Highwood Asset Management sells Wilson Creek assets

Canada NewsWire /NOT FOR DISSEMINATION IN THE U.S. OR THROUGH U.S. NEWSWIRES/ CALGARY, AB , June 2, 2026 /CNW/ - Highwood Asset Management Ltd. (" Highwood " or the " Company ") (TSXV: HAM) is pleased to announce it has entered into a definitive asset purchase and sale agreement (the " Agreement ") to sell its Wilson Creek assets (the " Assets ") to Obsidian Energy Ltd. (" Obsidian Energy ") for up to $112 million (the " Transaction "). Under the terms of the Agreement, Obsidian Energy will acquire the Assets for cash consideration of $105 million payable upon close (the " Upfront Consideration "), subject to closing adjustments, plus contingent consideration in quarterly instalments between the third quarter of 2026 and the second quarter of 2027 up to an aggregate of $7 million, based on the price of WTI (the "Contingent Value Payments" ). The Transaction has an effective date of April 1, 2026 and is expected to close on or about June 30, 2026, subject to customary closing conditions and regulatory approvals.

Highwood expects to use a portion of the Upfront Consideration to reduce the Company's outstanding debt, improving Highwood's balance sheet and overall liquidity.  The Transaction creates optionality for capital acceleration, returns of capital to shareholders, and acquisitions. Transaction Highlights Compelling Value Creation and Significant Return On Invested Capital - Crystallizes a pre-tax return on invested capital of >200% for the Wilson Creek assets since they were acquired in August 2023. The assets were acquired for net consideration of approximately $35 million and have generated approximately $26 million in Asset Level Free Cash Flow up to March 31, 2026. (1) Creates Further Capital Allocation Optionality to Maximize Total Returns to Shareholders — Significantly reduces Highwood's leverage.

Net proceeds from the divestiture will be used to reduce Highwood's net debt (1) , which is anticipated to be approximately $15.0 million after closing of the Transaction. The strength of Highwood's  balance sheet post-closing is expected to provide Highwood with the flexibility to enhance shareholder total returns through accelerated growth in Brazeau, further development of early-stage opportunities in Highwood's portfolio, strategic acquisitions, and/or returns of capital. Portfolio Concentration Toward Profitable Long Duration Assets — Continued drilling success in the Basal Belly River at Brazeau, which is analogous to the Belly River at Wilson Creek and implementation of waterflood which will continue to lower base declines and increase reserve lives.  Strategic Rationale Since closing the Brazeau, Castlegate, and Shale acquisitions in August 2023 at 2.2x field NOI and 0.5x 1P reserves, Highwood has grown production from approximately 4,000 boe/d to over 6,000 boe/d while converting reserves at strong recycle ratios (PDP: 1.4x; 1P: 2.0x; 2P: 3.3x) (1) .

The divestiture of Wilson Creek represents the next phase of the Company's strategy: concentrating capital toward long-duration, high-margin assets in Brazeau and other early-stage opportunities in Highwood's portfolio. Highwood's high-netback oil-weighted Brazeau asset delivers compelling single well economics with attractive recycle ratios and payback periods (approximately 2.6x recycle ratio and 12-month BT payback period at US$65 WTI) (2) . Capital efficiencies of approximately $19,000/boe/d and a corporate free cash flow breakeven below US$45 WTI provide significant downside protection while preserving upside optionality as the Company evaluates further growth opportunities.