Greenfire Resources (GFR) 6-KReport of Foreign Private Issuer

Exhibit 99.1

A copy of this preliminary non-offering prospectus has been filed with the securities regulatory authority in the province of Alberta, but has not yet become final. Information contained in this preliminary non-offering prospectus may not be complete and may have to be amended.

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This prospectus does not constitute a public offering of securities.

PRELIMINARY PROSPECTUS

GREENFIRE RESOURCES LTD.

No securities are being offered or sold pursuant to this prospectus.

This prospectus is being filed with the securities regulatory authority in the province of Alberta, to enable Greenfire Resources Ltd. (“GRL”), a corporation incorporated under the laws of the Province of Alberta, to become a reporting issuer under the Securities Act (Alberta), notwithstanding that no sale of securities is contemplated herein. For the purposes of this prospectus, unless the context requires otherwise, “Greenfire”, the “Company”, “we” or “us” shall refer to: (i) prior to completion of the Business Combination (as defined herein), Greenfire Resources Inc. (“GRI”) and/or its subsidiaries, on a consolidated basis, as the context requires; and (ii) following completion of the Business Combination, GRL and/or its subsidiaries, on a consolidated basis, as the context requires. Since no securities are being sold pursuant to this prospectus, no proceeds will be raised. Expenses in connection with the preparation and filing of this prospectus will be borne by the Company from its working capital.

Greenfire is an Alberta based intermediate-sized oil sands producer focused on responsible energy development in the Athabasca region of Alberta, Canada. The Company is actively developing its existing producing assets using Steam- Assisted Gravity Drainage (“SAGD”), an enhanced oil recovery extraction method, to responsibly increase the economic recovery of oil. The Company’s business plan contemplates that it will pursue exploration, development and exploitation drilling, complemented with property or corporate acquisitions exhibiting synergy in lands, facilities, production and operating efficiencies.

An investment in and ownership of the common shares (the “Common Shares”) of the Company should be considered speculative due to the nature of the Company’s involvement in the exploration for, and the acquisition, development and production of bitumen from oil sands reservoirs. The Company’s business is subject to the risks normally encountered in the oil and natural gas industry. Prospective purchasers of the Company’s securities must rely upon the ability, expertise, judgment, discretion, integrity and good faith of the management of the Company.

The Common Shares are listed on the New York Stock Exchange (“NYSE”) under the symbol “GFR”. On December 27, 2023, the last trading day on the NYSE prior to the date of this prospectus, the closing price of the Common Shares on the NYSE was US$5.17; however, there is no market currently through which the Common Shares may be sold in Canada. This may affect the pricing of the Common Shares in the secondary market, the transparency and availability of trading prices, the liquidity of the Common Shares and the extent of issuer regulation. See “Risk Factors”.

Greenfire has applied for listing of the Common Shares on the Toronto Stock Exchange (“TSX”) under the symbol “GFR”. Such listing is subject to the approval of the TSX in accordance with the TSX’s initial listing requirements, and the TSX has not conditionally approved Greenfire’s listing application, and there is no assurance the TSX will approve Greenfire’s listing application. Listing on the TSX will be conditional upon Greenfire fulfilling all of the listing requirements and conditions of the TSX. See “Advisories – Forward-Looking Statements” and “Risk Factors”.

The head office of Greenfire is located at Suite 1900, 250 – 5th Avenue SW, Calgary, Alberta T2P 2V7 and its registered office is located at Suite 2400, 525 – 8th Avenue SW, Calgary, Alberta T2P 1G1.

No underwriter has been involved in the preparation of this prospectus or performed any review of the contents of this prospectus. No person is authorized by the Company to provide any information or to make any representations other than those contained in this prospectus.

Messrs. Klesch, McIntyre, Siva and Perkal, directors of the Company, reside outside of Canada. They have each appointed Greenfire Resources Ltd., Suite 1900 250-5 Avenue SW, Calgary, Alberta T2P 2V7, as their agent for service of process. Securityholders are advised that it may not be possible to enforce judgments obtained in Canada against any person that resides outside of Canada, even if the party has appointed an agent for service of process.

This prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities.

TABLE OF CONTENTS

PROSPECTUS SUMMARY

The following is a summary of this prospectus and should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus. Certain capitalized terms used, but not defined, in this summary are defined in the “Glossary” or “Statement of Reserves Data and Other Oil and Gas Information - Glossary of Oil and Gas Terms”, as applicable. All dollar amounts in this prospectus are in Canadian currency, except as otherwise indicated.

SUMMARY OF OIL AND GAS RESERVES

AS OF DECEMBER 31, 2022

FORECAST PRICES AND COSTS

Notes:

SUMMARY OF NET PRESENT VALUES OF FUTURE NET REVENUE

AS OF DECEMBER 31, 2022

FORECAST PRICES AND COSTS

Notes:

GLOSSARY

In this prospectus, unless otherwise indicated or the context otherwise requires, the following terms shall have the meaning set forth below:

“2025 Indenture” are to the Indenture, dated as of August 12, 2021, by and among GRI (formerly GAC HoldCo Inc.), the guarantors party thereto from time to time, The Bank of New York Mellon, as trustee, BNY Trust Company of Canada, as Canadian co-trustee, and BNY Trust Company of Canada, as collateral agent, and any and all successors thereto, as amended, restated, supplemented or otherwise modified;

“2025 Notes” are to GRI’s 12.000% Senior Secured Notes due 2025 issued pursuant to the 2025 Indenture;

“ABCA” are to the Business Corporations Act (Alberta);

“Affiliate” are to, with respect to any person, any other person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such person;

“Amalgamation” are to the amalgamation of GRI and Canadian Merger Sub;

“Arrangement” are to the arrangement under section 193 of the ABCA on the terms and subject to the conditions set forth in the Plan of Arrangement in connection with the Business Combination;

“Audit and Reserves Committee” are to the Audit and Reserves Committee of the GRL Board;

“BIA” are to the Bankruptcy and Insolvency Act (Canada);

“bitumen” are to a naturally occurring solid or semi-solid Hydrocarbon (a) consisting mainly of heavier Hydrocarbons, with a viscosity greater than 10,000 millipascal-seconds (mPa·s) or 10,000 centipoise (cP) measured at the Hydrocarbon’s original temperature in the reservoir and at atmospheric pressure on a gas-free basis, and (b) that is not primarily recoverable at economic rates through a well without the implementation of enhanced recovery methods;

“Brigade” are to Brigade Capital Management, LP, a Delaware limited partnership;

“Business Combination” are to the transactions contemplated by the Business Combination Agreement, including the Plan of Arrangement;

“Business Combination Agreement” are to that certain Business Combination Agreement, dated December 14, 2022, as amended on April 21, 2023, June 15, 2023, and September 5, 2023, by and between MBSC, GRI, GRL, DE Merger Sub and Canadian Merger Sub;

“Canadian Merger Sub” are to prior to the Closing, 2476276 Alberta ULC, an Alberta unlimited liability corporation which, prior to the Amalgamation, was a direct, wholly-owned subsidiary of GRL;

“Cash Consideration” are to US$75,000,000, the cash consideration paid to the holders of GRI securities in the Business Combination;

“Closing” are to the closing of the Business Combination;

“Closing Date” are to September 20, 2023;

“Common Shares” are to the common shares in the capital of GRL;

“Company” or “Greenfire” are to (i) prior to the Closing, GRI and/or its subsidiaries on a consolidated basis, as the context requires, and (ii) following Closing, GRL and/or its subsidiaries on a consolidated basis, as the context requires;

“Corporate Governance Guidelines” are to National Policy 58-201 — Corporate Governance Guidelines;

“Court” are to the Alberta Court of King’s Bench;

“Crown” are to His Majesty the King in right of Canada or His Majesty the King in right of the Province of Alberta, as the context may require;

“CSA” are to the Canadian Securities Administrators;

“DE Merger Sub” are to, prior to the Closing, DE Greenfire Merger Sub Inc., a Delaware corporation which, prior to the Merger, was a direct, wholly-owned subsidiary of GRL;

“Demo Asset” are to the Hangingstone Demonstration Facility, a SAGD thermal oil sands production facility in the Athabasca region of Alberta;

“Demo GP” are to Hangingstone Demo (GP) Inc;

“Demo LP” are to Hangingstone Demo Limited Partnership;

“diluent” are to lighter viscosity petroleum products that are used to dilute bitumen for transportation in pipelines;

“ESG” are to environmental, social and governance;

“ESG and Compensation Committee” are to the ESG and Compensation Committee of the GRL Board, when and if established by the GRL Board;

“Exchange” are, for the purposes of the GRL Incentive Plan, the NYSE and/or the TSX, if the Common Shares are listed on such stock exchanges, and where the context permits such other stock exchanges on which the Common Shares are or may be listed, from time to time;

"Exchange Act” are to the U.S. Securities Exchange Act of 1934, as amended;

“Expansion Asset” are to the Hangingstone Expansion Facility, a SAGD thermal oil sands production facility in the Athabasca region of Alberta;

“Expansion GP” are to Hangingstone Expansion (GP) Inc;

“Expansion LP” are to Hangingstone Expansion Limited Partnership;

“Form 51-102F6” are to Form 51-102F6 – Statement of Executive Compensation as prescribed by National Instrument 51-102 – Continuous Disclosure Obligations;

“GAC” are to Greenfire Acquisition Corporation;

“GAC HoldCo” are to GAC HoldCo Inc;

“GHOPCO” are to Greenfire Hangingstone Operating Corporation;

“GRI” are to Greenfire Resources Inc.;

“GRI Bond Warrant Agreement” are to that certain Warrant Agreement dated as of August 12, 2021 between GAC Holdco Inc. (n/k/a Greenfire Resources Inc.), as issuer and The Bank of New York Mellon, as warrant agent providing for the issuance of GRI Bond Warrants;

“GRI Bond Warrants” are to, as of any determination time, each warrant to purchase GRI Common Shares that were outstanding, unexercised and issued pursuant to the GRI Bond Warrant Agreement;

“GRI Common Shares” are to the common shares in the authorized share capital of GRI;

“GRI Equity Plan” are to the Greenfire Resources Inc. Performance Warrant Plan, dated February 2, 2022, as amended from time to time, and the Greenfire Employee Trust established by trust agreement between GRI and Greenfire Resources Employment Corporation dated March 7, 2022, as amended from time to time;

“GRI Performance Warrant” are to, as of any determination time, each warrant to purchase GRI Common Shares issued pursuant to the GRI Equity Plan that were outstanding and unexercised;

“GRL Articles” are to the articles of incorporation, articles of amendment and articles of arrangement of GRL, as may be amended and/or restated from time to time;

“GRL Awards” are to, collectively, the GRL Options, the GRL Share Units and the GRL DSUs granted pursuant to the terms of the GRL Incentive Plan;

“GRL Board” are to the board of directors of GRL, as constituted from time to time;

“GRL Bylaws” are to the bylaws of GRL, as may be amended and/or restated from time to time;

“GRL Convertible Notes” are to the convertible notes of GRL that were subscribed for pursuant to the Subscription Agreements;

“GRL Debt Financing” are to the subscription by certain investors for US$50,000,000 aggregate principal amount of GRL Convertible Notes of GRL pursuant to the Subscription Agreements entered into concurrently with the execution of the Business Combination Agreement;

“GRL DSUs” are to deferred share units granted pursuant to the terms of the GRL Incentive Plan;

“GRL Incentive Plan” are to the omnibus share incentive plan of GRL providing for the grant of the GRL Awards for certain qualified directors, executive officers, employees or consultants of GRL;

“GRL Options” are to options to purchase the Common Shares granted pursuant to the terms of the GRL Incentive Plan;

“GRL Performance Warrant Plan” are to the amended and restated performance warrant plan of the Company, which amends and restates the GRI Equity Plan;

“GRL Performance Warrants” are to warrants to purchase Common Shares with each such performance warrant entitling the holder to purchase one Common Share, subject to the terms and conditions of the GRL Performance Warrant Plan;

“GRL Preferred Shares” are to preferred shares in the authorized share capital of GRL;

“GRL Shareholders” are to the holders of the Common Shares;

“GRL Share Units” are to rights awarded to participants to receive payments, which may be designated as “performance share units” or “restricted share units”, in cash or Common Shares pursuant to the terms of the GRL Incentive Plan;

“GRL Warrants” are to warrants to purchase Common Shares issued to MBSC Sponsor and former securityholders of GRI at Closing with each such warrant entitling the holder to purchase one Common Share at an exercise price of US$11.50 per Common Share, subject to the terms and conditions of the Warrant Agreements;

“Hangingstone Facilities” are to, collectively, the Demo Asset and the Expansion Asset;

“HEAC” are to HE Acquisition Corporation;

“Hydrocarbons” are to crude oil, natural gas, condensate, drip gas and natural gas liquids, coalbed gas, ethane, propane, iso-butane, nor-butane, gasoline, scrubber liquids and other liquids or gaseous hydrocarbons or other substances (including minerals or gases) or any combination thereof, produced or associated therewith;

“IFRS” are to the International Financial Reporting Standards, as issued by the International Accounting Standards Board;

“in situ” are to “in place” and, when referring to oil sands, means a process for recovering bitumen from oil sands by means other than surface mining, such as SAGD.

