Birchcliff Announces Second Quarter 2017 Results and Updated Guidance – Part 4

All wells drilled in 2017 were drilled on multi-well pads, which allows us to reduce our per well costs and our environmental footprint. In addition, we actively employ the evolving technology utilized by the industry regarding horizontal well drilling and the related multi-stage fracture stimulation technology.

We currently have 2 drilling rigs at work, both in Pouce Coupe. In addition to these drilling rigs, we have multiple completion rigs and pipeline crews working on various projects.

In Pouce Coupe, there are 26 wells left to bring on production during the remainder of 2017. It is currently expected that all but 4 of these wells will be brought on production by October 1, 2017 in connection with Phase V coming on-stream. The remaining 4 wells are anticipated to be brought on production in December 2017.

In Gordondale, we drilled 6 (6.0 net) Montney horizontal wells in the fourth quarter of 2016, 3 of which were Montney D2 oil wells and 3 of which were Montney D1 liquids-rich natural gas wells. These wells were completed, equipped and brought on production in the first quarter of 2017 and continue to meet our expectations. We have 7 wells left to bring on production in Gordondale during the remainder of 2017. It is expected that 3 wells will be brought on production in August and the remaining 4 wells will be brought on production in October 2017. After these remaining wells have been brought on production, we will have drilled, cased, completed and equipped a total of 22 wells on our Gordondale assets (12 Montney D2 oil wells, 5 Montney D1 oil wells and 5 Montney D1 liquids-rich natural gas wells) since we acquired the assets in July 2016.

Science and Technology Multi-Well Pad Program

We are finalizing the planning on the execution of a science and technology multi-well pad program later this year in order to optimize field development and develop an improved understanding of wells drilled on the Montney/Doig Resource Play. The first phase of the program involves the drilling of the vertical science and technology well, which is expected to be drilled in August 2017. The well will be drilled to the top of the Montney where we will extract a full diameter core through the entire Montney section (approximately 300 metres). The extracted rock core will provide analytical data to increase our knowledge of rock properties, which will be incorporated in our petrophysical models and help us to more accurately represent the geology of the area. The vertical well will be open holed logged with both conventional logging techniques, as well as advanced logging techniques, including formation imager, sonic scanner, geochemical spectroscopy and nuclear magnetic resonance. The second phase of the program which is expected to commence in early 2018 involves the drilling, completing, equipping and bringing on production of a Montney/Doig multi-layer four well pad utilizing the reservoir learnings from the vertical well. During the completion of the 4 horizontal wells, we intend to utilize the vertical well as a seismic monitoring well to gain further insight into fracture parameters and complexity. In addition to the vertical well, we plan to install a permanent fiber optic cable within the horizontal portion of one of the Montney horizontal wells, allowing further data to be collected on fracture parameters and ongoing production performance along the horizontal well length.

The purpose of this program is to collect high quality and high value data from the vertical well and the straddling horizontal wells, which can be used to accelerate our technical capabilities and understanding with respect to the drilling, completion and production from a multi-layer resource play.

Update on Natural Gas Transportation Capacity - Additional Firm Service

TCPL Mainline

We have entered into agreements with TransCanada Pipelines ("TCPL") for the firm service transportation of 175,000 GJ/d in aggregate (approximately 155 MMcf/d) of natural gas on TCPL's Canadian Mainline for a ten year term, whereby natural gas will be transported from the Empress receipt point in Alberta to the Dawn trading hub located in Southern Ontario. The toll for the Empress to Dawn portion of the service is $0.77/GJ plus fuel. Subject to regulatory approval, this service is expected to become available in three tranches on November 1 of each of 2017, 2018 and 2019. Provision of the service is conditional on, among other things, TCPL receiving National Energy Board approval on terms and conditions satisfactory to TCPL.

Alliance System

In addition, we have sales agreements with a third party marketer to sell approximately 40 MMcf/d of natural gas under contracts commencing November 1, 2017 and expiring March 31, 2018 and approximately 5 MMcf/d of natural gas under contracts commencing April 1, 2017 and expiring October 31, 2020. This production will be delivered into the Alliance Pipeline system and sold at Alliance's Trading Pool daily index price. We have completed the installation of the pipeline facilities necessary to access the Alliance pipeline system, including the construction of a new meter station. We expect to sell gas at various quantities to the Alliance system until November 1, 2017 where we will flow over 40 MMcf/d as outlined above.

