has adversely affected the Corporation's operational results and financial position. The current challenging economic climate may have significant adverse impacts on Altura including, but not exclusively:

• material declines in revenue and cash flows;

• declines in revenue and operating activities could result in increased impairment charges, and restrictions in lending agreements and reduced capital programs;

• increased risk of non-performance by Altura's purchasers which could materially increase the risk of non-payment of accounts receivable and customer defaults; and,

• if the situation continues for prolonged periods it could have a material impact on profitability, liquidity, and in the longer term could risk the ability to continue as a going concern for exploration and production companies, including Altura.

RISK FACTORS & RISK MANAGEMENT

Altura monitors and complies with current government regulations that affect its activities, although operations may be adversely affected by changes in government policy, regulations or taxation. In addition, Altura maintains a level of liability, and property insurance, which is believed to be adequate for the Corporation’s size and activities but is unable to obtain insurance to cover all risks within the business or in amounts to cover all possible claims.

Natural disasters, wars, terrorist attacks, riots or civil unrest, public health crises, including epidemics, pandemics or outbreaks of new infectious disease or viruses including COVID-19, and related events, could materially and negatively impact the Corporation’s business, its revenues and ultimately its profitability. Such events or occurrences may have a materially negative affect on one or more factors upon which the Corporation’s business relies, including without limitation the demand for, and therefore the price of, the natural resource products produced by the Corporation, supply chains to operate its business, and the availability of capital required by the Corporation to fund its operations.

ALTURA ENERGY INC. | MD&A | 31

See "Forward-Looking Information" in this MD&A and "Risk Factors" in Altura's most recently filed annual information form for additional information.

IMPACT OF NEW ENVIRONMENTAL REGULATIONS

The oil and gas industry is currently subject to regulation pursuant to a variety of provincial and federal environmental legislation, all of which is subject to governmental review and revision from time to time. Such legislation provides for, among other things, restrictions and prohibitions on the spill, release or emission of various substances produced in association with certain oil and gas industry operations, such as sulphur dioxide and nitrous oxide. In addition, such legislation sets out the requirements with respect to oilfield waste handling and storage, habitat protection and the satisfactory operation, maintenance, abandonment and reclamation of well and facility sites. Compliance with such legislation can require significant expenditures and a breach of such requirements may result in suspension or revocation of necessary licenses and authorizations, civil liability and the imposition of material fines and penalties.

Climate change regulation has the potential to significantly affect the regulatory environment of the crude oil and natural gas industry in Canada. In addition, the Supreme Court's decision in Orphan Well Association v Grant Thornton Limited may impact the manner in which provincial regulators seek to regulate their liability management and end-of-life asset retirement regimes. Such climate change and other environmental regulations impose certain costs and risks on the industry, and there remains some uncertainty with regard to the impacts of federal or provincial climate change and environmental laws and regulations, as Altura is unable to predict additional legislation or amendments that governments may enact in the future. Any new laws and regulations, or additional requirements to existing laws and regulations, could have a material impact on the Corporation's operations and adjusted funds flow.

Additional information is available in Altura’s AIF that is filed on SEDAR at www.sedar.com.

CHANGES IN ACCOUNTING POLICIES

The Corporation adopted IFRS 3, "Business Combinations", on January 1, 2020. Amendments to IFRS 3 were issued by the IASB in October 2018 that seek to clarify whether a transaction results in an asset or a business acquisition. The amendments include an election to use a concentration test. This is a simplified assessment that results in an asset acquisition if substantially all of the fair value of the gross assets are concentrated in a single identifiable asset or a group of similar identifiable assets. If the concentration test is not applied, or the test is failed, then the assessment focuses on the existence of a substantive process. The adoption of IFRS 3 had no impact to the Corporation's Financial Statements.

In 2020, Altura added a new accounting policy related to government grants. Altura recognizes government grants as they are received or if there is reasonable assurance that the Corporation is in compliance with all associated conditions. When the grant relates to an expense item, it is recognized as a reduction to the related expense in the period in which the costs are incurred. If the grant relates to an asset, it is recognized as a reduction to the carrying value of the asset and amortized into income over the expected useful life of the asset through lower depletion and depreciation.

