CALGARY - Petrus Resources Ltd. ('Petrus' or the 'Company') (TSX: PRQ) is pleased to report financial and operating results as at and for the three and twelve months ended December 31, 2019 and to provide 2019 year end reserves information as evaluated by Sproule Associates Limited ('Sproule').

The Company's Management's Discussion and Analysis ('MD&A') and audited consolidated financial statements are available on SEDAR (the System for Electronic Document Analysis and Retrieval) at www.sedar.com.

In 2019, the Company's primary objectives were to generate funds flow in excess of capital expenditures to repay debt and to maximize the profitability of its production by increasing its light oil weighting. Petrus generated funds flow of $33.6 million in 2019 and invested approximately half ($18.1 million) to drill 10 gross (3.1 net) Cardium light oil wells in Ferrier. The Company exceeded its debt repayment target for the year and used $15.5 million of its funds flow to reduce net debt(1). Despite average annual production being 8% lower year over year, funds flow was higher in 2019 due to increased light oil weighting, lower costs and improved commodity pricing.

Debt repayment - Reduction of debt is the Company's first and foremost priority. Since December 31, 2015 Petrus has repaid $103 million (45%) of net debt(1). This includes a $55 million reduction of the Company's second lien term loan ('Term Loan') which was $90 million in 2014 and currently has $35 million outstanding. The Company's revolving credit facility ('RCF') and Term Loan are due in 2020 and therefore have been reclassified to current liabilities in the December 31, 2019 consolidated financial statements. The RCF maturity date is May 31, 2020 which was set prior to the Term Loan maturity of October 8, 2020 due to the inter-creditor relationship between the RCF and the Term Loan. The Company requires an extension of its Term Loan before the syndicate of lenders will contemplate an extension to the RCF. Management is currently in discussion with the Term Loan lender and continues to focus on its disciplined debt reduction strategy.

Stronger natural gas pricing - The average benchmark natural gas price in Canada (AECO 5A monthly index) was $2.35/GJ in the fourth quarter, a significant increase from the third quarter 2019 average price of $0.87/GJ. In January 2020 the AECO 5A monthly index was $2.18/ GJ. Petrus anticipates the impacts of TC Energy Corporation's previously announced Temporary Service Protocol, continued expansion of the NGTL system in 2020 and 2021 and current Alberta natural gas storage levels will all continue to support Canadian natural gas prices(2).

Higher funds flow per share - Fourth quarter 2019 production of 8,292 boe/d was 5% higher than the prior year and quarterly funds flow per share was $0.19 in 2019, significantly higher (90%) than the $0.10 generated in the prior year.

Free funds flow - In 2019 Petrus generated funds flow of $33.6 million ($0.68 per share), invested $18.1 million of capital to maintain production and exceeded its debt reduction target of $1 to $2 million per quarter; net debt(1) was reduced by $15.5 million. During the fourth quarter of 2019, Petrus generated funds flow of $9.3 million, more than double the funds flow generated in the third quarter.

Increased light oil weighting - Fourth quarter average production included 1,834 bbl/d of light oil, which was a 47% increase from the third quarter. This was attributable to the new wells brought on production during the fourth quarter.

Increased light oil reserve volumes - In 2019, the Company realized Finding Development and Acquisition ('FD&A') costs of $13.31 per boe for PDP reserves. These finding costs were consistent with the best in the Company's history. In 2019, Petrus' development program generated PDP reserve volume additions of 1.3 mmboe which were comprised of 45% light oil. The Company produced 3.0 mmboe during 2019 and ended the year with 11.7 mmboe of PDP reserve volume (34% oil and liquids).

Company best operating costs - Total annual operating costs were 11% lower than 2018 at $4.25 per boe in 2019, which is the lowest in the Company's history (a 68% decrease since 2012). This marks the fourth consecutive year of operating cost reductions. The Company continues to focus on optimizing its cost structure, particularly in the Ferrier area, through facility ownership and control.

Non-core asset disposition - In December 2019, Petrus entered into an agreement for the sale of its oil and natural gas interests in the Foothills area of Alberta to an arm's length private company for total consideration of $1.8 million (the 'Disposition'). The Disposition is expected to close in the first quarter of 2020, subject to regulatory approvals. The Company expects it will reduce Petrus' undiscounted, uninflated decommissioning obligation by approximately $7.5 million or 18%. The cash proceeds from the Disposition will be used to reduce the borrowings under the Company's credit facility(2).

2020 Outlook

Petrus' Board of Directors has approved a first quarter 2020 capital budget of $9.0 million to drill 2 (2.0 net) Cardium wells in the Ferrier area. First quarter funds flow combined with proceeds from the previously announced non-core asset disposition are expected to total $9.5 million which will permit excess funds to be directed toward debt repayment(2). Petrus is committed to maintaining its financial flexibility and the Company will determine subsequent quarter capital spending as the year progresses. For the coming year there is significant optionality in the number, the commodity composition and the location of drilling opportunities. Management anticipates that the 2020 capital plan will be funded by funds flow, and will continue to systematically reduce debt each quarter by approximately $1 to $2 million. The objectives of the 2020 capital plan are to reduce debt, maintain or grow production, grow funds flow per share and increase the Company's liquids weighting. Petrus continues its efforts to divest additional non-core assets to improve the balance sheet and also continues its discussions with its lenders in order to extend the upcoming 2020 debt maturity dates.

Fourth quarter average production was 8,292 boe/d in 2019 compared to 7,785 boe/d in the third quarter of 2019. During the second half of 2019 the Company drilled 7 gross (1.6 net) Cardium light oil wells. Average production from the 1.6 net wells over the fourth quarter, net to Petrus, was approximately 560 bbl/d of oil and approximately 1,600 mcf/d of natural gas. The Company's development plan is strategically balanced between increasing its Cardium light oil weighting in the Ferrier area and continuing to improve its balance sheet. In 2019, Petrus drilled 10 gross (3.1 net) Cardium light oil wells, increased its light oil weighting 24% from the beginning of 2018 and reduced net debt(1) $15.5 million. Since December 31, 2017 Petrus has repaid $24.3 million (16%) of net debt.

The average benchmark natural gas price in Canada (AECO 5A monthly index) was $2.35/GJ in the fourth quarter, a significant increase from the third quarter 2019 average price of $0.87/GJ. Petrus anticipates the impacts of TC Energy Corporation's previously announced Temporary Service Protocol, continued expansion of the NGTL system in 2020 and 2021 and current Alberta natural gas storage levels will all continue to support Canadian natural gas prices(2).

Petrus' Board of Directors has approved a first quarter 2020 capital budget of $9.0 million to drill 2 (2.0 net) Cardium light oil wells in the Ferrier area. First quarter funds flow combined with proceeds from the previously announced non-core asset disposition are expected to total $9.5 million which will provide excess funds to be directed toward debt repayment. Management anticipates that the 2020 capital plan will be funded by funds flow, and will continue to systematically reduce debt each quarter by approximately $1 to $2 million. The objectives of the 2020 capital plan are to reduce debt, maintain or grow production, grow funds flow per share and increase the Company's liquids weighting(2).

Petrus believes it is unique in the junior E&P company space, as few gas-weighted companies are able to repay debt and grow production and funds flow all within funds from operations. Over the past four years, Petrus has dramatically strengthened its business in order to improve its sustainability as well as mitigate commodity price risk. Operating costs have been reduced by 68% since 2012 and management believes Petrus' total cash costs of $9.43/boe are consistently one of the lowest amongst its peers. The Company intends to continue its disciplined focus on balance sheet improvement and capital deployment in 2020(2).

Forward-Looking Statements

Certain information regarding Petrus set forth in this press release contains forward-looking statements within the meaning of applicable securities law, that involve substantial known and unknown risks and uncertainties. The use of any of the words 'anticipate', 'continue', 'estimate', 'expect', 'may', 'will', 'project', 'should', 'believe' and similar expressions are intended to identify forward-looking statements. Such statements represent Petrus' internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital investment, anticipated future debt, production, revenues or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions and actual events or results may differ materially. Although Petrus believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Petrus' actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Petrus.

In particular, forward-looking statements included in this press release include, but are not limited to, statements with respect to: the anticipated impacts of TSP; continued expansion of the NGTL system and low Alberta natural gas storage levels; Petrus' ability to modify its operations; Petrus' business plan and expected debt repayment in 2020 and the anticipated results thereof; the Closing of the Disposition, including the timing and results thereof; Petrus' expected drilling and operations activities in 2020; the results of Petrus' 2019 capital plan and the targets thereof; Petrus' 2020 capital plan and the expected results thereof; expectations regarding the adequacy of Petrus' liquidity and the funding of its financial liabilities; Petrus' ability to extend the RCF and Term Loan and the timing thereof; the impact of the current economic environment on Petrus; the performance characteristics of the Company's crude oil, NGL and natural gas properties; future prospects; the focus of and timing of capital expenditures; access to debt and equity markets; Petrus' future operating and financial results; capital investment programs; supply and demand for crude oil, NGL and natural gas; future royalty rates; drilling, development and completion plans and the results therefrom and treatment under governmental regulatory regimes and tax laws. In addition, statements relating to 'reserves' are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.

These forward-looking statements are subject to numerous risks and uncertainties, most of which are beyond the Company's control, including the impact of general economic conditions; volatility in market prices for crude oil, NGL and natural gas; industry conditions; currency fluctuation; imprecision of reserve estimates; liabilities inherent in crude oil and natural gas operations; environmental risks; incorrect assessments of the value of acquisitions and exploration and development programs; competition; the lack of availability of qualified personnel or management; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; hazards such as fire, explosion, blowouts, cratering, and spills, each of which could result in substantial damage to wells, production facilities, other property and the environment or in personal injury; stock market volatility; ability to access sufficient capital from internal and external sources; completion of the financing on the timing planned and the receipt of applicable approvals and the other risks. With respect to forward-looking statements contained in this press release, Petrus has made assumptions regarding: future commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment and services; effects of regulation by governmental agencies and future operating costs. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide shareholders with a more complete perspective on Petrus' future operations and such information may not be appropriate for other purposes. Petrus' actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company will derive therefrom. Readers are cautioned that the foregoing lists of factors are not exhaustive.

This press release contains future-oriented financial information and financial outlook information (collectively, 'FOFI') about Petrus' prospective results of operations including, without limitation, its ability to repay debt, which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth above. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on FOFI. Petrus' actual results, performance or achievement could differ materially from those expressed in, or implied by, these FOFI, or if any of them do so, what benefits Petrus will derive therefrom. Petrus has included the FOFI in order to provide readers with a more complete perspective on Petrus' future operations and such information may not be appropriate for other purposes.

These forward-looking statements and FOFI are made as of the date of this press release and the Company disclaims any intent or obligation to update any forward-looking statements and FOFI, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

Contact:

Tel: +1 403-984-4014

(C) 2020 Electronic News Publishing, source ENP Newswire