“Interim MD&A” are to management’s discussion and analysis of the Company for the three and nine month periods ended September 20, 2023 attached to this prospectus as Schedule “B”;

“Investor Rights Agreement” are to the investor rights agreement entered into at the Closing by and among GRL, the MBSC Sponsor, the other former holders of the MBSC Class B Common Shares, the PIPE Investors and certain other GRL Shareholders;

“JACOS“ are to Japan Canada Oil Sands Limited;

“JACOS Acquisition” are to the acquisition of all of the issued and outstanding shares in the capital of JACOS from Canada Oil Sands Co., Limited., for a purchase price of approximately $347 million on September 17, 2021 by Greenfire through its subsidiary predecessor entities;

“JOBS Act” are to the Jumpstart Our Business Startups Act of 2012;

“Letter of Credit Facility” are to one or more letter of credit facilities with Trafigura Canada General Partnership or any of its Affiliates or with banks (or other institutional lenders that provide revolving or non-revolving letter of credit facilities in the ordinary course of business) providing for revolving or non-revolving credit loans or other arrangements for the purposes of issuing letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced in any manner (whether upon or after termination or otherwise) or refinanced in whole or in part from time to time;

“Lock-Up Agreement” are to the lock-up agreement by and among GRL, the MBSC Sponsor, and certain GRL Shareholders entered into at the Closing;

“Market Value of a Share” are, with respect to any particular date as of which the Market Value of a Share is required to be determined for the purposes of the GRL Incentive Plan, (i) if the Common Shares are then listed on the Exchange (if at such time the Common Shares are listed on more than one Exchange, for the purpose of this definition Exchange shall refer to the Exchange on which a majority of trading in the Common Shares occurs), means the volume weighted average trading price of the Common Shares on the Exchange for the five (5) trading days immediately preceding such particular date and, for this purpose, the weighted average trading price shall be calculated by dividing the total value by the total volume of Common Shares traded for such period; (ii) if the Common Shares are not then listed on the Exchange, the closing price of the Common Shares on any other stock exchange on which the Common Shares are then listed (and, if more than one, then using the exchange on which a majority of trading in the Common Shares occurs) on the last trading day prior to the such particular date; or (iii) if the Common Shares are not then listed on any stock exchange, the fair market value as is determined solely by the GRL Board, acting reasonably and in good faith, and such determination shall be conclusive and binding on all persons;

“MBSC” are to M3-Brigade Acquisition III Corp., a Delaware corporation;

“MBSC Articles” are to the amended and restated certificate of incorporation of MBSC, adopted on October 21, 2021, as may be amended and/or restated from time to time;

“MBSC Class A Common Shares” are to MBSC’s Class A common shares, par value $0.0001 per share;

“MBSC Class B Common Shares” are to MBSC’s Class B common shares, par value $0.0001 per share;

“MBSC Extension Amount” are to, as of any measurement time, the aggregate amount deposited by the MBSC Sponsor, or its affiliates or designees to the Trust Account to extend the period of time MBSC shall have to consummate an Initial Business Combination (as defined in the MBSC Articles) pursuant to Section 9.1(c) of the MBSC Articles;

“MBSC IPO” are to MBSC’s initial public offering of units of MBSC (each consisting of one MBSC Class A Common Share and one-third of one MBSC Public Warrant), which closed on October 26, 2021;

“MBSC MD&As” are to management’s discussions and analyses for MBSC for the three and six month periods ending June 30, 2023 and for the year ended December 31, 2022, attached to this prospectus as Schedule “H” and Schedule “I”, respectively;

“MBSC Public Warrants” are to the former warrants of MBSC which were held by any persons other than the MBSC Sponsor and Cantor Fitzgerald & Co.;

“MBSC Sponsor” are to M3-Brigade Sponsor III LP, a Delaware limited partnership;

“MBSC Working Capital” are to the unrestricted cash on the balance sheet of MBSC at Closing;

“McDaniel” are to McDaniel & Associates Consultants Ltd.;

“Merger” are to the merger of DE Merger Sub with and into MBSC pursuant to the Business Combination Agreement;

“Merger Effective Time” are to the effective time of the Merger;

“New Note Indenture” are to the Indenture, dated as of September 20, 2023, by and among the Company, the guarantors party thereto from time to time, The Bank of New York Mellon, as trustee, BNY Trust Company of Canada, as Canadian co-trustee, and Computershare Trust Company of Canada, as collateral agent, and any and all successors thereto, as amended, restated, supplemented or otherwise modified;

“New Notes” are to the Company’s 12.000% Senior Secured Notes due 2028 which were issued by the Company on the Closing Date pursuant to the New Note Indenture concurrently with closing of the Business Combination;

“NI 51-101” are to the National Instrument 51-101 — Standards of Disclosure for Oil and Gas Activities;

“NI 52-110” are to National Instrument 52-110 — Audit Committees;

“NI 58-101” are to National Instrument 58-101 — Disclosure of Corporate Governance Practices;

“NOI Proceedings” are to the proceedings commenced on October 8, 2020, by each of GHOPCO and its parent company, Greenfire Oil and Gas Ltd., filing a Notice of Intention to Make A Proposal pursuant to the provisions of the Bankruptcy and Insolvency Act (Canada);

“NOI Transaction” are to the asset purchase agreement between GHOPCO and GAC entered into around December 1, 2020, pursuant to which GAC agreed to acquire the Demo Asset from GHOPCO;

“NYSE” are to the New York Stock Exchange;

“PCAOB” are to the Public Company Accounting Oversight Board (United States);

“Petroleum Marketer” are to Trafigura Canada General Partnership and Trafigura Canada Limited, collectively;

“PIPE Financing” are to the subscription by certain investors for an aggregate of 4,950,496 MBSC Class A Common Shares for an aggregate purchase price of $50,000,000 pursuant to the Subscription Agreements entered into concurrently with the execution of the Business Combination Agreement;

“PIPE Investors” are to the investors who subscribed for MBSC Class A Common Shares pursuant to the PIPE Financing and the GRL Convertible Notes pursuant to the GRL Debt Financing;

“Plan of Arrangement” are to the plan of arrangement made in accordance with the Business Combination Agreement;

“Refill” are to the meaning given to such term under “Business of the Company - Undeveloped Properties and Land Acreage - Well Information”.

“Registrar” are to the Registrar of Corporations for the Province of Alberta or the Deputy Registrar of Corporations appointed under subsection 263(1) of the ABCA;

“Resale Registration Statement” are to the registration statement registering the resale of certain securities held by or issuable to certain GRL Shareholders (including MBSC Sponsor and the PIPE Investors);

“SAGD” are to steam-assisted gravity drainage, an in-situ thermal oil production extraction technique;

“Sarbanes-Oxley Act” are to the U.S. Sarbanes-Oxley Act of 2002;

“SEC” are to the U.S. Securities and Exchange Commission;

“Securities Act” are to the U.S. Securities Act of 1933, as amended;

"Senior Credit Agreement” are to a credit agreement, dated as of September 20, 2023, with Bank of Montreal, as agent, and a syndicate of certain other financial institutions as lenders to provide for senior secured extendible revolving credit facilities;

"ServiceCo" are to 2373525 Alberta Ltd.;

"SubCo” are to 2373436 Alberta Ltd;

"Subscription Agreements” are to those certain subscription agreements dated December 14, 2022, as amended, entered into among MBSC, GRL and the PIPE Investors with respect to the PIPE Financing and the GRL Debt Financing;

“Trust Account” are to the trust account that held proceeds from the MBSC IPO and the concurrent private placement of MBSC warrants, established by MBSC for the benefit of the public stockholders of MBSC maintained at J.P. Morgan Chase Bank, N.A;

“TSX” are to the Toronto Stock Exchange;

“U.S. GAAP” are to generally accepted accounting principles in the United States; and

“Warrant Agreements” are to the Warrant Agreement and Amended and Restated Warrant Agreement, each dated as of September 20, 2023, by and between GRL, Computershare Inc. and Computershare Trust Company, N.A., governing the GRL Warrants.

ADVISORIES

General Matters

You should read this entire prospectus and consult your own professional advisors to assess the income tax, legal, risk factors and other aspects of your investment in Common Shares. You should rely only on the information contained in this prospectus and should not rely on parts of the information contained in this prospectus to the exclusion of others. The Company has not authorized anyone to provide you with additional or different information than is contained herein. If anyone provides you with additional, different or inconsistent information, including statements in the media about the Company, you should not rely on it.

The Company is not offering to sell Common Shares under this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus or as of the date stated, regardless of the time of delivery of this prospectus. The Company’s business, financial condition, results of operations and prospects may have changed since the date of this prospectus.

PROSPECTIVE INVESTORS ARE URGED TO READ THE INFORMATION UNDER THE HEADINGS “RISK FACTORS”, “ADVISORIES – FORWARD-LOOKING STATEMENTS” AND “PRESENTATION OF FINANCIAL INFORMATION”.

Except in respect of certain non-GAAP financial measures included in this prospectus, the financial statements and other financial information of Greenfire included in this prospectus have been prepared in Canadian dollars and in conformance with IFRS. The financial statements and information of MBSC included in this prospectus has been prepared in U.S. dollars and in conformance with U.S. GAAP. Unless otherwise indicated, references in this prospectus to “dollars” and “$” are to Canadian dollars.

Abbreviations

In this prospectus, the abbreviations set forth below have the following meanings:

Disclosure provided herein in respect of BOEs and Mcfes may be misleading, particularly if used in isolation. A BOE and Mcfe conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

The following table sets forth certain standard conversions between Standard Imperial Units and the International System of Units (or metric units).

In all cases where percentage figures are provided, such percentages have generally been rounded to the nearest whole number.

Currency and Exchange Rates

The following table sets forth: (i) the rates of exchange for Canadian dollars, expressed in United States dollars (“US$”), in effect at the end of each of the periods indicated; and (ii) the average exchange rates during each such period, in each case based on those rates published on the Bank of Canada’s website. On December 27, 2023, the Bank of Canada daily average exchange rate was US$ equals $1.3205.

Forward-Looking Statements

Certain statements contained in this prospectus constitute forward-looking statements. These statements relate to future events or future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “objectives”, “strategies”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this prospectus should not be unduly relied upon.

In particular, this prospectus contains forward-looking statements pertaining to the following: 

The actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this prospectus:

Statements relating to “reserves” are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future. Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking statements contained in this prospectus are expressly qualified by this cautionary statement.

Although the forward-looking statements contained in this prospectus are based upon assumptions which Greenfire believes to be reasonable, Greenfire cannot assure readers that actual results will be consistent with these forward- looking statements. With respect to forward-looking statements contained in this prospectus, Greenfire has made assumptions regarding: stock exchange, governmental, or regulatory approvals, as required; future commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the impact of increasing competition; general conditions in economic and financial markets; availability of drilling and related equipment; the performance of future wells will match management’s expectations; heavy oil price differentials; transportation availability; effects of regulation by governmental agencies; royalty rates and future operating costs. Greenfire has included the above summary of assumptions and risks related to forward-looking information provided in this prospectus in order to provide readers with a more complete perspective on the Company’s future operations and such information may not be appropriate for other purposes. The Company’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits Greenfire will derive therefrom. These forward-looking statements are made as of the date of this prospectus and Greenfire disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

PRESENTATION OF FINANCIAL INFORMATION

Non-GAAP Measures

This prospectus contains certain “non-GAAP financial measures” and “non-GAAP financial ratios” (as such terms are defined in National Instrument 52-112 - Non-GAAP and Other Financial Measures Disclosure”) which are described in further detail below and elsewhere in this prospectus. While these measures and ratios are commonly used in the oil and natural gas industry, Greenfire’s determination of these measures may not be comparable with calculations of similar measures presented by other reporting issuers. Specifically this prospectus contains certain non-GAAP financial measures including “adjusted EBITDA”, “adjusted funds flow”, “adjusted working capital”, “net debt” and “capital expenditures” and non-GAAP financial ratios including “adjusted EBITDA ($/bbl)” and “adjusted fund flow ($/bbl)”, each of which do not have any standardized meaning prescribed by IFRS. Greenfire believes that the inclusion of these measures and ratios provides useful information to readers when evaluating the financial results of Greenfire; however they should not be considered an alternative to, or more meaningful than, change in cash and cash equivalents, cash flow from operating activities, net profits or other measures of financial performance calculated in accordance with IFRS. For more information relating to these measures, other than capital expenditures, including reconciliations to the most directly comparable IFRS measures, refer to “Management’s Discussion and Analysis - Non-GAAP Measures and Other Performance Measures” and “Non-GAAP Measures” in the Interim MD&A, which is attached to this prospectus as Schedule “B”.