ADVISORIES

Non‐GAAP Measures

This MD&A and fourth quarter report contains references to measures used in the oil and natural gas industry such as "adjusted funds flow", "adjusted funds flow per share", "adjusted funds flow per boe", "net debt", "operating netback" and "operating netback after realized gain (loss) on financial instruments". The data presented in this MD&A and fourth quarter report is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. These reported non-GAAP measures and their underlying calculations are not necessarily comparable or calculated in an identical manner to a similarly titled measure of other companies where similar terminology is used. Where these measures are used, they should be given careful consideration by the reader.

32 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

Adjusted Funds Flow

Altura considers adjusted funds flow to be a key measure of performance as it demonstrates the Corporation's ability to generate the necessary funds for sustaining capital, future growth through capital investment, and to repay debt. Management believes that such a measure provides a useful assessment of Altura’s business on a continuing basis by eliminating certain non-cash charges, and transaction costs, if any, and actual settlements of decommissioning liabilities, the timing of which, in the opinion of management, is discretionary.

Adjusted funds flow per share is calculated using basic and diluted weighted average number of shares outstanding in the period. Adjusted funds flow is not intended to represent net cash flows from (used in) operating activities calculated in accordance with IFRS.

Adjusted funds flow per boe is calculated as adjusted funds flow divided by total production sold in the period.

The Corporation's adjusted funds flow is disclosed in the "Net Income (loss) and Adjusted Funds Flow" section of this MD&A on page 20. The following schedule sets out the reconciliation of net income to adjusted funds flow and cash flow from operating activities for the reporting period and the comparable prior period:

perating activities for the reporting period and the comparable prior period:	perating activities for the reporting period and the comparable prior period:	perating activities for the reporting period and the comparable prior period:
Three months ended December 31 Year ended December 31 ($000) 2020 2019 2020 2019
Net income (loss) 10,823 (56) Adjusted for the following non-cash items Other income (192) - Deferred tax expense (recovery) - 33 Depletion, depreciation and amortization 874 1,899 Impairment (recovery) (11,190) - Accretion of decommissioning liability 19 24 Lease interest - - Share-based compensation 45 116 Gain on property disposition - 417 Unrealized loss(gain)on financial instruments 439 530	(22,313) (192) (1,472) 3,854 23,560 66 - 286 (1,224) (63)	2,215 - 746 9,495 - 104 9 576 417 432
Adjusted funds flow 818 2,963 Changes in non-cash operatingworkingcapital (612) 992	2,502 (96)	13,994 (1,000)
Cash flow from operating activities 206 3,955	2,406	12,994

Net Debt

Management views net debt as key industry benchmarks and measures to assess the Corporation's financial position and liquidity. Net debt is calculated as current assets, excluding the fair value of financial instruments less current liabilities, excluding the fair value of financial instruments, less the current portion of lease liabilities, and the current portion of the decommissioning liability. Management has excluded the current portion of the decommissioning liability as this is an estimate based on management's assumptions and subject to volatility based on changes in cost and timing estimates, the risk-free discount rate and inflation rate. Altura’s net debt is disclosed in the "Capital Resources and Liquidity" section of this MD&A on page 26.

Operating Netback

Altura calculates operating netback on a per boe basis, before and after realized gains (losses) on financial instruments, as petroleum and natural gas sales less royalties, operating costs and transportation costs. Management feels that operating netback is a key industry benchmark and a measure of performance for Altura that provides investors with information that is commonly used by other crude oil and natural gas producers. The measurement on a per boe basis assists management and investors with evaluating operating performance on a comparable basis. Altura’s operating netback is disclosed in the "Operating Netback" section of this MD&A on page 16.

ALTURA ENERGY INC. | MD&A | 33

Barrels of Oil Equivalent

The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. Per boe amounts have been calculated by using the conversion ratio of six thousand cubic feet (6 Mcf) of natural gas to one barrel (1 bbl) of crude oil. The boe conversion ratio of 6 Mcf to 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. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalent of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Drilling Opportunities

Potential drilling opportunities are internal estimates based on the Corporation’s prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and Altura’s internal review. Potential drilling opportunities do not have attributed reserves or resources. Potential drilling opportunities have specifically been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves data on prospective acreage and geologic formations. The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, crude oil and natural gas prices, costs, actual drilling results and other factors. While certain of the potential drilling opportunities have been derisked by drilling existing wells in relative close proximity to such potential drilling opportunities, the majority of other potential drilling opportunities are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations, and if drilled there is more uncertainty that such wells will result in additional reserves, resources or production.

