Yangarra Resources Ltd. Condensed Interim Consolidated Financial Statements For the three months ended March 31, 2025 and 2024

Yangarra Resources Ltd. Condensed Interim Consolidated Statements of Financial Position

(in thousands of Canadian dollars)

Contingency (note 14)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Yangarra Resources Ltd. Condensed Interim Consolidated Statements of Income and Comprehensive Income For the three months ended March 31

(unaudited, in thousands of Canadian dollars except per share amounts)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Yangarra Resources Ltd. Condensed Interim Consolidated Statements of Changes in Equity For the three months ended March 31

(unaudited, in thousands of Canadian dollars)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Yangarra Resources Ltd. Condensed Interim Consolidated Statements of Cash Flows For the three months ended March 31 (unaudited, in thousands of Canadian dollars)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended March 31, 2025 and 2024 (in thousands of Canadian dollars, except per share and per unit amounts)

1. Basis of preparation and statement of compliance and authorization

Yangarra Resources Ltd. ("Yangarra" or the “Company”) is a publicly-traded company involved in the production, exploration and development of resource properties in Western Canada. The address of the registered office is 1530, 715 – 5 Avenue SW, Calgary Alberta, T2P 2X6. These condensed interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Yangarra Resources Corp., Yangarra Production Partnership and Yangarra Holding Corp., after the elimination of intercompany transactions and balances

These consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Company and its subsidiaries. The consolidated financial statements were authorized for issuance by the Company’s Board of Directors on April 30, 2025.

These interim consolidated financial statements statements have been prepared in accordance with IFRS® Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board and interpretations of the IFRS Interpretations Committee.

These condensed interim consolidated financial statements have been prepared in accordance with International – Accounting Standard 34 Interim Financial Reporting on a basis consistent with the accounting, estimation and judgement policies described in the Company’s audited consolidated financial statements as at and for the year ended December 31, 2024 (the “Annual Financial Statements”). These condensed interim consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments, stock options and RSUs which are recognized at fair value. All financial information is reported in Canadian dollars, unless otherwise noted. Certain information and disclosures normally included in the notes to the Annual Financial Statements prepared in accordance with IFRS have been condensed or omitted. These condensed interim consolidated financial statements should be read in conjunction with the Annual Financial Statements.

2. Property and equipment

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended March 31, 2025 and 2024 (in thousands of Canadian dollars, except per share and per unit amounts)

2. Property and equipment (continued)

At March 31, 2025, all of the Company’s properties are pledged as security for the bank debt (note 3). The calculation of depletion for the three months ended March 31, 2025 included estimated future development costs of $477,437 – (December 31, 2024 $494,800) associated with the development of the Company’s proved plus probable reserves.

– Cash additions for the three months ended March 31, 2025 include $223 (2024 $149) of recoveries related to the Company's working interest in operated capital expenditure programs on which overhead has been charged in – accordance with standard industry operating agreements and $105 (2024 $200) of capitalized salaries and consulting expenses directly related to geological, drilling and completions.

– Included in property and equipment at March 31, 2025 is $2,344 (December 31, 2024 $2,617) of right-of-use (“ROU”) assets associated with the Company’s lease obligations.

3. Bank debt

As at March 31, 2025 and December 31, 2024, the maximum amount available under the syndicated credit facility was $130,000 comprised of a $105,000 extendable revolving term credit facility and a $25,000 operating facility. The amount available under these facilities is re-determined at least twice a year and is primarily based on the Company’s oil and gas reserves, the syndicate of lending institutions’ forecast commodity prices, the current economic environment and other factors as determined by the syndicate (the “Borrowing Base”). If the total advances made under the credit facilities are greater than the re-determined Borrowing Base, the Company has 60 days to repay any shortfall. The facilities last for a 364-day period and will be subject to the next 364-day extension by May 30, 2025. If not extended by May 30, 2025, the facilities will cease to revolve, and all outstanding balances will become repayable on May 30, 2026.

