LUCERO ENERGY CORP. ANNOUNCES FOURTH QUARTER AND YEAR-END 2022 FINANCIAL & OPERATING RESULTS, HIGHLIGHTED BY RECORD FUNDS FLOW AND NET INCOME, AND REPORTS YEAR-END 2022 RESERVES

2023-03-09

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CALGARY, AB , March 9, 2023 /CNW/ - Lucero Energy Corp. ("Lucero" or the "Company") (TSXV: LOU) (OTCQB: PSHIF) is pleased to announce financial and operating results for the three months and year ended December 31, 2022 , and to provide 2022 year-end reserves information. The associated Management's Discussion and Analysis ("MD&A") and audited financial statements as at and for the year ended December 31, 2022 can be found at www.sedar.com or www.lucerocorp.com . All dollar amounts in this news release are stated in Canadian dollars unless otherwise noted.

2022 | September 30

2022 | December 31

2021 | December 31

2022 | December 31

2021 | | | | | | | | | | | | | | | | Financial | | | | | | | | | | | Funds flow (1) | | $37,015 | $41,498 | $19,961 | $147,131 | $64,742 | | | | | Per share basic | | $0.06 | $0.06 | $0.04 | $0.23 | $0.15 | | | | | Per share diluted | | $0.06 | $0.06 | $0.04 | $0.22 | $0.15 | | | | | | | | | | | | | | | | Funds flow, excluding transaction related costs (1) | | $37,015 | $41,498 | $19,961 | $149,231 | $64,742 | | | | | Per share basic | | $0.06 | $0.06 | $0.04 | $0.23 | $0.15 | | | | | Per share diluted | | $0.06 | $0.06 | $0.04 | $0.22 | $0.15 | | | | | | | | | | | | | | | | Adjusted EBITDA (1) | | $38,708 | $43,196 | $22,408 | $154,212 | $75,580 | | | | | Per share basic | | $0.06 | $0.07 | $0.04 | $0.24 | $0.17 | | | | | Per share diluted | | $0.06 | $0.06 | $0.04 | $0.23 | $0.17 | | | | | | | | | | | | | | | | Cash provided by operating activities | | $41,903 | $47,791 | $17,448 | $172,570 | $72,230 | | | | | | | | | | | | | | | | Net income (loss) | | $18,995 | $29,812 | $25,065 | $80,519 | ($828) | | | | | Per share basic | | $0.03 | $0.05 | $0.05 | $0.12 | - | | | | | Per share diluted | | $0.03 | $0.04 | $0.05 | $0.12 | - | | | | | | | | | | | | | | | | Exploration and development expenditures (1) | | $16,560 | $24,948 | $29,547 | $59,924 | $61,856 | | | | | Property acquisitions | | - | $207 | - | $8,858 | - | | | | | | | | | | | | | | | | Net debt (1) | | $77,426 | $99,192 | $196,067 | $77,426 | $196,067 | | | | | | | | | | | | | | | | Common shares | | | | | | | | | | | Shares outstanding, end of period | | 662,411 | 662,411 | 523,388 | 662,411 | 523,388 | | | | | Weighted average shares (basic) | | 662,411 | 662,403 | 521,800 | 648,842 | 431,950 | | | | | Weighted average shares (diluted) | | 672,207 | 667,169 | 532,491 | 672,010 | 442,641 | | | | | | | | | | | | | | | | Operations | | | | | | | | | | | Production | | | | | | | | | | | Tight oil (Bbls per day) | | 6,326 | 6,385 | 7,342 | 6,564 | 6,930 | | | | | Shale gas (Mcf per day) | | 13,218 | 13,991 | 11,615 | 12,207 | 11,226 | | | | | Natural gas liquids (Bbls per day) | | 2,480 | 2,187 | 1,628 | 2,275 | 1,747 | | | | | Barrels of oil equivalent (Boepd, 6:1) | | 11,009 | 10,904 | 10,906 | 10,874 | 10,548 | | | | | | | | | | | | | | | | Average realized price | | | | | | | | | | | Tight oil ($ per Bbl) | | $114.49 | $123.06 | $94.72 | $124.12 | $83.16 | | | | | Shale gas ($ per Mcf) | | $5.34 | $6.90 | $4.71 | $5.93 | $2.15 | | | | | Natural gas liquids ($ per Bbl) | | $13.25 | $28.56 | $25.81 | $22.61 | $16.00 | | | | | Barrels of oil equivalent ($ per Boe, 6:1) | | $75.18 | $86.58 | $72.64 | $86.32 | $59.57 | | | | | | | | | | | | | | | | Operating netback per Boe (6:1) | | | | | | | | | | | Operating netback (1) | | $40.07 | $44.93 | $23.77 | $41.23 | $21.05 | | | | | Operating netback (prior to hedging) (1) | | $44.07 | $52.24 | $43.74 | $52.81 | $34.74 | | | | | | | | | | | | | | | | Funds flow per Boe (6:1) | | | | | | | | | | | Including transaction related costs (1) | | $36.55 | $41.37 | $19.90 | $37.07 | $16.82 | | | | | Excluding transaction related costs (1) | | $36.55 | $41.37 | $19.90 | $37.60 | $16.82 | | | | | | | | | | | | | | | | (1) | Management uses these non-GAAP financial measures to analyze operating performance, leverage and investing activity. These measures do not have a standardized meaning under GAAP and therefore may not be comparable with the calculation of similar measures for other companies. See _Non-GAAP Measurements _within this document for additional information. | | | | | | | | | | | | | | | | | | | |