The Company uses capital expenditures to determine the amount of cash flow used for capital reinvestment and compare its capital expenditures to budget. Capital expenditures is comprised of additions to property, plant and equipment per the consolidated statements of cash flows. See the table below for the reconciliation of capital expenditures to net cash used in investing activities, the most comparable IFRS measure.

The following tables show a reconciliation of capital expenditures to net cash used in investing activities, the most comparable IFRS measure for the periods indicated:

THE COMPANY

The Company is a Calgary-based energy company focused on the sustainable production and development of upstream energy resources from the oil sands in the Athabasca region of Alberta, Canada, using in-situ thermal oil production extraction techniques such as SAGD at the: (i) Demo Asset; and (ii) the Expansion Asset. The Company has a 100% working interest in the Demo Asset and a 75% working interest in the Expansion Asset. In 2022, the average daily gross production from the Expansion Asset was 22,402 bbls (16,802 bbls/d net to Greenfire’s working interest) of bitumen and the average daily gross and net production from the Demo Asset was 3,701 bbls/d of bitumen. For the nine months ended September 30, 2023, the average daily gross production from the Expansion Asset was 18,327 bbls (13,745 bbls/d net to Greenfire’s working interest) of bitumen and the average daily gross and net production from the Demo Asset was 3,997 bbls/d of bitumen. The Hangingstone Facilities are located approximately 30 miles southwest of Fort McMurray, Alberta, Canada. The Company’s principal office is located at 1900, 205 - 5 Avenue SW, Calgary, Alberta T2P 2V7 and its registered office is located at Suite 2400, 525 – 8 Avenue SW, Calgary, Alberta T2P 1G1.

Corporate Structure

The following table provides the name, the percentage of voting securities owned by GRL and the jurisdiction of incorporation, continuance or formation of our subsidiaries and partnerships, either direct or indirect, as at the date hereof.

Organizational Structure of the Company

The following diagram sets forth the organizational structure of Greenfire.

Our Corporate History

The corporate structure of Greenfire, as it is currently constituted, is the result of the completion of the Business Combination and a number of other transactions (collectively referred to herein as the “Reorganization Transactions”) that included: (i) the acquisition of the Demo Asset out of the insolvency proceedings of an unaffiliated corporation named GHOPCO; (ii) a series of incorporations, amalgamations and other reorganization transactions; and (iii) the acquisition JACOS (which held the Expansion Asset). The following is a brief summary of the transactions, including the Business Combination and the Reorganization Transactions, that resulted in the current corporate structure of the Company and its subsidiaries.

The Business Combination

GRL is an Alberta corporation that was incorporated on December 9, 2022 under the ABCA. Pursuant to the Business Combination, which was completed on September 20, 2023, among other things: (i) Canadian Merger Sub amalgamated with and into GRI pursuant to the Plan of Arrangement, with GRI surviving the Amalgamation, and GRI became a direct, wholly-owned subsidiary of GRL; and (ii) DE Merger Sub merged with and into MBSC pursuant to the Merger, with MBSC continuing as the surviving corporation following the Merger, as a result of which MBSC became a direct, wholly-owned subsidiary of GRL. Prior to completion of the Business Combination, GRL had not conducted any material activities other than those incidental to its formation and to the matters contemplated by the Business Combination Agreement. Since the Closing of the Business Combination, GRL has continued the business of GRI.

Reorganization Transactions

Incorporations and Formation of Limited Partnerships

GAC was incorporated under the provisions of the ABCA on November 2, 2020. GAC HoldCo was incorporated under the provisions of the ABCA on June 1, 2021. HEAC was incorporated under the provisions of the ABCA as a wholly-owned subsidiary of GAC HoldCo on July 12, 2021.

On September 9, 2021: (i) SubCo, as a wholly-owned subsidiary of GAC HoldCo; (ii) Demo GP, as a wholly-owned subsidiary of SubCo; (iii) Expansion GP, as a wholly-owned subsidiary of HEAC; and (iv) ServiceCo, as a wholly- owned subsidiary of HEAC, were incorporated under the provisions of the ABCA.

On September 9, 2021: (i) Expansion GP, as general partner, and HEAC, as limited partner, formed Expansion LP and (ii) Demo GP, as general partner, and SubCo, as limited partner, formed Demo LP.

Insolvency Proceedings

GAC acquired the Demo Asset from GHOPCO through the NOI Proceedings on April 5, 2021.

First Amalgamation

On September 16, 2021, GAC, GAC HoldCo and SubCo entered into an amalgamation agreement providing for a triangular amalgamation whereby: (i) GAC and SubCo were combined to form the original iteration of “Greenfire Resources Operating Corporation” (“GAC AmalCo”); (ii) the Demo Asset was transferred (via amalgamation) to GAC AmalCo; and (ii) the shareholders of GAC received a nominal number of common shares of GAC HoldCo.

JACOS Acquisition

On September 17, 2021, HEAC acquired all of the issued and outstanding shares of JACOS and thereby took ownership of JACOS’s primary asset, a 75% working interest in the Expansion Asset.

Asset Contributions

On September 17, 2021, JACOS contributed all of its oil and gas assets to Expansion LP and GAC AmalCo contributed all of its oil and gas assets to Demo LP.

Second and Third Amalgamations

On September 17, 2021, HEAC and JACOS were amalgamated to form a temporary amalgamated entity (“Temporary AmalCo”) and Temporary AmalCo and GAC AmalCo were amalgamated to form the final iteration of “Greenfire Resources Operating Corporation” (“GROC”).

Following the Reorganization Transactions, GAC HoldCo changed its name to “Greenfire Resources Inc.” and ServiceCo changed its name to “Greenfire Resources Employment Corporation.”

GENERAL DEVELOPMENT OF THE BUSINESS OF GREENFIRE

Prior to the incorporation of GAC on November 2, 2020, neither Greenfire nor any of its subsidiaries conducted any business or had any operations. The following is a summary description of the development of Greenfire’s business since the incorporation of GAC on November 2, 2020.

Initial Incorporation and Financing

The principals of McIntyre Partners and Griffon Partners, each private investment companies based in the United Kingdom, founded GAC on November 2, 2020 for the purpose of pursuing the acquisition of the Demo Asset pursuant to the NOI Proceedings.

Acquisition of the Demo Asset

In 2016, a wildfire in Northern Alberta caused the temporary shutdown of a number of oil sands facilities, including the Demo Asset, which was then owned and operated by JACOS. Although there was no physical damage to the facilities and equipment at the Demo Asset, JACOS elected not to restart the facility after the wildfire was contained. JACOS was also planning for and constructing the Expansion Asset at that time. The Demo Asset remained non-operational until 2018.

In 2018, GHOPCO, the unaffiliated predecessor company that owned and operated the Demo Asset prior to GAC, acquired the Demo Asset from JACOS. GHOPCO successfully restarted production in 2018 and operated the facility until May 2020, when GHOPCO shut down operations following the onset of the COVID-19 pandemic. On October 8, 2020, each of GHOPCO and its parent company, Greenfire Oil and Gas Ltd., commenced the NOI Proceedings.

In early December 2020, GHOPCO and GAC entered into an asset purchase agreement pursuant to which GAC agreed to acquire the Demo Asset from GHOPCO pursuant to the NOI Transaction. Despite its similar name, GAC was not affiliated with GHOPCO. On December 18, 2020, pursuant to an Order (the “Insolvency Court Order”) of the Court of Queen’s Bench of Alberta (as it was then called) (the “Court”) approved the NOI Transaction. On April 5, 2021, following receipt of all necessary approvals, GAC completed the acquisition of the Demo Asset pursuant to the terms of the Insolvency Court Order, free and clear of all encumbrances (except those permitted encumbrances set out in the Insolvency Court Order). The total cash consideration paid by GAC for the Demo Asset was $19.7 million. This consideration was comprised of the assumption by GAC of amounts advanced by the Petroleum Marketer to GHOPCO in the NOI Proceedings pursuant to the terms of an interim financing facility that was also approved by the Court on December 18, 2020.

Following the acquisition of the Demo Asset, GAC employed a substantial majority of the former GHOPCO operations team and certain members of the former GHOPCO management team. Following the completion of certain repairs to the Demo Asset, GAC restarted operations at the Demo Asset and worked to increase production with limited capital expenditures, primarily by facility optimization and reservoir management.

Acquisition of the Expansion Asset

On September 17, 2021, HEAC, as predecessor of GROC, acquired all of the issued and outstanding shares in the capital of JACOS for a purchase price of approximately $347 million. At the time of the JACOS Acquisition, JACOS’s primary asset was a 75% working interest and operatorship in the Expansion Asset.

Prior to the JACOS Acquisition, the Expansion Asset was producing bitumen at a rate of 16,165 bbls/d net to JACOS working interest in August 2021. As a result of Greenfire’s efforts to optimize production, in December 2022 the Expansion Asset was producing bitumen at a rate of 17,120 bbls/d net to Greenfire’s working interest. For the year 2022, bitumen production at the Expansion Asset averaged 16,802 bbls/d net to Greenfire’s working interest.

GRI Bond Financing

In August and September 2021, GRI completed an offering of 312,500 units (the “Units”) consisting of US$312,500,000 aggregate principal amount of 2025 Notes and 312,500 GRI Bond Warrants. Each Unit consisted of one US$1,000 principal amount 2025 Note and one GRI Bond Warrant. The net cash proceeds from the offering of the Units were used to: (i) pay the purchase price for the JACOS Acquisition; (ii) pay transaction fees and expenses relating to the JACOS Acquisition; and (iii) for general corporate purposes and working capital. A portion of the Units were issued to the Petroleum Marketer in exchange for cancellation of the full amount outstanding under the term loan established on closing of the acquisition of the Demo Asset.

The 2025 Notes bore interest at an annual rate of 12.0%, and had a maturity date of August 15, 2025, and were secured by a lien on all of the assets of GRI and its subsidiaries other than the Reserve Account. The GRI Bond Warrants entitled the holders thereof to acquire GRI Common Shares at a purchase price of $0.01 per GRI Common Share and had an expiry date of August 15, 2026. Under the terms of the GRI Bond Warrant Agreement, which governed the GRI Bond Warrants, the number of GRI Common Shares issuable upon exercise of the GRI Bond Warrants was subject to adjustment to provide that the GRI Bond Warrants would entitle the holders thereof to acquire GRI Common Shares representing in aggregate 25% of the issued and outstanding GRI Common Shares.

See “General Development of the Business of Greenfire – New Financing Transactions” below for further information on refinancing of the 2025 Notes and the satisfaction and discharge of the 2025 Indenture.

Business Combination

Business Combination Agreement

On December 14, 2022, MBSC, GRI, GRL, DE Merger Sub and Canadian Merger Sub, entered into the Business Combination Agreement. The Business Combination Agreement contemplated an enterprise value for Greenfire of US$950,000,000 with indebtedness of US$170,000,000, resulting in a pre-money equity value of US$780,000,000.

Subscription Agreements

In connection with the Business Combination Agreement, GRL together with MBSC entered into the Subscription Agreements with the PIPE Investors related to the PIPE Financing and GRL Debt Financing. The Subscription Agreements contemplated that each of the PIPE Financing and the GRL Debt Financing would be automatically reduced based on the amount remaining in the Trust Account after giving effect to the redemption of the MBSC Class A Common Shares, with the GRL Debt Financing being reduced first, and, if reduced in its entirety, the PIPE Financing being thereafter reduced. Thereafter, the Subscription Agreement relating to the GRL Debt Financing was amended to reduce the amount of the GRL Debt Financing, depending on the amount of the New Notes to be issued, and the issuance of the New Notes at Closing resulted in the elimination of the requirement to complete the GRL Debt Financing.

Closing of the Business Combination

On September 20, 2023, the Company consummated the previously announced Business Combination, pursuant to the Business Combination Agreement. On the Closing Date: (i) Canadian Merger Sub amalgamated with and into GRI pursuant to the Plan of Arrangement, with GRI continuing as the surviving company, and GRI also became a direct, wholly-owned subsidiary of GRL; and (ii) DE Merger Sub merged with and into MBSC pursuant to the Merger under the laws of the State of Delaware, with MBSC continuing as the surviving corporation following the Merger, as a result of which MBSC also became a direct, wholly-owned subsidiary of GRL.

