Source Rock Royalties Ltd. announces that it has closed the acquisition of a 2% gross overriding royalty in approximately 6,400 net acres (10 sections) of land in S.E. Saskatchewan. The purchase price was $3.5 million and the transaction has an effective date of October 1, 2022. The GORR Lands are operated by Anova Resources Inc., and Elevation Oil & Gas Limited ("Elevation") is partnered with Anova on the GORR Lands.

Source Rock has completed several royalty deals with Anova since January 2019. Over this time, Anova has successfully drilled numerous horizontal wells on Source Rock's royalty lands and has become one of Source Rock's largest royalty payors. Gross production from the GORR Lands averaged approximately 500 bbl/d of Frobisher light oil in October 2022.

In addition, 8 horizontal wells were recently drilled on the GORR Lands, and 4 of these wells began producing over the last two weeks. It is anticipated that the remaining recently drilled horizontal wells will begin producing prior to year-end. Future development on the GORR Lands will be focused on the Frobisher formation.

The Frobisher is a shallow, conventional light oil play that does not require hydraulic fracturing; it is one of the most economic light oil plays in Canada. As part of the purchase of the GORR, Source Rock has received a drill commitment for 15 additional net horizontal wells (each a "Drill Commitment Well") to be drilled on Source Rock's royalty lands prior to December 31, 2024. Source Rock is entitled to $125,000 in damages for each Drill Commitment Well not drilled before the Drill Commitment Deadline.

The Drill Commitment Deadline may be automatically extended as follows: Upon the first time that the price of the NYMEX West Texas Intermediate Light Sweet Crude Oil Futures Contract (in U.S. Dollars) settles below $70.00 for 30 consecutive days, it shall be extended by 90 days; and Every time thereafter that the price of WTI settles below $70.00 for 30 consecutive days, it shall be extended by an additional 30 days.