As virtually all of our natural gas production is currently transported on the NGTL system in Alberta and sold at AECO, we expect that the above arrangements will provide us with access to a more diverse portfolio of natural gas markets and prices beyond AECO.

OUTLOOK AND GUIDANCE

We have updated our 2017 production guidance to take into account the Asset Sales (which represent forecast 2017 production of approximately 3,600 boe/d) and our increased 2017 Capital Program. The following table sets forth our previous and updated guidance for 2017:

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Previous Guidance Updated Guidance -------------------------------- -------------------- -------------------- Estimated 2017 Annual Average 70,000 - 74,000 67,000 - 68,000 Production boe/d boe/d % Oil and NGLs 23% 21% Estimated 2017 Q4 Average 80,000 - 82,000 79,000 - 80,000 Production boe/d boe/d % Oil and NGLs 21% 20% Total capital expenditures $355 million $404 million Net capital expenditures $355 million $262 million ---------------------------------------------------------------------------- (1) For further information regarding our guidance, including the assumptions surrounding such guidance, please see "Advisories - Forward-Looking Information" in this press release.

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We expect that our operating costs in the fourth quarter of 2017 will be less than $4.00/boe, assuming the successful completion of the Asset Sales and the Phase V expansion of our Pouce Coupe Gas Plant coming on-stream as planned.

We have hedged approximately 50% of our forecast 2017 natural gas production at an estimated average wellhead price of $3.47/Mcf, which helps to protect our balance sheet and our 2017 Capital Program. Although the majority of our capital expenditures are planned to be spent during the first half of 2017, we expect that the entirety of our 2017 Capital Program will be fully funded out of our forecast 2017 funds flow from operations, as well as the proceeds from the Asset Sales. The foregoing is based on our revised budgeted forecast average prices of approximately WTI US$50.00 per barrel of oil and approximately AECO CDN$2.35 per GJ of natural gas during 2017.

We are currently in the process of updating our Five Year Plan, which we expect to announce in the fall of 2017. We have deferred the construction of Phases VII and VIII of our Pouce Coupe Gas Plant, reduced the number of wells required to be drilled as a result of the Asset Sales and reduced both the cost of drilling wells and the per unit operating costs associated with our production. We intend to continue to maintain a strong balance sheet and financial flexibility, while we continue to pay a sustainable dividend.

SHAREHOLDER SUPPORT

We thank Mr. Seymour Schulich, our largest shareholder, for his leadership, unwavering commitment and his ongoing support. It is this kind of leadership that keeps our staff motivated and focused on the execution of our business plan. Mr. Schulich currently holds 40 million common shares, which represents approximately 15% of the current issued and outstanding common shares.

THANK YOU

We would like to take this opportunity to specifically thank our staff who are leaving Birchcliff as a result of the Asset Sales. These people are committed employees who were part of the Birchcliff Team. These people helped to create significant value for our shareholders and were part of the fabric of our culture. On behalf of our Board of Directors and our Management Team, we thank them for their hard work and dedication and wish them the best in the future.

Our Management Team and our employees are excited, committed and remain enthusiastic about executing our long-term plan and delivering value to our shareholders. Thank you to all of our shareholders for your support and to our employees who continue to go that extra mile for the benefit of all of us.

With Respect,

(signed) "A. Jeffery Tonken"

President and Chief Executive Officer

Birchcliff Energy Ltd.

ABBREVIATIONS

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AECO physical storage and trading hub for natural gas on the TransCanada Alberta transmission system which is the delivery point for various benchmark Alberta index prices bbl barrel bbls barrels bbls/d barrels per day boe barrel of oil equivalent boe/d barrels of oil equivalent per day F&D finding and development GAAP generally accepted accounting principles GJ gigajoule GJ/d gigajoules per day HZ horizontal IFRS International Financial Reporting Standards m3 cubic metres Mcf thousand cubic feet Mcfe thousand cubic feet of gas equivalent MJ megajoules MMbtu million British thermal units MMcf million cubic feet MMcf/d million cubic feet per day NGLs natural gas liquids NGTL NOVA Gas Transmission Ltd. WTI West Texas Intermediate oil at Cushing, Oklahoma, the benchmark for North American crude oil pricing 000s thousands $000s thousands of dollars

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NON-GAAP MEASURES

This press release uses "funds flow from operations", "funds flow per common share", "operating netback", "estimated operating netback", "funds flow netback", "operating margin", "total cash costs", "adjusted working capital deficit" and "total debt". These measures do not have standardized meanings prescribed by GAAP and therefore may not be comparable to similar measures presented by other companies where similar terminology is used. Management believes that these non-GAAP measures assist management and investors in assessing Birchcliff's profitability, efficiency, liquidity and overall performance. Each of these measures is discussed in further detail below.