On the Closing Date, pursuant to the Plan of Arrangement and prior to the Merger Effective Time, among other things, (i) the holders of GRI Common Shares received, in the aggregate, 43,690,534 Common Shares and their pro rata share of the Cash Consideration, as determined in accordance with the Plan of Arrangement, in exchange for their GRI Common Shares, (ii) the holders of GRI Performance Warrants received 3,617,016 GRL Performance Warrants, with substantially the same terms as the GRI Performance Warrants, as adjusted in accordance with the Plan of Arrangement, and their pro rata share of the Cash Consideration, as determined in accordance with the Plan of Arrangement, in exchange for their GRI Performance Warrants, and (iii) holders of GRI Bond Warrants received 15,769,183 Common Shares and a cash payment equal to their pro rata share of the Cash Consideration payable to holders of GRI Bond Warrants, each as determined in accordance with the GRI Bond Warrant Agreement and the Plan of Arrangement, in exchange for their GRI Bond Warrants. In addition, 5,000,000 GRL Warrants were issued to the pre-Plan of Arrangement holders of GRI Performance Warrants, GRI Bond Warrants, and GRI Common Shares, in each case in the numbers determined in accordance with the Plan of Arrangement.

Immediately prior the Merger Effective Time (i) the outstanding units of MBSC were each automatically separated into one MBSC Class A Common Share and one-third of one MBSC Public Warrant and (ii) MBSC redeemed all of the MBSC Public Warrants at US$0.50 per MBSC Public Warrant. On the Closing Date, at the Merger Effective Time, (i) holders of MBSC Class A Common Shares (after giving effect to the stockholder redemptions of the MBSC Class A Common Shares and the issuance of MBSC Class A Common Shares pursuant to the PIPE Financing) received, in aggregate, 4,177,091 Common Shares for their MBSC Class A Common Shares; (ii) holders of MBSC Class B Common Shares (after giving effect to certain forfeitures pursuant to the Business Combination Agreement) received, in the aggregate 4,250,000 Common Shares and a cash payment equal to the MBSC Working Capital plus the MBSC Extension Amount (at the Merger Effective Time); and (iii) private placement warrants to purchase shares of MBSC held by MBSC Sponsor (after giving effect to certain forfeitures pursuant to the Business Combination Agreement) were converted into 2,526,667 GRL Warrants.

Concurrently with the Closing, GRL and MBSC consummated the PIPE Financing pursuant to which the PIPE Investors purchased 4,177,091 MBSC Class A Common Shares for a purchase price of US$10.10 and received an equal number of Common Shares in exchange for such MBSC Class A Common Shares.

The following summarizes the ownership of the Common Shares following the Business Combination:

The following summarizes the ownership of the Common Shares following the Business Combination on a fully diluted basis:

Notes:

Following completion of the Business Combination, on September 21, 2023, the Common Shares commenced trading on the NYSE under the symbol “GFR”.

Lock-Up Agreement

At the Closing, GRL, the MBSC Sponsor, and certain other GRL Shareholders entered into the Lock-Up Agreement pursuant to which, among other things, each of the MBSC Sponsor and such other GRL Shareholders party thereto agreed, subject to certain customary exceptions (including for a pledge of equity securities to a financial institution or the enforcement of such pledge) , not to (i) sell or assign, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidation with respect to or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder with respect to, any equity securities of GRL, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any equity securities of GRL, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise or (iii) make any public announcement of any intention to effect any transaction specified in clause (i) or (ii) until the earliest of (a) the date that is 180 days after the Closing Date, (b) the date that the last reported closing price of a Common Share equals or exceeds US$12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days on the NYSE within any 30-day trading period commencing at least 75 days after the Closing Date, and (c) the date on which GRL completes a liquidation, merger, amalgamation, arrangement, share exchange, reorganization or other similar transaction that results in all GRL Shareholders having the right to exchange their shares of capital stock for cash, securities or other property.

Investor Rights Agreement

At the Closing, MBSC, GRL, the MBSC Sponsor, the other former holders of the MBSC Class B Common Shares, the PIPE Investors and certain other GRL Shareholders entered into the Investor Rights Agreement, pursuant to which GRL agreed that, within 30 calendar days following the Closing Date, GRL would file with the SEC (at GRL’s sole cost and expense) the Resale Registration Statement, and GRL will use its commercially reasonable efforts to cause the Resale Registration Statement to be declared effective by the SEC as soon as reasonably practicable after the initial filing thereof. In certain circumstances, the GRL Shareholders that are party to the Investors Rights Agreement can demand GRL’s assistance with underwritten offerings and block trades. The GRL Shareholders that are party to the Investors Rights Agreement are entitled to customary piggyback registration rights. In addition, the MBSC Sponsor was granted certain board representation rights with respect to the GRL Board. Under the Investor Rights Agreement, the MBSC Sponsor has the right to designate one nominee for election as a director at meetings of GRL Shareholders for a period expiring on the later of (i) immediately prior to the third annual meeting of GRL Shareholders following the initial election (or appointment) of the MBSC Sponsor’s director to the GRL Board, and (ii) such time as the MBSC Sponsor and certain related parties beneficially own, in the aggregate, less than 3% of all outstanding Common Shares.

Warrant Agreements

At the Closing: (i) certain private placement warrants of MBSC were exchanged for GRL Warrants, with such GRL Warrants governed by the terms of the Amended and Restated Warrant Agreement dated as of September 20, 2023, among GRL, Computershare Inc. and Computershare Trust Company, N.A., and; (ii) certain former securityholders of GRI were issued GRL Warrants pursuant to the Plan of Arrangement, with such GRL Warrants governed by the terms of the Warrant Agreement dated as of September 20, 2023 among GRL, Computershare Inc. and Computershare Trust Company, N.A. Each of the GRL Warrants are subject to substantially the same terms and conditions (including exercisability terms) as were applicable to the private placement warrants of MBSC prior to the Business Combination, except to the extent such terms or conditions were rendered inoperative by the Business Combination.

Accordingly: (i) each GRL Warrant is exercisable solely for one Common Share; (ii) the per share exercise price for the Common Shares issuable upon exercise of the GRL Warrants is US$11.50, subject to adjustment, on the terms and conditions set forth in the Warrant Agreements; and (iii) each GRL Warrant shall expire five years after the date of the Closing of the Business Combination. The Company has not, and does not intend to, list the GRL Warrants on the NYSE or another securities exchange.

New Financing Transactions

Concurrently with the closing of the Business Combination on the Closing Date, the Company completed a refinancing of the 2025 Notes and the 2025 Indenture was satisfied and discharged.

New Notes

As part of that refinancing, GRL issued US$300 million aggregate principal amount of the New Notes, which are 12.000% senior secured notes due on October 1, 2028, governed by the New Note Indenture. Interest on the New Notes is paid semi-annually in arrears on April 1 and October 1 of each year, commencing on April 1, 2024. At any time on or after October 1, 2025, the Company may redeem all or part of the New Notes at the redemption prices set forth in the table below plus any accrued and unpaid interest:

At any time prior to October 1, 2025, the Company may redeem up to 40% of the New Notes using the proceeds of certain equity offerings. In addition, the Company may redeem some or all of the New Notes prior to October 1, 2025 at a price equal to 100% of the aggregate principal amount thereof, plus a make-whole premium and accrued and unpaid interest to the redemption date. If a change of control event occurs, the Company must make an offer to purchase the New Notes at 101% of the principal amount of the New Notes, plus accrued and unpaid interest, if any. The Company is required to periodically mandatorily redeem the New Notes at 105% of the principal amount thereof, plus accrued and unpaid interest to but excluding the date of redemption, with at least 75% of Excess Cash Flow (as defined in the New Note Indenture), provided that with respect to any six-month period following June 30, 2024, if the Company’s Consolidated Net Indebtedness (as defined in the New Note Indenture) at the end of such period is less than US$150.0 million, the Company will be required to make an Excess Cash Flow Redemption (as defined in the New Note Indenture) with 25% of such Excess Cash Flow; provided further that for any six-month period commencing from June 30, 2024, the Company will not be required to make any Excess Cash Flow Redemption for such period if less than US$100.0 million of the New Notes remain outstanding. The New Note Indenture includes covenants requiring minimum hedging and limiting capital expenditures, and includes covenants limiting the ability of the Company and its restricted subsidiaries to: incur additional indebtedness or issue certain preferred securities; pay dividends, redeem stock or make other distributions; make other restricted payments or investments; create liens on assets; transfer or sell assets; engage in mergers, amalgamations or consolidations; engage in certain transactions with affiliates; and designate our subsidiaries as unrestricted subsidiaries.

Senior Credit Facility

On the Closing Date, the Company also entered into the Senior Credit Agreement with Bank of Montreal, as agent, and a syndicate of financial institutions as lenders to provide for up to $50 million of senior secured extendible revolving credit facilities (the “Senior Credit Facility”) comprised of a $20 million operating facility and a $30 million revolving facility. The Senior Credit Facility is extendable annually, subject to lender consent, and has an availability limit based on the lenders’ assessment of the borrowing base reserves of the Company and future commodity prices, which are to be reviewed semi-annually on November 30 and May 31, commencing on May 31, 2024. The Senior Credit Facility is available on a fully revolving basis until September 20, 2024 (the “Term Out Date”), and if the Term Out Date is not extended, on a non-revolving basis for a further one-year period. The Senior Credit Facility currently has a maturity date of September 20, 2025 and has no financial covenants or scheduled amortization payments.

Advances under the Senior Credit Facility are available by way of: (a) Canadian prime rate and U.S. base rate loans with interest rates between 1.75% and 5.25% over the bank’s prime Canadian or U.S. lending rate, as applicable, (b) SOFR and CDOR loans with interest rates between 2.75% and 6.25% over the adjusted SOFR and CDOR rates, as applicable, and (c) letters of credit with issuance fees between 2.75% and 6.25%, in each case dependent upon the Company’s trailing twelve-month senior funded debt to EBITDA ratio calculated quarterly.

The Senior Credit Agreement includes a minimum hedging covenant and covenants limiting the ability of the Company and its subsidiaries to: incur additional indebtedness; provide financial assistance; pay dividends, redeem stock or make other distributions; make investments; create liens on assets; transfer or sell assets; engage in mergers, amalgamations or consolidations; engage in certain transactions with affiliates; amend the New Note Indenture and redeem the New Notes.

The New Notes and the Senior Credit Facility are guaranteed by all of the subsidiaries of the Company other than MBSC and are secured by a lien over substantially all of the assets of the Company and the guarantors. The Senior Credit Facility ranks senior to the New Notes.

As a result of completing the 2025 Notes refinancing, and issuance of the New Notes, and pursuant to amendments to the Business Combination Agreement and the Subscription Agreements, the GRL Debt Financing was not completed.

Appointment of New Chief Financial Officer

Following successful completion of the Business Combination and the refinancing of the 2025 Notes, David Phung resigned as the Chief Financial Officer, effective as of October 2023, and Tony Kraljic was appointed as the new Chief Financial Officer of the Company.

New EDC Facility

On November 1, 2023, the Company entered into an unsecured $55.0 million letter of credit facility with a Canadian bank that is supported by a performance security guarantee from Export Development Canada (“EDC Facility”). The EDC Facility replaced the cash collateralized Letter of Credit Facility, which was terminated and cancelled upon the EDC Facility coming into effect. As at September 30, 2023, the Company had $43.2 million of the restricted cash relating to the Letter of Credit Facility which was released as a result of entering into the EDC Facility.

BUSINESS OF THE COMPANY

The Company is an intermediate-sized oil sands producer focused on responsible energy development in the Athabasca region of Alberta, Canada. The Company is actively developing its existing producing assets using SAGD, an enhanced oil recovery extraction method, to responsibly increase the economic recovery of oil.

About 80% of Alberta’s bitumen reserves are too deep to be mined and must be extracted in-place (or in-situ) using steam, whereby bitumen is heated and pumped out of the ground, leaving most of the solids behind. In-situ extraction has a much smaller footprint than oil sands mining, uses less water, and does not produce a tailings stream.

SAGD uses a dual-pair of horizontal wells drilled approximately five meters apart, one above the other. Well depth can vary anywhere from 150 to 450 meters and length can be over 1,600 meters. High pressure steam is injected into the top well, or the injection well, and the hot steam heats the surrounding bitumen. As the bitumen warms up, it liquefies and, due to gravity, begins to flow to the lower well, or the producing well. The bitumen and condensed steam emulsion contained in the lower well are pumped to the surface and sent to a processing plant, where the bitumen and water are separated. The recovered water is treated and recycled back into the process and the bitumen is typically diluted with natural gas condensate and sold to market.

Both the Demo Asset and the Expansion Asset use SAGD to produce bitumen reserves. Both the Demo Asset and Expansion Asset are considered by the Company to be Tier 1 SAGD reservoirs in that they have no top gas, bottom water or lean zones. Top gas, bottom water or lean zones are considered “thief zones” as they provide an unwanted outlet for steam and reservoir pressure. Thief zones require costly downhole pumps and recurring pump replacements to achieve targeted production rates, leading to higher capital and operating expenditures.