– As at March 31, 2025, the $118,527 (December 31, 2024 $115,785) reported amount of bank debt was comprised – – of $13,913 (December 31, 2024 $11,395) drawn on the operating facility and $105,000 (December 31, 2024 – $105,000) drawn on the revolving facility and net of unamortized transaction costs of $386 (December 31, 2024 $610).

The Company is subject to a financial covenant requiring an adjusted working capital ratio above 1:1 (current assets plus the undrawn availability under the revolving facility, divided by the current liabilities less the drawn portion of the revolving facility and excluding unrealized commodity contracts). The Company was in compliance with this covenant as at March 31, 2025 and December 31, 2024. The facilities are secured by a general security agreement over all assets of the Company. Beginning December 20, 2024, the Company is required to ensure that not less than 30% of the forecasted daily production for the next twelve-month period is hedged and subject to commodity swaps with a minimum of 15% of such forecasted production being subject to commodity swaps that are swaps only (as opposed to a combination of swaps, collars and/or puts/calls).

The total standby fees on the revolving facility range, depending on the debt to EBITDA ratio, between 200 bps to 400 bps on bank prime borrowings and between 300 bps and 500 bps on bankers’ acceptances. The undrawn portion of the revolving facility is subject to a standby fee in the range of 75 bps to 125 bps.

During the three months ended March 31, 2025, the weighted average effective interest rate for the bank debt was – approximately 7.11% (three months ended March 31, 2024 9.34%).

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended March 31, 2025 and 2024 (in thousands of Canadian dollars, except per share and per unit amounts)

4. Lease obligations

The Company incurs lease payments related to the oil hauling fleet, operator/crew trucks and the head office. Leases are entered into and exited in coordination with specific business requirements which includes the assessment of the appropriate durations for the related leased asset.

5. Decommissioning liability

The following table presents the reconciliation of the carrying amount of the liability associated with the decommissioning of the Company’s property and equipment:

The current portion of decommissioning liability relates to wells the Company plans to abandon and reclaim in the next 12 months as part of the Alberta Energy Regulator’s mandatory spend target.

The following significant assumptions were used to estimate the decommissioning liability:

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended March 31, 2025 and 2024 (in thousands of Canadian dollars, except per share and per unit amounts)

6. Share capital

Authorized:

Unlimited number of common shares, without nominal or par value. Unlimited number of First Preferred Shares and an unlimited number of Second Preferred Shares, both issuable in series.

Issued:

7. Share-based compensation

– During the three months ended March 31, 2025, the Company issued 4,678 (2024 4,893) RSUs that vest equally over 3 years. The RSUs are exercisable in either cash or shares at the option of the Company. As it is the Company’s intention to settle in shares, the RSUs are treated as share-based compensation with a fair value on the – date of issue of $1.17 (2024 $1.11) per RSU.

The following table provides a continuity of RSUs outstanding:

The following table provides a continuity of stock options outstanding as at:

The following provides a summary of stock options outstanding as at March 31, 2025:

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended March 31, 2025 and 2024 (in thousands of Canadian dollars, except per share and per unit amounts)

7. Share-based compensation

– During the three months ended March 31, 2025, the Company recognized $1,014 (2024 $862) of share-based compensation in the condensed interim consolidated statements of income and comprehensive income. During the – three months ended March 31, 2025, the Company capitalized $226 (2024 $371) of share-based compensation to property and equipment (note 2).

8. Earnings per common share

Basic earnings per share was calculated as follows:

The average market value of the Company’s shares for purposes of calculating the dilutive effect of stock options and RSUs was based on quoted market prices for the period that the options and RSUs were outstanding. For the – three months ended March 31, 2025, 216 (2024 1,169) options are excluded as they are out-of-the-money based – on an average share price of $1.04 (three months ended March 31, 2024 $1.16) for the period.

