Select financial and operational information is outlined below and should be read in conjunction with Rubellite's unaudited condensed consolidated interim financial statements and related Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2026, which are available on the Company's website at www.rubelliteenergy.com and SEDAR+ at www.sedarplus.ca.
This news release contains certain specified financial measures that are not recognized by GAAP and used by management to evaluate the performance of the Company and its business. Since certain specified financial measures may not have a standardized meaning, securities regulations require that specified financial measures are clearly defined, qualified and, where required, reconciled with their nearest GAAP measure. See "Non-GAAP and Other Financial Measures" in this news release and in the MD&A for further information on the definition, calculation and reconciliation of these measures. This news release also contains forward-looking information. See "Forward-Looking Information". Readers are also referred to the other information under the "Advisories" section in this news release for additional information.
FIRST QUARTER 2026 OPERATIONAL AND FINANCIAL HIGHLIGHTS
Operational Highlights
Heavy oil sales production: Averaged a record 8,641 bbl/d in the first quarter of 2026, an increase of 4% from 8,339 bbl/d in the first quarter of 2025 and a 4% increase from 8,295 bbl/d in the fourth quarter of 2025, exceeding first quarter guidance of 8,300 to 8,400 bbl/d.
Total sales production: Averaged a record 13,843 boe/d in the first quarter of 2026 (66% heavy oil and natural gas liquids ("NGL")), an increase of 12% from 12,383 boe/d (70% heavy oil and NGL) in the first quarter of 2025 and a 6% increase from 13,042 boe/d in Q4 2025, exceeding first quarter guidance of 13,300 to 13,400 boe/d.
Heavy oil activity: Brought 10 (9.5 net) heavy oil wells on production at Figure Lake and Frog Lake in the first quarter.
West Central natural gas activity: Added 2 (1.0 net) liquids-rich conventional natural gas wells to production at East Edson at the end of the fourth quarter of 2025 and 2 (1.0 net) additional wells during the first quarter.
Exploration and development spending(1): Spent $31.3 million in the first quarter, within the guided range of $30.0 to $32.0 million. First quarter spending included the drilling and completion of 4 (4.0 net) multi-lateral horizontal Clearwater development wells, and 1 (1.0 net) waterflood pilot producer-injector pair at Figure Lake (2.0 net drills); 3 (2.5 net) multi-lateral horizontal Waseca development wells at Frog Lake; 1 (1.0 net) exploration well on a new prospect in Saskatchewan; and the drilling, completion, equipping and tie-in of 2 (1.0 net) liquids-rich conventional natural gas wells at East Edson that commenced drilling late in 2025.
Land and geological and geophysical spending: Spent $0.9 million on land to capture acreage in core areas and for exploration prospects, and $0.4 million on geological and geophysical activities related to completion of the 3D seismic program at Frog Lake, which commenced in the fourth quarter of 2025.
Abandonment and reclamation: Spent $0.4 million on decommissioning, abandonment and reclamation activities and received one reclamation certificate from the Alberta Energy Regulator ("AER") (Q1 2025 - one).
Financial Highlights
Adjusted funds flow(1): $33.4 million ($0.36 per share) in the first quarter of 2026, a decrease of 7% from $35.9 million ($0.39 per share) in the first quarter of 2025.
Cash costs(1): $19.4 million or $15.57/boe in the first quarter of 2026, representing a 17% decrease on a per boe basis as compared to the first quarter of 2025 (Q1 2025 - $20.9 million or $18.76/boe).
Net loss: $23.1 million ($0.25 per share) in the first quarter of 2026 (Q1 2025 - $1.2 million net income or $0.01 per share) primarily driven by an unrealized loss on risk management contracts.
Net debt(1): $148.0 million at March 31, 2026, an increase of 3% from $143.1 million at December 31, 2025. Positive free funds flow(1) of $0.7 million generated during the first quarter was primarily used to reduce other obligations, including a $3.8 million reduction of the other provision, $0.4 million of decommissioning expenditures and $0.7 million of cash-settled share based compensation payments.
Available liquidity(2): $30.8 million at March 31, 2026, based on a $140.0 million first-lien credit facility borrowing limit, less $107.8 million of bank borrowings and $1.4 million in letters of credit. Subsequent to the end of the quarter, the borrowing limit was increased to $160.0 million, further enhancing available liquidity.