MESSAGE TO SHAREHOLDERS

Lucero had a transformative year in 2022, which commenced with the appointment of a new management team (the "New Management Team"), who brought a proven track record of value creation for shareholders along with a refreshed strategy and corporate recapitalization. The New Management Team is sharply focused on disciplined capital allocation and a balanced pace of development, while prioritizing EBITDA generation, financial flexibility and long-term sustainability.

Several operational achievements were realized through the year, including the safe and efficient execution of the Company's 2022 capital program, which was successfully completed within the previously announced budget and guidance range. In support of continued sustainability and the responsible development of Lucero's high-quality, North Dakota Bakken asset base, the Company took intentional measures to moderate the production decline profile, which was maintained at an average of approximately 30%. Lucero's operational success was also demonstrated by strong capital efficiencies across the reserves base both in 2022 and over the trailing three-year average, during which the Company's finding and development costs and recycle ratios helped drive underlying corporate profitability.

Within a favourable commodity price environment, Lucero successfully generated record funds flow in 2022, which contributed to further debt reduction and demonstrated Lucero's ongoing commitment to profitability and capital discipline while setting the stage to capitalize on future growth opportunities. The Company's strong financial performance through the year was aided by stronger Bakken pricing differentials due to excess local pipeline capacity arising from regional Bakken production that was muted despite strong pricing for crude oil delivered to the U.S. Gulf Coast. Lucero continues to monitor such market trends with the view to adapting operations, marketing and other elements of the business to optimally respond to changing macro-economics and other broader industry conditions.

Lucero also continued to prioritize strong Environmental, Social, and Governance ("ESG") principles across the organization, which translated into ongoing safe operations, responsible environmental stewardship, and a focus on people, culture and the team. The Company's ESG commitment and actions will be highlighted and reported to Stakeholders within Lucero's inaugural Sustainability Report which is expected to be issued before the end of April 2023 .

Looking ahead, the New Management Team is confident in Lucero's long-term growth prospects and committed to delivering value for all Stakeholders.

2022 HIGHLIGHTS

Lucero's achievements in the fourth quarter and year-ended December 31, 2022 include the following:

Fourth quarter:

11,009 Boepd average production compared to 10,904 Boepd in Q3 2022 and 10,906 Boepd in Q4 2021; $37.0 million of funds flow 1 , compared to $41.5 million in the previous quarter and $20.0 million in Q4 2021; $0.06 per share of funds flow 1 , consistent with Q3 2022 and 50% higher than $0.04 per share generated in the same quarter of 2021; $44.07 per Boe average operating netback 1 prior to hedging, compared to $52.24 per Boe in the previous quarter and $43.74 per Boe in Q4 2021; $16.6 million of exploration and development ("E&D") expenditures 1 , allocated to drilling six (2.7 net) wells and completing two (1.98 net) operated wells, representing a conservative payout ratio 1 of 45% on funds flow 1 of $37.0 million ; and $77.4 million of net debt 1 at December 31, 2022 , reflecting a 22% decrease from $99.2 million at September 30, 2022 , and 61% lower than $196.1 million at December 31, 2021 .