Principal Properties

Hangingstone Expansion Asset

The Company owns a 75% working interest in the Expansion Asset. The Expansion Asset is located in the southern Athabasca region of Northeastern Alberta, approximately 30 miles southwest of Fort McMurray. JACOS commenced Phase I construction of the Expansion Asset in 2013, investing approximately $1.5 billion of capital to create robust infrastructure to support growth. The Expansion Asset’s first steam occurred in April 2017 and first production occurred in July 2017. The Company estimates that the Expansion Asset has a debottlenecked capacity of 35,000 bbls/d of bitumen production. Since the commencement of production in 2017, 32 well pairs have been developed at the Expansion Asset. The Expansion Asset is pipeline connected for diluted bitumen and diluent, and as a result, all production from the Expansion Asset is transported by pipeline following the blending of bitumen with diluent to meet pipeline specifications.

In 2022, the annual average gross production from the Expansion Asset was 22,402 bbls/d (approximately 16,802 bbls/d net to Greenfire’s working interest) of bitumen and for the nine months ended September 30, 2023, the average gross production was 18,327 bbls/d (approximately 13,745 bbls/d net to Greenfire’s working interest) of bitumen. Greenfire has an interest in 17,730 gross hectares (13,298 net hectares) of land at the Expansion Asset.

Hangingstone Demo Asset

The Company owns a 100% working interest in the Demo Asset, which is approximately three miles from the Expansion Asset. Management estimates that the Demo Asset has a debottlenecked capacity of 7,500 bbls/d of bitumen production. The Demo Asset was originally commissioned in 1999 by JACOS as a demonstration asset to prove the economic viability of enhanced thermal oil recovery. As of December 31, 2022, approximately 39 million barrels of bitumen had been produced at the Demo Asset and the facility has a relatively long history of production.

Bitumen production from the Demo Asset is unique relative to other thermal oil assets in western Canada as it is produced without the use of added diluent or synthetic oils. This attribute results in relatively lower operating expenses when compared to other oil sands assets of similar scale and provides more options in terms of marketing and selling the product. Access to a diluent-free heavy crude oil barrel is also valued by refiners in the United States, which facilitates additional sales points for the Demo Asset’s production, including transportation by rail to the United States to access WTI indexed pricing, when it is economically viable to do so. Following the JACOS Acquisition, Greenfire constructed a truck offloading facility at the Expansion Asset to accept trucked production volumes from the Demo Asset. Prior to the construction of the truck offloading facility, production from the Demo Asset was required to be trucked over 600 miles round trip to a pipeline salespoint, and following completion of the construction of the truck offloading facility the round trip trucking distance has been reduced to approximately six miles. Aside from enhancing profitability by reducing transportation costs, the reduction of distance trucked reduces emissions associated with the transportation of its production.

In 2022, the gross and net annual average bitumen production from the Demo Asset was 3,701 bbls/d and for the nine months ended September 30, 2023, the gross and net average bitumen production was 3,997 bbls/d. Greenfire has an interest in 974 hectares of land at the Demo Asset.

Undeveloped Properties and Land Acreage

As a result of the JACOS Acquisition, Greenfire holds significant undeveloped leases at three locations, Chard, Corner, and Liege, all of which are in the Athabasca region of Alberta, Canada. The Company believes that the Chard and Corner properties are potential prospects for future in-situ bitumen production using SAGD processes.

Developed acreage, as used herein, means those acres spaced or assignable to productive wells. A gross acre is an acre in which a working interest is owned, and a net acre is the result that is obtained when the fractional ownership working interest of a lease is multiplied by gross acres of that lease. The number of net acres is the sum of the fractional working interests owned in gross acres expressed as whole numbers and fractions thereof. Greenfire’s developed acreage consists of the drainage areas of bitumen producing wells.

Undeveloped acreage, as used herein, means acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or natural gas, regardless of whether or not that acreage contains proven reserves, but does not include undrilled acreage held by production under the terms of a lease. Select undeveloped acreage at the Expansion Asset and Demo Asset contains proved reserves.

All of Greenfire’s acreage is located in the Province of Alberta and is held indefinitely. There are no near-term undeveloped acreage expirations. The following table shows Greenfire’s total gross and net mineral rights acreage by asset location as of December 31, 2022:

Developed Acreage

Undeveloped Acreage

Well Information

Greenfire had 54 gross (46 net) horizontal wells capable of producing bitumen as of each of the years ended December 31, 2022, and 2021. As of September 30, 2023, Greenfire has drilled three new redevelopment infill (“Refill”) wells with plans to drill up to seven additional Refill wells in 2023 with the intention of producing bitumen. Refill wells are an infill well that has been drilled via the re-entry of an existing primary producer well to produce incremental pre- heated bitumen between two sets of well pairs. Refill wells utilize an existing producer wellhead and casing to reduce costs associated with drilling and facilities, with an acceleration of first production anticipated, relative to producing from traditional infill wells. The Company expects that Refill wells will enhance the total bitumen recovery of previously drilled and steamed well pairs, with marginal incremental capital expenditure and minimal geological risk. The SAGD industry has a long-term track record of consistently and effectively producing incremental pre-heated bitumen volumes from infill and Refill wells.

Greenfire has no exploratory wells and did not drill any dry exploratory or development wells in the last two fiscal years.

As evaluated by McDaniel as of December 31, 2022, proved undeveloped reserves are from planned well locations in the Alberta Energy Regulator (“AER”) approved development area and are within three miles from existing bitumen producing wells at the Demo Asset and Expansion Asset. Development plans include new well pairs that consist of horizontal steam injector wells placed approximately 15 feet (5 meters) above horizontal bitumen production wells in a reservoir that has a minimum of 32 feet (10 meters) of average bitumen net pay and up to over 100 feet (30 meters). Spacing between well pairs at both the Demo Asset and Expansion Asset is approximately 325 feet (100 meters). Future development plans include drilling infill horizontal bitumen production wells between existing and new well pairs.

In order to make the most efficient use of Greenfire’s steam generating and oil treating facilities, the drilling and steaming of new wells would take place over 30 years. Development of Greenfire’s proved undeveloped reserves will take place in an orderly manner as additional well pairs and infills are drilled to use available steam when existing well pairs reach the end of their steam injection phase. The forecasted production of Greenfire’s proved reserves extends approximately 33 years.

Seasonality of the Business

The level of activity in the Canadian oil and gas industry is influenced by seasonal weather patterns. A mild winter or wet spring may result in limited access and, as a result, reduced operations or a cessation of operations. Greenfire operates in an area of extreme weather conditions. Cold temperatures affect the properties of diluent and bitumen and may contribute to production difficulties, delivery problems and increased operating costs. Winter driving conditions in Northern Alberta can affect truck transportation of Greenfire’s bitumen, and cold weather can lead to equipment failure and slowdown. Warmer temperatures can lead to equipment failures and slowdowns not only at the Expansion Asset and Demo Asset but can also affect delivery of operating inputs such as natural gas and cause power price surges.

Municipalities and provincial transportation departments enforce road bans that restrict the movement of drilling rigs and other heavy equipment during periods of wet weather, thereby reducing activity levels. Also, certain oil and natural gas producing areas are located in areas that are inaccessible other than during the winter months because the ground surrounding the sites in these areas consists of swampy terrain. Seasonal factors and unexpected weather patterns may lead to increases or declines in exploration and production activity as well as increases or declines in the demand for the goods Greenfire produces.

Raw Materials

Production from in-situ oil sands reservoirs using SAGD processes has various inputs including natural gas, power and water to create steam, and condensate as diluent for blending with the bitumen in order to transport the bitumen production via pipeline.

Pursuant to the Expansion Diluent Agreement (as defined below), the Petroleum Marketer has agreed to sell to Greenfire all of the condensate required for Greenfire’s blending with its bitumen production to satisfy pipeline specification. Condensate is locally sourced at Edmonton and delivered to the Expansion Asset via the Inter Pipeline Polaris Pipeline. Production from the Expansion Asset is diluted with condensate to meet pipeline specifications.

Greenfire produces non-diluted bitumen at the Demo Asset. That is a product that is relatively unique in Alberta’s oil sands. Historically, each barrel of production was transported from the Demo Asset to several locations, with optionality to deliver to both pipeline and rail sales points, depending on the economics of each option at the time of sale. At pipeline connected sales points, Demo Asset bitumen is blended with diluent to reach pipeline specifications. At rail connected terminals, Demo Asset bitumen is moved into railcars and transported to its final sales destination, generally without the need to blend with diluent.

With the construction of the truck offloading facility at the Expansion Asset, most of the bitumen production from the Demo Asset is trucked to the Expansion Asset, blended with diluent and sold into the pipeline. However, from time to time, Greenfire may choose to transport bitumen from the Demo Asset to other pipeline sales points or by rail if the economics of selling non-diluted bitumen at those sales points are relatively attractive.

Natural gas is a primary energy input cost for Greenfire. Natural gas is used as fuel to generate steam for SAGD operations. Greenfire purchases natural gas in Alberta from the AECO system. AECO is the Western Canadian benchmark for natural gas. The AECO Hub gas storage facility in southern Alberta is one of the largest natural gas hubs in North America, with its substantial production and storage capability and extensive network of export pipelines. Generally, natural gas is shipped to Greenfire’s systems via the NOVA Gas Transmission Ltd. system.

Greenfire sources water for its SAGD operations from water wells. Condensed steam emulsion is recovered with bitumen from wells, which are processed at the surface to separate the bitumen from water. The recovered water is treated and recycled back into the process. Greenfire has a water recycling rate of 94%.

Electricity necessary for the operation of the Expansion Asset and Demo Asset is sourced from the Alberta power grid and Greenfire pays market prices for electricity.

Marketing

Greenfire has entered into three separate marketing agreements with the Petroleum Marketer as described under the heading “Business of the Company — Material Contracts, Liabilities and Indebtedness — Marketing Agreements”. The Petroleum Marketer purchases all of Greenfire’s bitumen and blend and provides and arranges transportation via trucks and pipelines for Greenfire’s products in exchange for a marketing fee.

Employees

At November 30, 2023, Greenfire had 39 full-time employees and 5 consultants located at its Calgary office and 134 full-time employees and 16 contracted operators in various field locations.

Greenfire’s goal is to hire and retain highly qualified and motivated individuals.

Customer Base and Principal Markets

Greenfire’s revenue from contracts with customers primarily consists of non-diluted and diluted bitumen sales. All of Greenfire’s diluted and non-diluted bitumen production is produced by Greenfire in Alberta and is sold to the Petroleum Marketer. As such, substantially all of Greenfire’s total revenue in 2021 and 2022 was from Alberta and provided by the Petroleum Marketer. For a description of the terms of the marketing agreements with the Petroleum Marketer see subsection “Business of the Company — Material Contracts, Liabilities and Indebtedness — Marketing Agreements” below.

Principal Capital Expenditures

Greenfire’s principal capital expenditures in 2022 and 2021 (excluding capital expenditures relating to the acquisitions of the Demo Asset and Expansion Asset) are set forth in the table below:

As at September 30, 2023, Greenfire had planned approximately $19.6 million of further net capital expenditures in 2023 related to its Refill drilling program and facility optimization activities for the Expansion Asset and Demo Asset. The Company anticipates satisfying these capital commitments with funds from operations.

Maintenance

Partial outages are a recurring event for the Company, typically taking place annually around September. However, steps have been taken to mitigate their impact on production. Pipeline bypasses and tie-in points were installed during the most recent major turnaround in September 2022. These improvements are expected to reduce the annual maintenance-related production impacts going forward. As a result, the major plant maintenance requiring a full plant shutdown is now scheduled every four years, with the next one planned for 2026.

Operational Processes and Systems

To assist in managing fluctuations in commodity pricing, the Company seeks to implement cost efficiencies across all of its operations.

Since acquiring the Demo Asset and Expansion Asset in 2021, Greenfire has sought to improve its operating and transportation expenses and pursue low risk opportunities to further enhance production with limited capital expenditures. The costs of energy and goods and services have increased over the period that Greenfire has operated the Demo Asset and Expansion Asset. Greenfire has managed its operating expenses by increasing water handling, surface facility debottlenecking and optimizing workforce and operating processes.

Capital Cost Efficiencies

Since acquiring the Demo Asset and Expansion Asset in 2021, Greenfire has implemented a modest capital expenditure program focused on surface debottlenecking programs at the Expansion Asset and Demo Asset to enable additional potential capacity for production growth at both existing facilities. As of August 2022, Greenfire commissioned water disposal wells at both sites to improve water handling capability. These wells are in the process of being conditioned for maximum water disposal which will reduce off site waste disposal expenses. The Company believes that increasing water disposal capability at the Demo Asset and Expansion Asset will optimize fluid handling capacity at the sites which may lead to increased production.

Redevelopment Infill Wells

Greenfire continues to progress its production growth initiatives at the Expansion Asset, including the drilling of Refill wells as well as ongoing debottlenecking projects to restore higher reservoir pressure.

