Veren (VRN) Announces Strategic Infrastructure Transaction

Veren Inc. (NYSE: VRN) is pleased to announce it has entered into a strategic long-term partnership with Pembina Gas Infrastructure ("PGI") related to certain infrastructure assets in the Alberta Montney and will receive net cash proceeds of $400 million related to this transaction.

KEY HIGHLIGHTS

• Directing $400 million of proceeds toward debt reduction, resulting in total expected debt reduction of $1.3 billion in 2024.
• Gaining operatorship of additional oil battery sites, further enhancing efficiencies and reducing operating costs.
• Renegotiated and consolidated multiple prior agreements resulting in reduced fees.
• Receiving priority access for all products and firm processing for 100 percent of capacity at Patterson Creek Gas Plant.
• Option to design, construct and operate certain future infrastructure assets with PGI funding up to $300 million.

TRANSACTION DETAILS AND STRATEGIC PARTNERSHIP SYNERGIES

Veren and PGI have entered into a transaction for certain infrastructure assets in the Alberta Montney which includes the Company selling to PGI primarily all its working interest in four oil battery sites in the Gold Creek and Karr areas, while maintaining full operatorship of these sites. In addition, Veren will acquire full operatorship of four oil battery sites which are currently operated by PGI. The Company will also acquire firm processing commitment for 100 percent of capacity at the Patterson Creek Gas Plant and will receive priority access for all its products at the oil battery sites, further enhancing Veren's long-term execution in the area. PGI, a joint venture between Pembina Pipeline Corporation and KKR, is an established industry midstream partner with extensive infrastructure and midstream assets within Veren's Alberta Montney and Kaybob Duvernay plays and has a track record of safe and reliable operations.

The Company and PGI also renegotiated and consolidated multiple prior agreements for gathering and processing of Veren's products in the Alberta Montney, resulting in a new agreement with lower fees. The Company has agreed to an amended area of dedication and a 15 year take-or-pay commitment at the oil battery sites with PGI, which will result in an annual fee of $35 million, net of re-contracted lower gathering and processing fees. This does not include synergies related to enhanced efficiencies and further reduction in operating costs that Veren expects as a result of fully operating all the related oil battery sites in its Alberta Montney assets.

As part of this transaction, the Company will receive net cash proceeds of $400 million at closing.

PGI has also granted Veren an option to design, construct and operate certain future infrastructure development in the Company's Alberta Montney area and agreed to fund up to $300 million with Veren entering into an additional take-or-pay commitment with similar terms to this transaction. This will allow the Company to reduce its future capital expenditures related to facility expansions.

Including the impact from a reduction in Veren's future capital expenditures related to facility expansions funded by PGI and expected interest expense savings due to the immediate reduction in debt as a result of this transaction, the Company's expected cumulative five-year after-tax excess cash flow remains unchanged, while reducing its net debt by $400 million.

This transaction is expected to close in fourth quarter 2024 and is subject to customary closing conditions. CIBC Capital Markets is acting as financial advisor and BMO Capital Markets is acting as strategic advisor to Veren in relation to this transaction.

BALANCE SHEET STRENGHTENING

The Company will direct the $400 million of net cash proceeds from the transaction toward further debt reduction. Veren expects its year-end 2024 net debt to total $2.4 billion, based on current commodity prices, resulting in a total reduction of $1.3 billion in 2024.

OUTLOOK

As a result of higher-than-expected production from the Company's multi-well pads in the Gold Creek West area of its Alberta Montney in 2024, Veren plans to accelerate facility capacity expansion on its retained oil battery site in the area that is fully owned and operated by the Company from 2025 to fourth quarter 2024. Production from this area is expected to be temporarily impacted as the expansion takes place. Veren's production was also temporarily impacted in third quarter 2024 by unplanned turnaround activity and third-party facilities downtime. As a result, the Company is narrowing its full year 2024 production guidance range to 192,500 to 197,500 boe/d (from 191,000 to 199,000 boe/d), with the mid-point of the production guidance range remaining unchanged. Veren's 2024 development capital expenditures budget of $1.4 billion to $1.5 billion also remains unchanged.

The Company is committed to its strategic priorities of operational execution, strengthening its balance sheet and increasing its return of capital.

2024 GUIDANCE

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