Original Oil in Place (OOIP)

For the purpose of this MD&A and fourth quarter report, Original Oil in Place ("OOIP") means Discovered Petroleum Initially In Place ("DPIIP"). DPIIP is derived by Altura’s internal Qualified Reserve Evaluators ("QRE") and prepared in accordance with National Instrument 51-101 and the Canadian Oil and Gas Evaluations Handbook ("COGEH"). DPIIP, as defined in COGEH, is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of DPIIP includes production, reserves and Resources Other Than Reserves (ROTR). The OOIP/DPIIP and potential recovery rate estimates are as at December 31, 2020 and are based on current recovery technologies and have been prepared by Altura’s internal QRE. There is significant uncertainty as to the ultimate recoverability and commercial viability of any of the resource associated with the OOIP/DPIIP estimates, and as such a recovery project cannot be defined for this volume of OOIP/DPIIP at this time.

Forward‐looking Information

This MD&A and fourth quarter report contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "budget", "forecast", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "strategy" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this MD&A and fourth quarter report contains forward-looking information and statements pertaining to:

• uncertainty about the COVID-19 pandemic and the impact it will have on Altura’s operations, the demand for Altura’s products, and economic activity in general;

• Altura's expectation of bringing one shut-in well back on production in May 2021;

• Altura's ability to self-fund growth within cash flow and maintain a strong balance sheet;

• Altura's capital budget of $6.0 million and plans to drill two (1.8 net) Rex wells and complete three (2.7 net) Rex wells at Leduc-Woodbend.

• forecasted production volumes to range between 1,100 and 1,050 boe per day for 2021; and,

• the expected closing of two additional dispositions of a 0.6875% working interest for $437,500 on April 30, 2021 and a 1.375% working interest for $875,000 on June 30, 2021;

The forward-looking information and statements contained in this MD&A and first quarter reflect several material factors and expectations and assumptions of Altura including, without limitation:

• the continued performance of Altura’s oil and gas properties in a manner consistent with its past experiences;

34 | ALTURA ENERGY INC. | 2020 FOURTH QUARTER REPORT

• that Altura will continue to conduct its operations in a manner consistent with past operations;

• the return of industry conditions to pre-COVID-19 levels;

• the continuance of existing (and in certain circumstances, the implementation of proposed) tax, royalty and regulatory regimes;

• the accuracy of the estimates of Altura’s reserves and resource volumes;

• certain commodity price and other cost assumptions;

• the continued availability of oilfield services; and

• the continued availability of adequate debt and equity financing and cash flow from operations to, among other things, fund its planned expenditures.

Altura believes the material factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable based on prior operating history but no assurance can be given that these factors, expectations and assumptions will prove to be correct particularly in the current operating environment which is unprecedented by any standard. To the extent that any forward-looking information contained herein may be considered future oriented financial information or a financial outlook, such information has been included to provide readers with an understanding of management’s assumptions used for budgeted and developing future plans and readers are cautioned that the information may not be appropriate for other purposes.

The forward-looking information and statements included in this MD&A and first quarter are not guarantees of future performance and should not be unduly relied upon. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements including, without limitation:

• the COVID-19 pandemic and related disruptions in oil and gas markets, including the duration and impacts thereof;

• changes in commodity prices including, without limitation, as a result of COVID-19 pandemic;

• changes in commodity prices including, without limitation, as a result of the COVID-19 pandemic and related disruptions in oil and gas markets;

• unanticipated operating results or production declines;

• public health crises, such as the recent outbreak of COVID-19 and the related economic disruption that can result in volatility in financial markets, disruption to global supply chains, and the ability to directly and indirectly staff the Corporation’s day to day operations;

• changes in tax or environmental laws, royalty rates or other regulatory matters;

• changes in development plans of Altura or by third-party operators of Altura’s properties;

• increased debt levels or debt service requirements;

• inaccurate estimation of Altura’s oil and gas reserve and resource volumes;

• limited, unfavorable or a lack of access to capital or debt markets;

• increased costs;

• a lack of adequate insurance coverage;

• the impact of competitors; and

• certain other risks detailed from time to time in Altura’s public documents.

The forward-looking information and statements contained in this MD&A and fourth quarter report speak only as of the date of this MD&A and fourth quarter report, and Altura does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.

ALTURA ENERGY INC. | MD&A | 35