(1)
Non-GAAP financial measure, non-GAAP ratio or supplementary financial measure. See "Non-GAAP and Other Financial Measures" in this news release.
(2)
See "Liquidity, Capitalization and Financial Resources - Capital Management" in the MD&A.
Q1 2026 GUIDANCE RECONCILIATION
During the first quarter of 2026, Rubellite recorded strong growth from a successful drilling program, which saw both heavy oil and total sales production exceed the high end of the Q1 2026 guidance range. Rubellite's heavy oil wellhead differential of $4.81/bbl in Q1/26 exceeded the guided range $3.50 to $4.00/bbl due to higher than expected diluent costs. A comparison of the Company's most recent Q1 2026 guidance metrics to actual results is provided below.
Q1 2026 Guidance(1)
Q1 2026 Actuals
Sales Production (boe/d)
13,300 - 13,400
13,843
Production mix (% oil and NGL)
67 %
66 %
Heavy oil sales production (bbl/d)
8,300 - 8,400
8,641
Exploration and development spending ($ millions)(2)(3)
$30 - $32
$31.3
Heavy oil wellhead differential ($/bbl)(2)
$3.50 - $4.00
$4.81
Royalties (% of revenue)(2)
13% - 14%
13 %
Production and operating costs ($/boe)(2)
$6.50 - $7.25
$5.89
Transportation costs ($/boe)(2)
$4.50 - $5.00
$4.52
General and administrative costs ($/boe)(2)
$3.00 - $3.50
$3.48
(1)
Q1 2026 guidance dated March 10, 2026.
(2)
Non-GAAP financial measure, non-GAAP ratio or supplementary financial measure. See "Non-GAAP and Other Financial Measures".
(3)
Excludes abandonment and reclamation spending, land and geological expenditures.
OPERATIONS UPDATE
Figure Lake
Primary Development Update:
In the first quarter, Rubellite drilled and rig released 4 (4.0 net) Clearwater primary development multi-lateral horizontal wells targeting the Wabiskaw Member of the Clearwater Formation, using the optimized 33 meter inter-leg spacing and 15,000 meters open hole length at the 8-26-61-16W4 Surface Pad (the "8-26 Pad"). Initial well performance continues to exceed expectations, with average(1) IP30/60 rates of 303 bbl/d (3 wells)/300 bbl/d (2 wells), compared to the 2025 McDaniel Tier 1 type curve(2) of IP30/60 of 201/193 bbl/d(2).
Drilling operations continued at the 8-26 Pad into the second quarter. In early April, a second drilling rig was added to supplement the one‑rig program and is expected to drill a minimum of 8.0 and up to 13.0 net additional Clearwater multi-lateral horizontal wells to grow heavy oil production in this stronger commodity price environment. Continuation of the second rig into the fourth quarter is contingent upon future heavy oil prices.
A well targeting the Sparky Formation (1.0 net) drilled in the fourth quarter of 2025 continues to deliver encouraging results, with an IP30/60 rate of 286 bbl/d/259 bbl/d and water cut averaging 10%. The well has 6 legs and approximately 7,750 meters of horizontal length. Continuous production from the initial well and further development of the Sparky discovery pool will require construction of a permanent all season access road and pad expansion, which are currently planned for the second half of 2026. The well was temporarily shut in during spring breakup and will be restarted later in the second quarter following completion of interim access upgrades. Two (2.0 net) additional Sparky wells are planned for the fourth quarter of 2026.
Enhanced Oil Recovery ("EOR") Update:
Water injection commenced in March at the first Figure Lake waterflood pilot producer-injector pair drilled in the fourth quarter of 2025 on the 9-35-63-18W4 Pad (the "9-35 Pad").
A second waterflood pilot at Figure Lake was advanced in the first quarter of 2026, with the drilling of an 8‑leg horizontal multi‑lateral producer (1.0 net) on the 8-26 Pad, straddling a dedicated single‑leg injection well (1.0 net). The 4-leg sets on each side of the injector were drilled with 25 meter inter-leg spacing, and offset from the injector by 75 meters. Total open hole length for the 8 legs is approximately 9,900 meters. Initial well performance for the 8 leg producer exceeded expectations with an average IP30 rate of 283 bbl/d. Water injection for this pilot is expected to commence late in the second quarter.