9. Change in non-cash working capital

The change in non-cash working capital has been allocated to the following activities:

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended March 31, 2025 and 2024 (in thousands of Canadian dollars, except per share and per unit amounts)

10. Financial instruments and financial risk management

a. Accounts receivable and credit risk

Purchasers of the Company’s natural gas and liquids are subject to credit review to minimize the risk of non-payment. As at March 31, 2025, the maximum credit exposure is the carrying amount of the accounts receivable of $27,967 – (December 31, 2024 $28,878).

The maximum exposure to credit risk for accounts receivable by type of customer was:

The Company historically has not experienced any significant collection issues with its natural gas and liquids marketers. The majority of the revenue accruals and receivables from natural gas and liquids marketers were received in April 2025.

The Company’s receivables are aged as follows:

– As at March 31, 2025, 99% (December 31, 2024 99%) of the over 90-day receivables are due from four (December – 31, 2024 four) industry partners, for which a significant portion of the balances are in dispute (note 14). The Company has performed an analysis of each partner’s financial situation and has determined they have the ability to pay.

b. Liquidity risk

As at March 31, 2025, the contractual maturities of the Company’s obligations are as follows:

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended March 31, 2025 and 2024 (in thousands of Canadian dollars, except per share and per unit amounts)

10. Financial instruments and financial risk management (continued)

c. Market risk

The Company has exposure to the following market risks:

i. Interest rate risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company is exposed to interest rate fluctuations on its bank debt which bears interest at a floating rate and to mitigate this risk, the Company may enter into interest rate contracts. For the three months ended March 31, 2025, if interest rates had been 1% lower with all other variables held constant, net income would have been – $292 (2024 $289) higher, due to lower interest expense. An equal and opposite impact would have occurred had interest rates been higher by the same amount. The Company had no interest rate contracts in place as at March 31, 2025.

ii. Currency risk

Foreign currency exchange rate risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. All of the Company’s petroleum and natural gas sales are denominated in Canadian dollars, however, the underlying market prices in Canada for petroleum and natural gas are impacted by changes in the exchange rate between the Canadian and United States dollar. The sensitivity of the fair value of a 10% change in foreign exchange rates would have an immaterial impact the consolidated statements of income and comprehensive income.

iii. Commodity price risk

Commodity price risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in commodity prices.

As at March 31, 2025 the Company was committed to the following commodity price risk contracts:

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended March 31, 2025 and 2024 (in thousands of Canadian dollars, except per share and per unit amounts)

10. Financial instruments and financial risk management (continued)

c. Market risk (continued)

As the Company had a limited number of derivatives in place as at March 31, 2025, the sensitivity of the fair value of a 10% volatility in commodity prices would have an immaterial impact on unrealized gains (losses) reported in the consolidated statements of income and comprehensive income.

d. Fair value of financial instruments

The following table summarizes the carrying value and fair value of the Company’s risk management assets and liabilities.

11. Capital disclosures

The Company’s objective when managing capital is to maintain a flexible capital structure which will allow it to execute its capital expenditure program, which includes expenditures in oil and gas activities which may or may not be successful. Therefore, the Company monitors the level of risk incurred in its capital expenditures to balance the proportion of debt and equity in its capital structure.

The Company considers its capital structure to include shareholders’ equity and debt:

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three months ended March 31, 2025 and 2024 (in thousands of Canadian dollars, except per share and per unit amounts)

13. Revenue

The Company derives its revenue from contracts with customers primarily through the sale of commodities at a point in time representing the following major product types:

At March 31, 2025, receivables from contracts with customers, which are included in trade accounts receivable, were – $15,956 (December 31, 2024 $15,061).

14. Contingency

In the normal conduct of operations, there are pending claims by and against the Company. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. In the opinion of management, based on the advice and information provided by its legal counsel, the final determination of these other litigations will not materially affect the Company’s financial position or results of operations.

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