Cuda Oil and Gas Inc. Announces December 31, 2020 Year-End Financial and Operating Results

Calgary, Alberta--(Newsfile Corp. - May 4, 2021) - Cuda Oil and Gas Inc. (TSXV: CUDA) ("Cuda" or the "Company") announces its financial and operational results for the year ended December 31, 2020. Cuda's audited consolidated financial statements, and management's discussion and analysis for the year ended December 31, 2020 and 2019 are available under the Company's profile on the SEDAR website at www.sedar.com.

Significant 2020 Highlights
2020 proved to be another year of significant growth and change for the Company.

• Production in Wyoming, United States, continues to respond positively to the miscible gas flood project. With the 15 new wells in operation in 2020, fourth quarter production increased 3% to 370 bbls/d, from 360 bbls/d in the third quarter of 2020, and increased 50% from 246 bbls/d, when compared to production from the fourth quarter of 2019. Offsetting the Wyoming, United States, production increases were lower WTI prices as a result of COVID-19. For the year ended December 31, 2020, Cuda's average realized prices were 32% lower, $47.71 per boe, compared to $69.69 per boe for 2019.

• Cuda remains optimistic that opportunities to increase near-term crude oil production from Wyoming, United States can materialize. Cuda has achieved the milestone of 1 billion cubic feet of gas injection to increase crude oil production at Barron Flats Shannon Recovery Unit.

• Cuda completed a 15 well drilling program in early 2020 with 100% success rate on the 8 wells drilled in the fourth quarter of 2019 and 7 wells in the first quarter of 2020. All wells are now on line with 11 new producers and 4 new injectors.

• Cuda completed a major restructuring of its indebtedness including existing credit facilities and convertible debentures of approximately $53 million at December 31, 2020. The restructuring culminated on January 26, 2021, with a new and additional senior $9.0 million credit facility. The new senior credit facility will allow Cuda to continue development of the Wyoming assets.

For the years ended December 31, 2020 and 2019, the Company reported net losses of approximately $40.4 million and $41.9 million, respectively, and cash flows from operating activities of approximately $2.3 million, and cash flows used in operating activities of $5.7 million, respectively. At December 31, 2020, the Company had a working capital deficiency of approximately $67.3 million, including outstanding credit facilities and convertible debentures to which the Company was in default under the terms and conditions of the applicable loan agreements.

At December 31, 2020, the Company had existing credit facilities with an outstanding balance of approximately $51.3 million. The existing credit facilities, including all unpaid interest and financing fees, matured on July 30, 2020, however the Company was unable to repay the outstanding balances. In addition, at December 31, 2020, the Company had convertible debentures in the amount of $1.67 million, including accrued unpaid interest. The convertible debentures originally matured on July 21, 2020, however the Company was unable to repay the outstanding balances. During the year ended December 31, 2020, the existing credit facilities, the promissory note, and the convertible debentures became in default under their applicable agreements, and remain in default currently.

The Company has determined that during the three months ended and as at March 31, 2021, it was not in compliance with the covenants of the new facility, signed on January 26, 2021, which represents an event of default under each of the new facility, existing credit facilities, and the promissory note agreements. An event of default enables each of the lenders to demand immediate payment of all amounts owing for which the Company is incapable of making such payments. The Company is in discussions with each of its lenders to attempt to remedy the events of default, as well as the ultimate settlement of finance charges and fees. There can be no guarantee that the Company will be successful in any negotiation, or settlement with the lenders either with respect to the rectification of the events of default, or with respect to an ultimate settlement of finance changes and fees. As such, a material uncertainty exists that casts significant doubt on the Company's ability to continue as a going concern.

Financial and Operational Results(1)
Summary table of selected 2020 and 2019 financial and operational results:

Note:
(1) For further discussion and disclaimers regarding the results above, see the Company's audited consolidated financial statements and management's discussion and analysis for the years ended December 31, 2020 and 2019, available under the Company's profile on SEDAR.

The Company continued its strategy to focus its resources on exploration and development in the Barron Flats Shannon Unit in Wyoming, United States. Crude oil production from Wyoming, United States increased 22% from 2019 production, primarily due to the gas injection flood project. Offsetting the Company's crude oil production increases were lower average crude oil realized prices primarily attributable to world crude oil demand destruction, as a result of the COVID-19 health pandemic. The Company shut-in its Alberta oil production in Canada as of March 30, 2020.

About Cuda Oil and Gas Inc.
Cuda Oil and Gas Inc. is engaged in the business of exploring for, developing and producing oil and natural gas, and acquiring oil and natural gas properties across North America. The Cuda management team has worked closely together for over 20 years in both private and public company environments and has an established track record of delivering strong shareholder returns. Cuda will continue to implement its proven strategy of exploring, acquiring, and exploiting with a long-term focus on large, light oil resource- based assets across North America including significant operational experience in the United States. The Cuda management team brings a full spectrum of geotechnical, engineering, negotiating and financial experience to its investment decisions.

For further information please contact:
Glenn Dawson
President and Chief Executive Officer
Cuda Oil and Gas Inc.
(403) 454-0862

Non-GAAP Measures
This news release contains the terms "operating netback" and "working capital deficit", which do not have standardized meanings prescribed by IFRS and therefore may not be comparable with the calculation of similar measures presented by other issuers.

• Operating netback denotes total revenue less royalty and production tax expenses, and operating and transportation costs calculated on a per boe basis. Management uses operating netback on a per boe basis in operational and capital allocation decisions.
• Working capital deficit is calculated as current assets less current liabilities.

Glossary

Forward-Looking Information
This news release contains forward-looking statements. All statements other than statements of historical fact included in this news release are forward-looking statements that involve various risks and uncertainties and are based on forecasts of future operational or financial results, estimates of amounts not yet determinable and assumptions of management. Risk factors that could prevent forward looking statements relating to Cuda and its operating activities from being realized include ongoing permitting requirements, the actual results of current exploration and development activities, operational risks, risks associated with drilling and completions, uncertainty of geological and technical data, market conditions, the availability and nature of alternative sources of energy, conclusions of economic evaluations and changes in project parameters as plans continue to be refined as well as future prices of oil and natural gas. Although Cuda has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Oil and Gas Advisories
This news release contains metrics commonly used in the oil and natural gas industry. These oil and gas metrics have been prepared by management and do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included in this news release to provide readers with additional measures to evaluate Cuda's performance and to compare Cuda's operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this news release, should not be unduly relied upon.

"boes" may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 mcf: 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. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

This news release provides certain information relating to recovery results from gas-injection operations on properties in close proximity to the Company's properties, which is "analogous information" as defined by applicable securities laws. This analogous information is derived from publicly available information sources, which Cuda believes are independent in nature. Estimates by engineering and geotechnical practitioners may vary and the differences may be significant. Cuda believes that the provision of this analogous information is relevant to its activities and forecasting, given its interest in properties in the area; however, readers are cautioned that there is no certainty that any forecasts provided herein based on analogous information will be accurate.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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