Subsequent to the end of the quarter, a third dedicated producer (1.0 net) and injector (1.0 net) pair were drilled on the 08-26 Pad to evaluate the utility and effectiveness of polymer injection on oil recovery. The 8 leg producer recovered oil based mud ("OBM") on April 20th and achieved an IP(15) of 185 bbl/d. Polymer injection is expected to commence in the fourth quarter.
In addition, two multi-lateral horizontal producer-to-injector conversions on two separate pads at Figure Lake were advanced, with water injection initiated on the 1-3 Pad in March 2026, and water injection expected to be initiated on the 1-13 Pad in the second quarter. These producer-to-injector conversion pilots will evaluate the effectiveness of waterflood where primary production has already occurred through multi-lateral drilling development.
Information from the multiple EOR pilot schemes are being evaluated and will inform future development plans.
Frog Lake
Waseca Update - Open Hole Horizontal Multi-laterals:
During the first quarter, Rubellite drilled and rig released 3 (2.5 net) open hole multi-lateral wells targeting the Waseca Formation.
Waseca North: 2 (2.0 net) wells achieved average(1) IP30/IP60 rates of 130 bbl/d (2 wells)/134 bbl/d (1 well), exceeding the 2025 McDaniel type curve(2) of 122/117 bbl/d.
Waseca South: 1 (0.5 net) well achieved an average IP30/IP60 rate of 68 bbl/d, below the 2025 McDaniel type curve(2) of 145 bbl/d due to a combination of thinning reservoir and higher shale content encountered at the toe of the well.
Rubellite suspended drilling operations at Frog Lake on February 5, 2026 to allow the drilling rig, which operated continuously for several years, to undergo servicing and recertification. Drilling recommenced at Frog Lake on April 19, 2026, with the spud of an extended reach Waseca North well (1.0 net). The well is targeting up to 20,000m of open hole, as compared to historical 15,000m of open hole, and using a new water-based amine mud system to reduce costs, improve hole cleaning, and limit fluid losses to the formation while drilling.
GP and Sparky Update - Single Leg Lined Laterals with Recycle Strings:
Rubellite has continued to positively advance the use of single leg lined lateral horizontal wells equipped with high velocity recycle strings to enable consistent production of heavy oil with solids from the less consolidated GP and Sparky Sands of the Mannville Stack. Four (3.0 net) GP wells have been drilled to date using both single‑leg and fishbone designs, of which three were completed with recycle strings. Early IP30(1) performance across the three wells completed with recycle strings ranged from 44–134 bbl/d, with an average of 78 bbl/d. The most recent of those three wells, 00/09-23-056-03W4 (50% working interest), has been on production since December 19, 2025, and following startup and tubing string optimization, is currently producing at an average of 145 bbl/d gross. For reference, the McDaniel year-end 2025 type curve(2) for the GP formation assumes an IP30/IP60 of 73/72 bbl/d.
Other Operational Updates:
Approximately 26 km2 of new 3D seismic was acquired in late 2025 and early 2026 to support future drilling plans at Frog Lake.
A continuous one-rig drilling program is planned for the remainder of the year, targeting the Waseca North and Waseca South sands with open hole multilateral horizontal wells, and the GP and Sparky zones within the Mannville Stack with horizontal wells equipped with recycle strings.
East Edson
Two (1.0 net) Wilrich development wells were rig released, fracture stimulated, equipped, and tied-in following drilling that commenced in late 2025, with both wells brought on production in February.
Other Exploration
In addition to ongoing zonal delineation activity in the GP and Sparky zones at Frog Lake and the Sparky zone at Figure Lake, Rubellite continued to advance multiple early stage exploration prospects including land capture and play concept de-risking, while maintaining a disciplined approach to risked capital exposure. One (1.0 net) exploration well was drilled at Bayhurst, Saskatchewan in the first quarter and placed on a limited production trial until spring breakup, at which time the well was temporarily shut in. An extended production evaluation period is planned once road restrictions are lifted.
(1)
No development wells were excluded from the calculation of average results except by the criteria for producing days.