"Funds flow from operations" denotes cash flow from operating activities before the effects of decommissioning expenditures and changes in non-cash working capital. "Funds flow per common share" denotes funds flow from operations divided by the basic or diluted weighted average number of common shares outstanding for the period. Management believes that funds flow from operations and funds flow per common share assist management and investors in assessing Birchcliff's profitability, as well as its ability to generate the cash necessary to fund future growth through capital investments, pay dividends and repay debt. The following table provides a reconciliation of cash flow from operating activities, as determined in accordance with IFRS, to funds flow from operations:

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------------------------------------------- Three months ended Six months ended June 30, June 30, ------------------------------------------- ($000s) 2017 2016 2017 2016 --------------------------------------------------------------------------- Cash flow from operating activities 57,467 7,049 128,081 27,796 Adjustments: Decommissioning expenditures 70 16 371 593 Change in non-cash working capital 31,075 6,202 27,790 5,573 ------------------------------------------------------------------------- Funds flow from operations 88,612 13,267 156,242 33,962 ---------------------------------------------------------------------------

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"Operating netback" denotes petroleum and natural gas revenue less royalties, less operating expenses and less transportation and marketing expenses. "Estimated operating netback" of the Pouce Coupe Gas Plant (and the components thereof) is based upon certain cost allocations and accruals directly attributable to the Pouce Coupe Gas Plant and related wells and infrastructure on a production month basis. "Funds flow netback" denotes petroleum and natural gas revenue less royalties, less operating expenses, less transportation and marketing expenses, less net general and administrative expenses, less interest expenses and less any realized losses (plus realized gains) on financial instruments and plus any other cash income sources. All netbacks are calculated on a per boe basis, unless otherwise indicated. Management believes that operating netback, estimated operating netback and funds flow netback assist management and investors in assessing Birchcliff's profitability and its operating results on a per unit basis to better analyze its performance against prior periods on a comparable basis. The following table provides a breakdown of operating netback and funds flow netback for the periods indicated:

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------------------------------------------ Three months ended June 30, ------------------------------------------ 2017 2016 ------------------------------------------ ($000s) ($/boe)(1) ($000s) ($/boe)(1) ---------------------------------------------------------------------------- Petroleum and natural gas revenue 146,597 24.92 47,261 13.14 Royalty expense (4,711) (0.80) (885) (0.25) Operating expense (27,453) (4.67) (12,403) (3.45) Transportation and marketing expense (15,175) (2.57) (8,496) (2.35) ---------------------------------------------------------------------------- Operating netback 99,258 16.88 25,477 7.09 General & administrative expense, net (6,286) (1.07) (4,468) (1.24) Interest expense (6,844) (1.16) (7,825) (2.18) Realized gain on financial instruments 2,484 0.42 83 0.02 ---------------------------------------------------------------------------- Funds flow netback 88,612 15.07 13,267 3.69 ----------------------------------------------------------------------------
------------------------------------------ Six months ended June 30, ------------------------------------------ 2017 2016 ------------------------------------------ ($000s) ($/boe)(1) ($000s) ($/boe)(1) ---------------------------------------------------------------------------- Petroleum and natural gas revenue 279,305 24.43 104,764 14.13 Royalty expense (15,677) (1.37) (3,436) (0.46) Operating expense (56,403) (4.93) (26,555) (3.58) Transportation and marketing expense (29,381) (2.57) (16,999) (2.30) ---------------------------------------------------------------------------- Operating netback 177,844 15.56 57,774 7.79 General & administrative expense, net (12,139) (1.06) (9,481) (1.28) Interest expense (14,358) (1.26) (14,414) (1.94) Realized gain on financial instruments 4,895 0.43 83 0.01 ---------------------------------------------------------------------------- Funds flow netback 156,242 13.67 33,962 4.58 ---------------------------------------------------------------------------- (1) All per boe figures are calculated by dividing each aggregate financial amount by the production (boe) in the respective period.

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