At the Expansion Asset, beginning in the third quarter of 2023, Greenfire successfully drilled six extended reach Refill wells, which were completed in under three months. These six extended reach Refill wells have average horizontal lengths of approximately one mile (approximately 1,600 meters). The wells have started producing, and Management expects production rates to improve over the next three months. Subsequent to the third quarter of 2023, Greenfire approved the acceleration of another four well Refill drilling program at the Expansion Asset, which commenced drilling in November 2023 and will extend into early 2024.

Additional future drilling plans for Greenfire are expected to remain focused on exploiting the Company’s existing inventory of pre-heated bitumen locations at the Hangingstone Facilities with Refill wells, which, combined with surface facility optimizations, is anticipated to result in a material increase in production and profitability at the Hangingstone Facilities. To provide cost and service availability certainty for the Company’s planned multi-year drilling program, Greenfire has entered into a two-year take-or-pay drilling commitment with an established SAGD drilling contractor in Western Canada.

Sustainability

The Company seeks to do business in a responsible, safe and sustainable manner. The Company seeks to continue to improve and strengthen its strategies for air quality, emissions, water, waste, land and biodiversity, risk management, health and safety and First Nations relations. These areas are critical based on their significant impact to building a sustainable company and the Company’s ESG framework. Since Greenfire acquired the Demo Asset and Expansion Asset, it has focused on optimization efficiencies to improve carbon intensity and reduce waste. To date, Greenfire’s sustainability program has been focused on the following goals:

The Company intends to continue to evolve its approach to sustainability and to developing ESG focus areas to bring visibility to what the Company feels are key priorities as a Canadian oil sands producer.

Climate, Air & Emissions

The Company is focused on reducing its Scope 1 and Scope 2 greenhouse gas emissions in line with the Canadian government’s national commitments and is evaluating process optimizations and carbon reduction technologies that have the potential to deliver localized solutions.

The Company is constantly monitoring the air quality at and adjacent to its Hangingstone Facilities. The results from this monitoring consistently show compliance with Alberta and Canadian air quality objectives. For 2022 and through 2023, Greenfire reported zero contraventions with its air quality monitoring.

Water

The Company is actively working to reduce its reliance on non-saline water by optimizing its usage at its Hangingstone Facilities. By recycling 94% used in its steam production operations, the Company minimizes the need for non-saline water to be used to make-up any water shortages within its industrial process. All the Company’s non-saline water is conveyed via dedicated underground pipelines, eliminating the need for trucks and their corresponding emissions.

Indigenous Relations

The Company recognizes the rights of First Nations, Metis, and Inuit peoples and is committed to working collaboratively with First Nation communities in an atmosphere of integrity, honor and respect. The Company continues its collaborative participation in the Indigenous Advisory Group (the “IAG”). Founded by JACOS, the IAG comprises members from various local First Nation communities in the Fort McMurray region, providing valuable traditional knowledge and ensuring the Company upholds the highest possible standards of environmental protection and monitoring. The IAG is a critical instrument in guiding engagement with the local First Nation communities.

The Company also provides scholarships for local First Nations students to train in environmental monitoring programs. These programs increase access to related future employment opportunities, help the development of First Nation entrepreneurial enterprises, promote the transmission of First Nation knowledge within local communities and enhance cultural connections to the land.

The Company is committed to the ongoing development of trust-based equitable and beneficial partnerships with local First Nation communities.

Land & Biodiversity

The Company seeks to minimize its land disturbances by practicing avoidance, using existing land disturbances for future development and reclaiming end-of-life site to equivalent land capacity. Additionally, the Company supports a road reclamation research project at its Demo Asset that is implementing innovative solutions to the remediation and reclamation of local swamps/bogs, commonly referred to as muskeg.

Risk Management

The Company’s operating team identifies operational risks to the Company in order to implement systems and execute procedures to adequately address those risks and reduce their impact on the Company. This process has been driven on a team basis with each individual team (i.e., Health and Safety, Facilities, or Drilling) identifying, assessing and managing their own operational risks with associated risk matrices. The Company believes that risks related to climate change and the transition to a lower carbon economy will increasingly impact the Company. A net zero economy, supported by the Canadian Net-Zero Emissions Accountability Act (the “CNEAA”) and enacted through new policies, regulations, and standards is emerging in Canada. The Company continues to evaluate key emerging issues that may impact the Canadian energy sector as it moves to align with Canada’s Net-Zero 2050 ambitions.

Health & Safety

The health and safety of the Company’s personnel, including its employees, contractors, and the communities the Company works in, is its highest priority. The Company actively works to ensure that every employee and contractor is aware of, understands, and adheres to the Health and Safety Management System and associated policies. Safety is a shared responsibility of the Company’s leaders, employees, and contractors.

Material Contracts, Liabilities and Indebtedness

Letters of Credit

Prior to the JACOS Acquisition, JACOS had long-term pipeline transportation contracts for the Expansion Asset, which were subject to credit requirements requiring letters of credit to guarantee future payments under the contracts. Upon the completion of the JACOS Acquisition, the Petroleum Marketer provided $51.5 million in letters of credit in relation to these long-term pipeline transportation agreements under the terms of the Letter of Credit Facility. As of December 31, 2022, including other letters of credit for utilities, capital projects and credit cards, Greenfire had total letters of credit with a face value of $54.8 million.

Under the Letter of Credit Facility, Greenfire was required to contribute a minimum of $2 million per month into a funding reserve account (the “Reserve Account”) until the balance of the Reserve Account was equal to 105% of the aggregate face amount of all letters of credit issued under the Letter of Credit Facility. As at December 31, 2022, the Reserve Account balance was $27.3 million and as at September 30, 2023, the Reserve Account balance was $43.2 million. Cash collateralized amounts incurred an interest rate of 1% and the remaining balance incurred an interest rate of 6%.

On November 1, 2023, the Company entered into the EDC Facility, which is supported by a performance security guarantee from Export Development Canada. The EDC Facility replaced the cash collateralized Letter of Credit Facility. As a result of entering into the EDC Facility all amounts in the Reserve Account were released to the Company. As of December 27, 2023, including the EDC Facility and other letters of credit for utilities, capital projects and credit cards, Greenfire had total letters of credit with a face value of $54.4 million.

New Notes

Concurrently with the Business Combination, the Company closed a private offering of US$300 million aggregate principal amount of its New Notes. The New Notes mature on October 1, 2028, and have a fixed coupon of 12.0% per annum, paid semi-annually on April 1 and October 1 of each year, commencing on April 1, 2024. The New Notes are secured by a lien on substantially all the assets of the Company and the guarantors. The Senior Credit Facility ranks senior to the New Notes.

For additional details of the terms of the New Notes and the New Note Indenture see “General Development of the Business of Greenfire – New Financing Transaction – New Notes” and “Management’s Discussion and Analysis — Capital Resources and Liquidity — Long Term Debt”.

Marketing Agreements

The Company has three separate marketing agreements with the Petroleum Marketer. The Petroleum Marketer purchases substantially all of the Company’s bitumen and blend and provides and arranges transportation via trucks and pipelines for the Company’s products and condensate in exchange for a marketing fee.

In April 2021, in conjunction with GAC completing the acquisition of the Demo Asset, the Petroleum Marketer and GAC entered into a marketing agreement (the “Demo Marketing Agreement”) pursuant to which the Petroleum Marketer agreed to purchase 100% of monthly produced bitumen volumes from the Demo Asset. The Demo Marketing Agreement was subsequently amended to replace GAC with GROC. Under the Demo Marketing Agreement, the purchase price is the weighted average of all sales to third parties of the product purchased by the Petroleum Marketer. The price is adjusted based on a number of other factors and there are certain other fees and payments payable by GROC. The Demo Marketing Agreement originally had a term expiring on April 1, 2024, but in December 2022, the Demo Marketing Agreement was amended to extend the term until April 1, 2025, in addition to making certain other amendments, all of which became effective upon the closing of the Business Combination. An additional amendment in September 2023 extended the term to April 1, 2026. Under the terms of the Demo Marketing Agreement, under certain circumstances if there is a “Change of Control” (as defined in the Demo Marketing Agreement) of Greenfire or GROC, there will be a fee payable by Greenfire to the Petroleum Marketer, however the Petroleum Marketer agreed to waive that fee for the Business Combination and the other transactions contemplated by the Business Combination Agreement.

In October 2021, in conjunction with Greenfire completing the JACOS Acquisition, the Petroleum Marketer and JACOS (as predecessor to GROC) entered into a marketing agreement (the “Expansion Marketing Agreement”) pursuant to which the Petroleum Marketer agreed to purchase 100% of monthly diluted bitumen volumes from the Expansion Asset. Under the Expansion Marketing Agreement, the purchase price is based on the weighted average of all sales to third parties of the product purchased by the Petroleum Marketer. The price is adjusted based on a number of other factors and there are certain other fees and payments payable by Greenfire. The Expansion Marketing Agreement originally had a term expiring in October 2026, but in December 2022, the Expansion Marketing Agreement was amended to extend the term until October 2027, in addition to making certain other amendments. An additional amendment in September 2023 extended the term to October 2028.

In October 2021, in conjunction with Greenfire completing the JACOS Acquisition, the Petroleum Marketer and JACOS (as predecessor to GROC) entered a marketing agreement (the “Expansion Diluent Agreement”) pursuant to which the Petroleum Marketer agreed to sell to Greenfire 100% of the condensate required for Greenfire’s blending with its bitumen production to satisfy pipeline specifications. Under the Expansion Diluent Agreement, the purchase price is based on the weighted average market price for condensate at the time. The price is adjusted based on a number of other factors, and there are certain other fees and payments payable by Greenfire under the terms of the Expansion Diluent Agreement. The Expansion Diluent Agreement originally had a term expiring in October 2026, but in December 2022, the Expansion Marketing Agreement was amended to extend the term until October 2027, in addition to making certain other amendments. An additional amendment in September 2023 extended the term to October 2028.

Risk Management Contracts

As part of the Company’s normal operations, it is exposed to volatility in commodity prices. In an effort to manage these exposures, the Company uses various financial risk management contracts and physical sales contracts that are intended to reduce the volatility in the Company’s cash flow, as well as to ensure the Company’s ability to service and repay indebtedness.

The New Note Indenture and the Senior Credit Agreement each require the Company, on or prior to the last day of each calendar month, to enter into and maintain at all times hedge arrangements for the consecutive 12 calendar month period commencing from November 1, 2023 in respect of Hydrocarbons the net notional volumes for which are no less than, for each calendar month during such consecutive 12 calendar months as determined with reference to Company’s the most recent reserve report, 50% of the reasonably expected output of production of Hydrocarbons of the Company and its restricted subsidiaries from their PDP reserves as prepared to the Canadian standard using NI 51-101 (the hedge arrangements entered into pursuant to the foregoing, “Hedges”); provided, however, that the Hedges shall have a floor price equal to the greater of (i) at least 80% of the price of WTI for such month being hedged and (ii) US$55/bbl for such month being hedged. Notwithstanding the foregoing:

Insurance

The Company maintains insurance coverage for damage to its commercial property, third-party liability, and employers’ liability, sudden and accidental pollution and other types of loss or damage. The insurance coverage is subject to deductibles that must be met prior to any recovery. Additionally, the insurance is subject to exclusions and limitations, and such coverage may not adequately protect it against liability from all potential consequences and damages. See “Risk Factors — Risks Related to the Company’s Operations and the Oil and Gas Industry — Not all risks of conducting oil and natural gas opportunities are insurable and the occurrence of an uninsurable event may have a material adverse effect on the Company”.

STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION

The statement of Greenfire’s reserves data and other oil and gas information set forth below is dated December 31, 2022. The effective date of the statement of reserves data and other oil and gas information set forth below is December 31, 2022 and the preparation date is March 8, 2023. All of Greenfire’s reserves are in Canada and, specifically, in the Province of Alberta.

Glossary of Oil and Gas Terms

The following words and phrases have the following meanings, unless the context otherwise requires:

“developed non-producing reserves” are those reserves that either have not been on production, or have previously been on production, but are shut-in, and the date of resumption of production is unknown;

“developed producing reserves” are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty;

“developed reserves” are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (for example, when compared to the cost of drilling a well) to put the reserves on production. The developed category may be subdivided into producing and non-producing;

“development costs” means costs incurred to obtain access to reserves and to provide facilities for extracting, treating, gathering and storing the oil and gas from reserves. More specifically, development costs, including applicable operating costs of support equipment and facilities and other costs of development activities, are costs incurred to:

“exploration costs” means costs incurred in identifying areas that may warrant examination and in examining specific areas that are considered to have prospects that may contain oil and gas reserves, including costs of drilling exploratory wells and exploratory type stratigraphic test wells. Exploration costs may be incurred both before acquiring the related property (sometimes referred to as “prospecting costs”) and after acquiring the property. Exploration costs, which include applicable operating costs of support equipment and facilities and other costs of exploration activities, are:

“forecast prices and costs” means future prices and costs that are:

“Greenfire Reserves Report” means the report of McDaniel dated March 8, 2023 evaluating the bitumen reserves of Greenfire as at December 31, 2022;

“gross” means:

“McDaniel” means McDaniel & Associates Consultants Ltd., independent petroleum engineers of Calgary, Alberta;

“net” means:

“possible reserves” are those additional reserves that are less certain to be recovered than probable resources. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves;

“probable reserves” are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves;

“proved reserves” are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves;

“reserves” are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on: (i) analysis of drilling, geological, geophysical and engineering data; (ii) the use of established technology; and (iii) specified economic conditions, which are generally accepted as being reasonable and shall be disclosed. Reserves are classified according to the degree of certainty associated with the estimates; and

“undeveloped reserves” are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves category (proved, probable, possible) to which they are assigned.