(2)
Type curve assumptions are based on the total proved plus probable undeveloped reserves contained in the McDaniel Report as disclosed in the most recent AIF available under the Company's profile on SEDAR+ at www.sedarplus.ca. "McDaniel Report" means the independent engineering evaluation of the heavy crude oil and conventional natural gas and NGL reserves, prepared by McDaniel with an effective date of December 31, 2025 and a preparation date of March 10, 2026.
OUTLOOK AND GUIDANCE
For 2026, Rubellite forecasts total exploration and development spending(1) of $125 to $135 million, with the range reflecting the expected duration of a second drilling rig at Figure Lake. In addition to development drilling in its core heavy oil operating areas, 2026 capital spending will support longer term strategic initiatives including: (1) advancing multiple EOR pilots in the Clearwater, with water injection expected to have commenced at six waterflood pilots by mid‑2026; (2) initiating polymer injection on the producer‑injector pair drilled for a polymer flood pilot, with injection planned to commence in Q4 2026; (3) additional injection and production cycles under the novel gas injection EOR pilot at Figure Lake; and (4) ongoing exploration activities across the Company's land base.
Capital Program - Q1 2026:
Figure Lake:
Drilled and completed 4 (4.0 net) 15,000m, 12 leg, Clearwater primary development wells; and
Drilled and completed 1 (1.0 net) 10,000m, 8 leg, waterflood pilot producer and 1.0 (1.0 net) injector on the 8-26 Pad.
Frog Lake:
Drilled and completed 1 (0.5 net) Waseca South development wells; and
Drilled and completed 2 (2.0 net) Waseca North development wells.
East Edson:
Drilled, fracture stimulated, equipped, and tied-in 2 (1.0 net) Wilrich natural gas development wells.
Exploration:
Drilled and completed 1 (1.0 net) exploration well at Bayhurst, Saskatchewan.
Capital Program - Remainder of 2026:
At Figure Lake:
Drilling and completion of 17 (17.0 net) to 22 (22.0 net) 15,000m, 12 leg, Clearwater primary development wells;
Drilling and completion of 2 (2.0 net) 10,000m, 10 leg, Clearwater step-out wells;
Drilling and completion of 2 (2.0 net) 10-15,000m, 12 leg, Sparky wells;
Drilling and completion of 1 (1.0 net) 10,000m, 8 leg, polymer flood pilot producer and 1 (1.0 net) injector on the '8-26 Pad';
Surface and downhole equipping activities related to two mature multi-lateral producer to waterflood injector conversions; and
Additional core testing to continue informing EOR initiatives.
At Ukalta:
Conversion of an existing mature multi-lateral producer to waterflood injector, with water injection expected to commence in the second quarter.
At Frog Lake:
Drilling and completion of 24 (13.0 net) wells targeting the Waseca North, Waseca South, GP and Sparky zones;
Drilling and completion of 1 (0.5 net) water disposal well; and
Core testing to inform EOR initiatives.
Additional capital spending is anticipated for land and seismic purchases and other exploration activities. Capital activity is expected to be funded from adjusted funds flow(1), with any excess free funds flow(1) applied to net debt(1) reduction and other balance sheet obligations.
For 2026, heavy oil sales volumes are forecast to average 8,800 to 9,200 bbl/d, while total production sales volumes, including natural gas and NGL volumes, are forecast to average 13,300 to 13,800 boe/d, representing 7% to 10% growth relative to 2025.
Building on continued efficiency gains, operating costs are forecast to average $6.50 to $7.00/boe for 2026, and transportation costs are forecast to average $4.75 to $5.25/boe, reflecting anticipated increased fuel surcharges for trucked oil. Heavy oil wellhead differentials are forecast to average $4.50 to $5.50/bbl, assuming diluent pricing consistent with the current forward curve. Royalties are expected to increase as a percentage of revenue, averaging 14.5% to 15.5%, given the higher forecast reference oil prices.
Rubellite will continue to address end of life asset retirement obligations ("ARO"), with $1.4 million of abandonment and reclamation expenditures planned for the remainder of 2026, satisfying the Company's AER area-based mandatory 2026 spending requirement of $1.4 million.
(1)
Non-GAAP financial measure, non-GAAP ratio or supplementary financial measure. See "Non-GAAP and Other Financial Measures".
Planned exploration and development spending and drilling activity for 2026 is summarized in the table below:
Q1 2026
Q2 - Q4 2026