Full year:

10,874 Boepd of average production, 3% higher than 10,548 Boepd in 2021; $147.1 million of funds flow 1 , a 127% increase over $64.7 million in 2021; $52.81 per Boe average operating netback prior to hedging 1 , a 52% increase over $34.74 per Boe in 2021; $59.9 million of E&D expenditures 1 , allocated to the successful drilling of five (4.95 net) operated wells and an additional 1.8 net non-operated wells, along with the completion of three (2.48 net) operated wells, enabling Lucero to exit the year with nine (4.70 net) wells that were drilled but uncompleted ("DUCs"); and $80.5 million of net income ( $0.12 per share basic and diluted), a record for the Company, and significantly higher than the net loss of $0.8 million recorded in 2021.

Year-end Reserves:

30.9 MMboe of proved developed producing ("PDP") reserves, consistent with 31.0 MMboe at year-end 2021; 53.9 MMboe of proved reserves ("TP") compared to 55.6 MMboe at year-end 2021; 73.5 MMboe of proved plus probable ("P+P") reserves, an increase from 72.0 MMboe at year-end 2021; 13.2 years P+P reserve life index; $16.76 per Boe PDP finding, development & acquisition costs ("FD&A") (including future development costs or "FDC"), which drove a recycle ratio of 3.1 times (based on the Company's 2022 operating netback prior to hedging); and $13.70 per Boe P+P FD&A (including FDC) resulted in a recycle ratio of 3.9 times .

| __ _ | | 1 See "Non-GAAP Measures" within this press release. |

OPERATIONAL UPDATE

Throughout the year, the Company sought to enhance the sustainability of Lucero's business model by prudently moderating the pace of development. With average production volumes of 10,874 Boepd in 2022, the Company exited the year with fourth quarter production averaging 11,009 Boepd, setting the stage for continued execution and balanced growth in 2023. Due to this more measured production growth profile, the Company's overall corporate production decline rate improved meaningfully, which is expected to be further reduced in 2023 to approximately 28%. Flattening this decline curve has a direct impact on sustainability by reducing the level of capital required to keep production volumes constant.

With $59.9 million of capital invested in E&D activities during 2022, Lucero drilled five (4.95 net) operated wells and an additional 1.8 net non-operated wells. In addition, the Company completed three (2.48 net) operated wells in 2022, and set the stage for continued development in 2023 by exiting the year with nine (4.70 net) DUCs, which affords Lucero operational development flexibility in the future. All of the wells the Company brought on production exhibited strong results. Lucero also invested in important infrastructure that can help drive future efficiencies and reduce greenhouse gas emissions.

The combination of steady production volumes and strong operating netbacks led to Lucero generating $147.1 million of funds flow 1 during 2022, of which $59.9 million was invested in E&D expenditures 1 resulting in an annual payout ratio 1 of 41%. The Company invested an additional $8.9 million to acquire various working interests in the Company's operated assets which are scheduled for near-term development in 2023. The balance of the funds flow was directed to debt repayment and continued strengthening of the balance sheet. As a result, Lucero exited 2022 with net debt 1 of $77.4 million , a 61% decrease from year-end 2021, and 22% lower than the previous quarter end, providing significant financial flexibility to execute on future growth opportunities. The Company's net debt to funds flow ratio 1 improved from 3.0x in 2021, to 0.5x in 2022.

RESERVES

In this press release, all references to reserves are to gross Company reserves, meaning Lucero's working interest reserves before deductions of royalties and before consideration of Lucero's royalty interests. The reserves were evaluated by Netherland, Sewell & Associates, Inc. ("NSAI") in accordance with National Instrument 51-101 – _Standards of Disclosure for Oil and Gas Activities _("NI 51-101") effective December 31, 2022 . Lucero's Annual Information Form for the year ended December 31, 2022 (the "AIF") will contain Lucero's reserves data and other oil and natural gas information as mandated by NI 51-101. Lucero expects to file the AIF on SEDAR by March 31, 2023 .

The following tables are a summary of Lucero's petroleum and natural gas reserves, as evaluated by NSAI, effective December 31, 2022 . As a reporting issuer in Canada , Lucero is required to report its reserves and net present value estimates using forecast pricing and costs, as stipulated under NI 51-101. The forecast prices reflected in the net present values are based on an average of the price decks of three independent engineering firms (GLJ Ltd., Sproule Associates Limited and McDaniel & Associates Consultants Ltd.). It should not be assumed that the estimates of future net revenues presented in the tables below represent the fair market value of the reserves. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of our crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. It is important to note that the recovery and reserves estimates provided herein are estimates only. Actual reserves may be greater or less than the estimates provided herein. Reserves information may not add due to rounding.

Reserves Summary

| | Tight Oil

(Mbbl) | Shale Gas (MMcf) | NGLs

(Mbbl) | Total Oil Equivalent

(Mboe) | | Proved | | | | | | Developed Producing | 17,569 | 38,067 | 6,996 | 30,910 | | Developed Non-Producing | 490 | 949 | 276 | 923 | | Undeveloped | 16,737 | 15,898 | 2,648 | 22,034 | | Total Proved | 34,796 | 54,913 | 9,920 | 53,868 | | Probable | 12,328 | 20,618 | 3,883 | 19,647 | | Total Proved plus Probable | 47,124 | 75,531 | 13,802 | 73,515 |

Net Present Value of Future Net Revenue (in Canadian dollars)

| | Before Future Income Tax Expenses and Discounted at | | | | | | | 0 % | 5 % | 10 % | 15 % | 20 % | | | (C$MM) | (C$MM) | (C$MM) | (C$MM) | (C$MM) | | Proved | | | | | | | Developed Producing | 1,325 | 887 | 671 | 546 | 465 | | Developed Non-Producing | 37 | 27 | 21 | 18 | 16 | | Undeveloped | 1,028 | 652 | 465 | 356 | 285 | | Total Proved | 2,390 | 1,566 | 1,157 | 919 | 765 | | Probable | 953 | 543 | 364 | 269 | 211 | | Total Proved plus Probable | 3,343 | 2,109 | 1,521 | 1,188 | 976 |

| Values have been converted to Canadian dollars using the year-end 2022 exchange rate of US$1.00 = C$1.3544 |

Net Present Value of Future Net Revenue (in US dollars)

| | Before Future Income Tax Expenses and Discounted at | | | | | | | 0 % | 5 % | 10 % | 15 % | 20 % | | | (US$MM) | (US$MM) | (US$MM) | (US$MM) | (US$MM) | | Proved | | | | | | | Developed Producing | 979 | 655 | 495 | 403 | 343 | | Developed Non-Producing | 28 | 20 | 16 | 13 | 12 | | Undeveloped | 759 | 481 | 343 | 263 | 210 | | Total Proved | 1,765 | 1,156 | 854 | 679 | 565 | | Probable | 704 | 401 | 269 | 199 | 156 | | Total Proved plus Probable | 2,468 | 1,557 | 1,123 | 877 | 721 |

Capital Expenditures and Finding, Development, and Acquisition Costs

| | Finding, Development & Acquisition ("FD&A") (1) | Finding & Development

("F&D") (1) | | | | | | | | | | PDP | Total

Proved | Total Proved plus Probable | PDP | Total

Proved | Total Proved Plus Probable | | | | | Capital Costs (C$000s) | | | | | | | | | | | Capital expenditures | 59,924 | 59,924 | 59,924 | 59,924 | 59,924 | 59,924 | | | | | Acquisitions | 8,858 | 8,858 | 8,858 | - | - | - | | | | | Change in future development capital ("FDC") | (3,146) | (33,869) | 6,716 | (3,401) | (43,258) | (5,313) | | | | | Total FD&A / F&D costs | 65,636 | 34,913 | 75498 | 56,523 | 16,666 | 54,611 | | | | | | | | | | | | | | | | Reserves Additions (Mboe) | | | | | | | | | | | Net change in reserve volumes | (525) | (3,054) | (266) | (525) | (3,054) | (266) | | | | | Add back production | 3,969 | 3,969 | 3,969 | 3,942 | 3,942 | 3,942 | | | | | Reserves associated with acquisitions | 471 | 1,366 | 1,807 | - | - | - | | | | | Total additions | 3,915 | 2,281 | 5,510 | 3,417 | 888 | 3,676 | | | | | | | | | | | | | | | | F&D (C$/Boe) | 16.77 | 15.31 | 13.70 | 16.54 | 18.77 | 14.86 | | | | | Three year F&D (C$/Boe) (2) | 9.86 | 5.45 | 4.55 | 9.61 | 4.14 | 3.71 | | | | | Recycle ratio (3) | 3.1 | 3.4 | 3.9 | 3.2 | 2.8 | 3.6 | | | | | | | | | | | | | | |

| (1) | The calculation of F&D and FD&A costs incorporates the change in FDC required to bring proved undeveloped and probable reserves into production. The FDC was converted to Canadian dollars using the average 2022 exchange rate of US$1.00 = C$1.3544. | | (2) | Calculation of the three year FD&A and F&D costs per Boe reflect the sum of capital costs and net reserve additions for the years 2020 through 2022. | | (3) | Recycle ratio is defined as 2022's operating netback prior to hedging, divided by F&D or FD&A costs, as applicable, on a per Boe basis. Operating netback prior to hedging is calculated as revenue (excluding realized gain or loss on financial derivatives) minus royalties, operating expenses, production taxes and transportation expenses. Lucero's operating netback prior to hedging in 2022 averaged $52.79 per Boe. See also "Non-GAAP Measures". |

Net Asset Value per Share as at December 31, 2022

| (C$ millions except share and per share amounts) | | | Proved Plus Probable Reserve Value NPV10 (before tax) | 1,521 | | Net Debt | (77) | | Total Net Assets (basic) | 1,444 | | Basic Common Shares Outstanding (MM) | 662 | | Estimated NAV per Basic Common Share | $2.18 |

INAUGURAL SUSTAINABILITY REPORT

Lucero intends to release an inaugural Sustainability Report before the end of April 2023 , which will profile the Company's commitment to ESG principles and foundations, while aligning with recognized sustainability frameworks. Management and the Board are proud to report on the Company's excellent health, safety, governance and environmental performance through 2022, highlighted by significant reductions in Scope 1 emission and emissions intensity year over year, along with a flawless safety record. Within the report, Lucero will also articulate a roadmap outlining how the Company will continue to uphold high levels of responsibility and accountability throughout the sustainability journey. This report will be made available on the Company's website on or before April 30, 2023 .

CAPITAL BUDGET AND PRODUCTION GUIDANCE

Lucero's 2023 capital program is budgeted at US$70 million ( C$95 million ) and is expected to be primarily directed to light oil development projects, with over 75% planned to be allocated to drilling, completions and tie-ins, with the remainder to infrastructure and optimization development initiatives that are designed to enhance production efficiencies and continued environmental performance.

With a strong underlying production base, Lucero anticipates that the Company's 2023 capital program will drive annual average production of approximately 11,500 Boepd (80% weighted to light oil and natural gas liquids) with an exit production rate of approximately 12,000 Boepd (80% light oil and natural gas liquids). This annual average volume expansion represents year-over-year production growth of 9% while maintaining a corporate production decline rate of less than 30%.

OUTLOOK AND SUSTAINABILITY

Lucero has established a unique position among Canadian-listed, growth-oriented exploration and production companies. With 100% exposure to U.S. light oil-weighted assets, Lucero offers a solid growth platform of lower-risk, high-impact development opportunities in the heart of the prolific North Dakota Bakken/Three Forks play. As current and future benchmark oil prices remain high due to the supply/demand imbalance, the Company remains well positioned to realize stable production rates, high estimated recoveries, and robust operating netbacks, all of which are key contributors to generating compelling rates of return and creating shareholder value. With a corporate production decline profile forecast at less than 30% for 2023 combined with a supportive pricing environment, Lucero's assets are expected to yield significant free funds flow.