Certain other terms used herein but not defined herein are defined in NI 51-101 and, unless the context otherwise requires, shall have the same meanings herein as in NI 51-101. All dollar amounts stated herein are expressed in Canadian dollars.

Disclosure of Reserves Data

The statement of reserves data and other oil and gas information set forth below are based upon an evaluation by McDaniel dated March 8, 2023 with an effective date of December 31, 2022 contained in the Greenfire Reserves Report. The statement of reserves data and other oil and gas information set forth below summarizes bitumen reserves of Greenfire and the future net revenues and net present values for such reserves using forecast prices and costs as at December 31, 2022.

The crude oil and natural gas reserve estimates presented in the Greenfire Reserves Report are based on the guidelines contained in the Canadian Oil and Gas Evaluation Handbook (the “COGE Handbook”) and the reserve definitions contained in NI 51 101 and the COGE Handbook. A summary of those definitions are set forth under “Glossary of Oil and Gas Terms” above. McDaniel was engaged to provide evaluations of proved and proved plus probable reserves.

The board of directors of Greenfire has reviewed and approved the Greenfire Reserves Report. The Report on Reserves Data by Independent Qualified Reserves Evaluator or Auditor and the Report of Management and Directors on Oil and Gas Disclosure are attached as Schedule “C” and Schedule “D” hereto, respectively.

All evaluations of future revenue contained in the Greenfire Reserves Report are after the deduction of royalties, operating costs, development costs and abandonment, decommission and reclamation costs. It should not be assumed that the estimates of future net revenues presented in the tables below represent the fair market value of the reserves. There are numerous uncertainties inherent in estimating quantities of bitumen reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth in this statement are estimates only. The recovery and reserve estimates of the bitumen reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual bitumen reserves may be greater than or less than the estimates provided herein.

In general, estimates of economically recoverable oil and gas reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially from actual results. For those reasons, among others, estimates of the economically recoverable oil and gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues associated with reserves may vary and such variations may be material. The actual production, revenues, taxes and development and operating expenditures with respect to the reserves associated with Greenfire’s properties may vary from the information presented herein and such variations could be material. In addition, there is no assurance that the forecast price and cost assumptions contained in the Greenfire Reserves Report will be attained and variances could be material. See “Advisories – Forward Looking Statements”, “Risk Factors” and “Industry Conditions”.

As a public company in the United States, Greenfire has and is expected to continue to disclose reserves information in filings with the SEC prepared in accordance with guidelines specified in Item 1202(a)(8) of Regulation S-K and in conformity with Rule 4-10(a) of Regulation S-X. There are significant differences to the type of volumes disclosed and the basis from which the volumes are economically determined under the SEC requirements and NI 51-101, and the difference between the reported numbers under the two disclosure standards can, therefore, be material. For example, the U.S. standards require United States oil and gas reporting companies, in their filings with the SEC, to disclose only proved reserves after the deduction of royalties and production due to others but permits the optional disclosure of probable and possible reserves in accordance with the SEC’s definitions. Additionally, the COGE Handbook and NI 51-101 require disclosure of reserves and related future net revenue estimates based on forecast prices and costs, whereas the U.S. standards require that reserves and related future net revenue be estimated using average prices for the previous 12 months and that the standardized measure reflect discounted future net income taxes related to Greenfire’s operations. In addition, the COGE Handbook and NI 51-101 permit the presentation of reserves estimates on a “company gross” basis, representing Greenfire’s working interest share before deduction of royalties, whereas the U.S. standards require the presentation of net reserve estimates after the deduction of royalties and similar payments. There are also differences in the technical reserves estimation standards applicable under NI 51-101 and, pursuant thereto, the COGE Handbook, and those applicable under the U.S. Standards. NI 51-101 requires that proved undeveloped reserves be reviewed annually for retention or reclassification if development has not proceeded as previously planned, while the U.S. Standards specify a five-year limit after initial booking for the development of proved undeveloped reserves. Finally, the SEC prohibits disclosure of oil and gas resources in SEC filings, including contingent resources, whereas Canadian securities regulatory authorities allow disclosure of oil and gas resources. Resources are different than, and should not be construed as, reserves. The foregoing is not an exhaustive summary of Canadian or U.S. reserves reporting requirements.

In certain of the tables set forth below, the columns may not add due to rounding. All dollar amounts in the tables below are expressed in Canadian dollars.

Reserves Data (Forecast Prices and Costs)

SUMMARY OF OIL AND GAS RESERVES

AS OF DECEMBER 31, 2022

FORECAST PRICES AND COSTS

Notes:

SUMMARY OF NET PRESENT VALUES OF FUTURE NET REVENUE

AS OF DECEMBER 31, 2022

FORECAST PRICES AND COSTS

Notes:

TOTAL FUTURE NET REVENUE (UNDISCOUNTED)
AS OF DECEMBER 31, 2022

FORECAST PRICES AND COSTS

Notes:

FUTURE NET REVENUE BY PRODUCT TYPE

AS OF DECEMBER 31, 2022

FORECAST PRICES AND COSTS

Note:

Pricing Assumptions

The future net revenues and net present values presented in the Greenfire Reserves Report were calculated using the average forecast price and costs of Sproule Associates Limited (“Sproule”), McDaniel and GLJ Ltd. (“GLJ”) as of December 31, 2022 for the future crude oil, natural gas and natural gas product prices.

Sproule, McDaniel, and GLJ have prepared their December 31, 2022, price and market forecasts after a comprehensive review of information. Information sources include numerous government agencies, industry publications, Canadian oil refiners and natural gas marketers. The forecasts presented herein are based on an informed interpretation of currently available data. While these forecasts are considered reasonable at this time, users of these forecasts should understand the inherent high uncertainty in forecasting any commodity or market. These forecasts will be revised periodically as market, economic and political conditions change. These future revisions may be significant.

The forecast cost and price assumptions assume increases in wellhead selling prices and take into account inflation with respect to future operating and capital costs. The forecast cost and price assumptions utilized in the Greenfire Reserves Report were as follows:

SUMMARY OF PRICING AND INFLATION RATE ASSUMPTIONS⁽¹⁾

AS OF DECEMBER 31, 2022

FORECAST PRICES AND COSTS⁽¹⁾

Notes:

Weighted average historical prices realized by Greenfire for the year ended December 31, 2022, were $84.00/bbl for bitumen.

Reserves Reconciliation

RECONCILIATION OF GROSS RESERVES BY PRODUCT TYPE

FORECAST PRICES AND COSTS

Note:

Additional Information Relating to Reserves Data

Undeveloped Reserves

Undeveloped reserves are attributed by McDaniel in accordance with standards and procedures contained in the COGE Handbook. Proved undeveloped reserves are those reserves that can be estimated with a high degree of certainty and are expected to be recovered from known accumulations where a significant expenditure is required to render them capable of production. Probable undeveloped reserves are those reserves that are less certain to be recovered than proved reserves and are expected to be recovered from known accumulations where a significant expenditure is required to render them capable of production. Proved and probable undeveloped reserves have been assigned in accordance with engineering and geological practices as defined under NI 51 101.

Proved and Probable Undeveloped Reserves

The following tables set forth the proved undeveloped reserves and the probable undeveloped bitumen reserves that were first attributed to Greenfire’s assets for the years ended December 31, 2021 and 2022. Greenfire acquired the Demo Asset and Expansion Asset in 2021 and did not have any oil and gas properties in the year ended December 31, 2020. All of Greenfire’s proved undeveloped reserves and the probable undeveloped reserves are located in the Province of Alberta.

There are a number of factors that could result in delayed or cancelled development, including the following: (i) changing economic conditions (due to commodity pricing, operating and capital expenditure fluctuations); (ii) changing technical conditions (including production anomalies, such as facility bottlenecks or accelerated depletion); (iii) a larger development program may need to be spread out over several years to optimize capital allocation and facility utilization; and (iv) surface access issues (including those relating to land owners, weather conditions and regulatory approvals). See “Advisories – Forward-Looking Statements” and the sections entitled “Industry Conditions” and “Risk Factors” in this prospectus.

Proved Undeveloped Reserves

Proved undeveloped reserves have been assigned in areas where the reserves can be estimated with a high degree of certainty. In most instances, proved undeveloped reserves will be assigned on lands immediately offsetting existing producing wells within the same accumulation or pool. The Greenfire Reserves Report has assigned 148 MMboe of proved undeveloped reserves with $1,421 million of associated undiscounted capital.

Development of the proved undeveloped reserves is expected to occur over the next 33 years. Timing of the investment and the desired pace of development will depend to a large extent on economic conditions, including, in particular, world commodity prices.

Probable Undeveloped Reserves

Probable undeveloped reserves have been assigned in areas where the reserves can be estimated with less certainty. It is equally likely that the actual remaining quantities recovered will be greater or less than the proved plus probable reserves. In most instances probable undeveloped reserves have been assigned on lands in the area with existing producing wells but there is some uncertainty as to whether they are directly analogous to the producing accumulation or pool. The Greenfire Reserves Report has assigned 48 MMboe of probable undeveloped reserves with $220 million of associated undiscounted capital.

Development of the probable undeveloped reserves is expected to occur over the next 38 years. Timing of the investment and the desired pace of development will depend to a large extent on performance of new and existing wells and economic conditions, including, in particular, world commodity prices.

See “Statement of Reserves Data and Other Oil and Gas Information – Other Oil and Natural Gas Information – Principal Properties” and “Statement of Reserves Data and Other Oil and Gas Information – Additional Information Related to Reserves Data – Future Development Costs” for a description of Greenfire’s exploration and development plans and expenditures.

Significant Factors or Uncertainties

The process of evaluating reserves is inherently complex. It requires significant judgments and decisions based on available geological, geophysical, engineering and economic data. These estimates may change substantially as additional data from ongoing development activities and production performance becomes available and as economic conditions impacting oil and gas prices and costs change. The reserve estimates contained herein are based on current production forecasts, prices and economic conditions and other factors and assumptions that may affect the reserve estimates and the present worth of the future net revenue therefrom. These factors and assumptions include, among others: (i) historical production in the area compared with production rates from analogous producing areas; (ii) initial production rates; (iii) production decline rates; (iv) ultimate recovery of reserves; (v) success of future development activities; (vi) marketability of production; (vii) effects of government regulations; and (viii) other government levies imposed over the life of the reserves. Although every reasonable effort is made to ensure that reserve estimates are accurate, reserve estimation is an inferential science. As a result, subjective decisions, new geological or production information and a changing environment may impact these estimates.

Greenfire has a significant amount of proved undeveloped and probable undeveloped reserves assigned to its properties. As circumstances change and additional data becomes available, reserve estimates also change. Estimates are reviewed and revised, either upward or downward, as warranted by new information. Revisions are often required due to changes in well performance, prices, economic conditions and government restrictions. Revisions to reserve estimates can arise from changes in year-end prices, reservoir performance and geologic conditions or production. These revisions can be either positive or negative. Degradation in future commodity price forecasts relative to the forecast in the Greenfire Reserves Report can also have a negative impact on the economics and timing of development of undeveloped reserves, unless significant reduction in the future costs of development are realized.

Other than the foregoing, Greenfire does not anticipate any significant economic factors or significant uncertainties that may affect any particular components of this statement of reserves data and other oil and gas information. However, reserves can be affected significantly by fluctuations in product pricing, capital expenditures, operating costs, royalty regimes and well performance that are beyond Greenfire’s control. See the section entitled “Risk Factors” in this prospectus.

Abandonment and Reclamation Costs

The Company follows IFRS to account for and report the estimated cost of future site abandonment and reclamation. This standard requires liability recognition for retirement obligations associated with long-lived assets, which would include abandonment of wells and related facilities, natural gas wells and related facilities, removal of equipment from leased acreage and returning such land to a condition equivalent to its original condition. Under the standard, the estimated cost of each decommissioning obligation is recorded in the period a well or related asset is drilled, constructed or acquired. The obligation is estimated using the present value of the estimated future cash outflows to abandon the asset at the Company’s credit-adjusted risk-free rate. The obligation is reviewed regularly by management based upon current regulations, costs, technologies and industry standards. The discounted obligation is recognized as a liability and is accreted against income until it is settled or the property is sold and is included as a component of net finance expense. Actual restoration expenditures are charged to the accumulated obligation as incurred.

The Company’s decommissioning obligation is the estimated cost of future abandonment and reclamation of the Company’s existing long-lived assets. As of December 31, 2022, the estimated total undiscounted amount required to settle the decommissioning obligations in respect of all the Company’s facilities and wells, net of estimated salvage recoveries, was $206.5 million. This obligation is estimated to be settled in periods up to 2071. The 12% discounted present value of this amount is $7.5 million. Over the next three years, the Company expects to incur approximately

$nil in decommissioning expenditures.

The Greenfire Reserves Report estimate of abandonment and reclamation costs is an estimate of the amount required to abandon and reclaim the entire development over the life of the reserves. In the Greenfire Reserves Report, abandonment and reclamation costs for total proved plus probable reserves were estimated to be $265.4 million, undiscounted, and $17.2 million, discounted at 10%. These costs include the abandonment, decommissioning and reclamation of the entire Hangingstone Facilities, infrastructure, currently drilled SAGD and observation wells plus the future well pairs, infills and observation wells anticipated to be required to develop the assigned reserves over the life of the Hangingstone Facilities. These estimates do not include abandonment and reclamation costs or other liabilities outside of the Hangingstone Facilities, which the Company has included in determining its total decommissioning provision.

Future Development Costs

The following table sets out the development costs deducted in the estimation of future net revenue attributable to proved reserves (using forecast prices and costs) and proved plus probable reserves (using forecast prices and costs) based upon the Greenfire Reserves Report.

Greenfire expects to use a combination of internally generated cash from operations, working capital and the issuance of new equity or debt where and when it believes appropriate to fund future development costs set out in the Greenfire Reserves Report. There can be no guarantee that funds will be available or that Greenfire will allocate funding to develop all of the reserves attributable in the Greenfire Reserves Report. Failure to develop those reserves could have a negative impact on Greenfire’s future cash flow. Further, Greenfire may choose to delay development depending upon a number of circumstances including the existence of higher priority expenditures and available cash flow.

Greenfire does not anticipate that interest or other funding costs would make further development of any of Greenfire’s properties uneconomic.

Other Oil and Natural Gas Information

Unless otherwise stated, the following information is presented as at December 31, 2022.

Principal Properties

The Company’s principal properties are the Expansion Asset and the Demo Asset. For a description of the Expansion Asset and Demo Asset see “Business of the Company – Principal Properties”.

Oil and Natural Gas Wells

The following table sets forth Greenfire’s producing and non-producing bitumen production wells as of December 31, 2022, all of which are in Alberta, Canada:

Properties with No Attributed Reserves

As at December 31, 2022, Greenfire held approximately 81,867 gross acres 39,283 net acres of rights to which no reserves were booked. For additional information about Greenfire’s properties with no attributed reserves see “Business of the Company – Undeveloped Properties and Land Acreage”.

Forward Contracts

Greenfire may use financial derivatives to manage its exposure to fluctuations in commodity prices, foreign exchange and interest rates. These include contracts for exposure management unrelated to crude oil sales price risk management; and contracts for management of price exposures associated with crude oil, crude oil differentials, condensate, natural gas liquids, refined products, refining margins, natural gas, electricity and renewable power contracts. The New Note Indenture has a minimum hedging requirement of 50% of the forward 12 calendar month PDP forecasted production as prepared in accordance with the Canadian standards under NI 51-101 until principal debt under the New Notes is less than US$100.0 million. A description of such instruments is provided under the heading “Management’s Discussion and Analysis”.

As of September 30, 2023, Greenfire entered into commodity-based derivative contracts as follows:

The following commodity- based derivative contracts were entered into subsequent to September 30, 2023.

Tax Horizon

In 2022, Greenfire was not required to pay any income related taxes. It is expected, based upon current legislation, the projections contained in the Greenfire Reserves Report, proved plus probable analysis and various other assumptions, that no income taxes will be required to be paid by Greenfire prior to 2029. A higher level of capital expenditures than those contained in the Greenfire Reserves Report, or further additional acquisitions, could further extend the estimated tax horizon.

Costs Incurred

The following table summarizes certain costs incurred by Greenfire in Canada for the year ended December 31, 2022:

Note:

Exploration and Development Activities

The following table sets forth the wells in which Greenfire participated during the year ended December 31, 2022.

Greenfire did not drill any dry exploratory or development wells in the last two fiscal years.

See “Statement of Reserves Data and Other Oil and Gas Information – Other Oil and Natural Gas Information – Principal Properties” for a description of Greenfire’s current and proposed exploration and development activities.

Production Estimates

The following table sets out the volumes of gross production estimated by McDaniel for 2023, which is reflected in the estimate of future net revenue disclosed in the forecast price tables contained under “Statement of Reserves Data and Other Oil and Gas Information –Disclosure of Reserves Data – Pricing Assumptions”.

Production History

The following table sets forth certain information in respect of production, product prices received, royalties paid, production costs and resulting netback received by Greenfire for the periods indicated below:

Notes:

The following table indicates Greenfire’s average daily production from the Demo Asset and the Expansion Asset for the year ended December 31, 2022:

MANAGEMENT’S DISCUSSION AND ANALYSIS

Presented below is the management’s discussion and analysis (“MD&A”) of Greenfire for the years ended December 31, 2022 and 2021. In addition, included in this MD&A is a discussion of certain results of operations of JACOS for the period from January 1, 2021 to September 17, 2021 and the year ended December 31, 2020. The Interim MD&A, which is management’s discussion and analysis of the Company for the three and nine month periods ended September 30, 2023, is attached to this prospectus as Schedule “B”. The MBSC MD&As, which are management’s discussions and analyses for MBSC for the three and six month periods ending June 30, 2023 and for the year ended December 31, 2022 are attached to this prospectus as Schedule “H” and Schedule “I”.

On September 20, 2023, GRL consummated the Business Combination with MBSC, pursuant to which, among other things, GRI and MBSC became wholly owned subsidiaries of GRL. Prior to the Business Combination, GRL had not conducted any material activities other than those incidental to its formation and to the matters contemplated by the Business Combination Agreement. The Interim MD&A, the MBSC MD&As and the following MD&A each provide information which the Company’s management believes is relevant to an assessment and understanding of Greenfire’s consolidated results of operations for the periods described herein, which should be read in conjunction with Greenfire’s audited annual consolidated financial statements and notes as of and for the years ended December 31, 2022, 2021 and 2020, GRL’s interim condensed financial statements as at September 30, 2023 and December 31, 2022 and for the three and nine month periods ended September 30, 2023 and 2022, JACOS’s audited financial statements and notes for the period from January 1, 2021 to September 17, 2021 and the year ended December 31, 2020 and MBSC’s audited financial statements for the year ended December 31, 2022 and for the period from March 25, 2021 through December 31, 2021 and MBSC’s unaudited interim condensed financial statements of MBSC for the three and six months ended June 30, 2023 that are included elsewhere in this prospectus. GRL’s, GRI’s and JACOS’s financial statements, including the comparative figures, were prepared in accordance with IFRS. MBSC’s financial statements were prepared in accordance with US GAAP.

This MD&A contains forward looking information based on management’s current expectations and projections. For information on the material factors and assumptions underlying such forward-looking information, refer to “Advisories – Forward-Looking Statements” and “Risk Factors”. Certain dollar amounts have been rounded to the nearest million dollars or thousand dollars, as noted, and tables may not add due to rounding. Production volumes and per unit statistics are presented throughout this MD&A on a net of Greenfire’s working interest and before royalty or “gross” basis. Dollar per barrel ($/bbl) costs are based upon sold bitumen barrels unless otherwise noted.

Overview

GRI was incorporated on June 18, 2021 under the ABCA as a Calgary-based energy company focused on the sustainable production and development of upstream energy resources from the oil sands in the Athabasca region of Alberta, Canada, using in-situ thermal oil production extraction techniques such as steam-assisted gravity drainage at: (i) the Demo Asset; and (ii) the Expansion Asset. Greenfire has a 100% working interest in the Demo Asset and a 75% working interest in the Expansion Asset.

GAC, the predecessor entity of GRI, was incorporated on November 2, 2020 and acquired the Demo Asset on April 5, 2021. HEAC was incorporated on July 12, 2021 and acquired JACOS, including its primary asset, the Expansion Asset, on September 17, 2021. GRI, as it is currently constituted, became the ultimate holding company of the Demo Asset and the Expansion Asset through a series of Reorganization Transactions described in “The Company” section of this prospectus. Prior to the acquisition of the Demo Asset in April of 2021, neither Greenfire nor any of its subsidiaries had any material operations and JACOS is therefore deemed to be a predecessor of Greenfire. A discussion of certain results of operations of JACOS for the period from January 1, 2021 to September 17, 2021 and the year ended December 31, 2020 follows management’s discussion and analysis of the financial condition and results of operation of Greenfire.

Greenfire had no material operations in 2020 as the acquisitions of the Demo Asset and JACOS occurred in 2021.

Key Factors Affecting Operating Results

The Company believes its performance depends on several factors that present significant opportunities for it but also pose risks and challenges.

Commodity Prices

Prices for crude oil, condensate and natural gas have historically been volatile. This volatility is expected to continue due to the many uncertainties associated with the global political and economic environment, including the supply of, and demand for, crude oil and natural gas and the availability of other energy supplies, both regionally and internationally, as well as the relative competitive relationships of the various energy sources in the view of consumers and other factors.

The market prices of crude oil, condensate and natural gas impact the amount of cash generated from Greenfire’s operating activities, which, in turn, impact Greenfire’s financial position and results of operations.

Competition

The petroleum industry is competitive in all of its phases. Greenfire competes with numerous other entities in the exploration, development, production and marketing of oil. Greenfire’s competitors include oil and natural gas companies that have substantially greater financial resources, workforce and facilities than those of Greenfire. Some of these companies not only explore for, develop and produce oil, but also carry on refining operations and market oil and natural gas on an international basis. As a result of these complementary activities, some of these competitors may have greater and more diverse competitive resources to draw on than Greenfire. Greenfire’s ability to increase its reserves in the future will depend not only on its ability to explore and develop its present properties, but also on its ability to select and acquire other suitable producing properties or prospects for exploratory drilling. Competitive factors in the distribution and marketing of oil include price, process, and reliability of delivery and storage Greenfire also faces competition from companies that supply alternative resources of energy, such as wind or solar power. Other factors that could affect competition in the marketplace include additional discoveries of Hydrocarbon reserves by Greenfire’s competitors, changes in the cost of production, and political and economic factors and other factors outside of Greenfire’s control.

The petroleum industry is characterized by rapid and significant technological advancements and introductions of new products and services utilizing new technologies that may increase the viability of reserves or reduce production costs. Other companies may have greater financial, technical and personnel resources that allow them to implement and benefit from such technological advantages. Greenfire may not be able to respond to such competitive pressures and implement such technologies on a timely basis, or at an acceptable cost. If Greenfire does implement such technologies, Greenfire may not do so successfully. One or more of the technologies currently used or implemented in the future by Greenfire may become obsolete or uneconomic. If Greenfire is unable to employ the most advanced commercially available technology, or is unsuccessful in implementing certain technologies, its business, financial condition and results of operations could also be adversely affected in a material way.

Royalty Regimes

Greenfire pays royalties in accordance with the established royalty regime in the Province of Alberta. Greenfire’s royalties are paid to the Crown, which are based on government prescribed pre- and post- payout royalty rates determined on sliding scales and dependent on commodity prices. The Government of Alberta may adopt new royalty regimes, or modify the existing royalty regime, which may have an impact on the economics of Greenfire’s projects. An increase in royalties would reduce Greenfire’s earnings and could make future capital investments, or Greenfire’s operations, less economic.

Non-GAAP Measures

This MD&A contains certain non-GAAP financial measures, including “adjusted EBITDA”, “adjusted funds flow”, “adjusted working capital” and “net debt” and non-GAAP financial ratios, including “adjusted EBITDA ($/bbl)” and “adjusted fund flow ($/bbl)”, which do not have any standardized meaning prescribed by IFRS. While these measures and ratios are commonly used in the oil and natural gas industry, Greenfire’s determination of these measures may not be comparable with calculations of similar measures presented by other reporting issuers.. Greenfire believes that the inclusion of these specified financial measures provides useful information to financial statement users when evaluating the financial results of Greenfire; however they should not be considered an alternative to, or more meaningful than, change in cash and cash equivalents, cash flow from operating activities, net profits or other measures of financial performance calculated in accordance with IFRS. For more information refer to “Non-GAAP Measures and Other Performance Measures” in this MD&A.

Results of Operations

Performance Highlights for the Year Ended December 31, 2022

For the year ended December 31, 2022, operational and financial highlights include:

Comparison of certain production, financial and operating results for the year ended December 31, 2022 to the year ended December 31, 2021: