• Transformational 2025 results highlighted by successful production tests at SE-MGH (8 mmcf/d) and N-MGH (2.5 mmcf/d)
• SE-MGH total project capex reduced to US$2.0 million net to Criterium. First gas, anticipated in Q2 2026, to be achieved within cashflow
• PGN selected as offtaker, progressing to binding Gas Sales Agreement. Pipeline contract signed and site preparation commenced
Criterium Energy Ltd. (TSXV: CEQ), an independent upstream energy development and production company focused on energizing growth for Southeast Asia, has provided an operational update on the Southeast Mengoepeh (“SE-MGH”) and North Mengoepeh (“N-MGH”) gas development projects, in addition to providing a summary of the 2026 budget approved by the Company’s Board of Directors.
“Entering 2026, we have a clear pathway to gas production and to materially transforming our production and cashflow”, said Matthew Klukas, President and CEO of Criterium Energy. “We now turn our focus to executing the Gas Sales Agreement and supporting the construction of the SE-MGH pipeline, which upon completion will deliver gas from the Tungkal PSC into an undersupplied domestic gas market in Indonesia. With encouraging results from N-MGH, we anticipate this field will provide incremental gas production, improving operating margins and cashflow. While our focus this year will be on executing the SE-MGH and N-MGH developments, we will also be laying the foundation for incremental gas production, via site preparations at Macan Gedang and Cerah, and improving long-term oil production through detailed technical and feasibility studies required to implement secondary recovery at the MGH and PLT oil fields.”
Project Updates and Operational Highlights
• Pipeline contract signed, construction commenced: On January 30, 2026, Criterium and PT Dredolf Indonesia (“Dredolf”) signed a binding contract for the construction, operations, and maintenance for a 21 km six-inch gas pipeline to connect SE-MGH to nearby gas processing facilities. Site preparation for the pipeline commenced on February 2, 2026. The initial length of 14 km has been expanded to replace a 7 km pipeline which was intended to be used but did not pass hydrostatic testing.
• Key gas sales agreement terms agreed: Criterium has agreed key terms of a Gas Sales Agreement (“GSA”) with PT Perusahaan Gas Negara Tbk (“PGN”) for the sale of produced gas from the Tungkal PSC, including SE-MGH. The parties are now proceeding with the regulatory approval process and finalizing the binding GSA. The gas sales priced received is anticipated to be aligned with recent sales in South Sumatra of US$6–$7/mmbtu.
• SE-MGH reduced project capex, fully funded to first gas: The overall project budget has been reduced to US$2 million (initial estimate of US$3–$5 million) of which US$1.9 million has been incurred to date. Remaining costs include project support for pipeline construction and facility tie-in. The Company reiterates its ability to bring SE-MGH online within cash flow from operations.
• SE-MGH first gas on track for Q2 2026: With site preparations ongoing, first gas remains targeted for Q2 2026 despite the expanded scope that includes the 7 km pipeline replacement. Initial production rates from SE-MGH are anticipated to be 5–7 mmcf/d, aligned with the successful production test rates acquired in August 2025.
• N-MGH extended well tests ongoing: Following the successful test of MGH-20 in July 2025, which produced 2.5 mmcf/d, the Company conducted additional testing at MGH-32 which produced at a rate of 2.1 mmcf/d from the same reservoir zones. Additional testing is planned in Q1 2026 for reservoir zones that have not been previously tested but produced gas prior to being shut-in in 2014.
• SE-MGH & N-MGH production volumes: SE-MGH and N-MGH production volumes and resource will be detailed further in the upcoming reserve report, to be released in Q1 2026 (the “2025 Reserve Report”). Management estimates that the data collected during the SEM-01 extended production test will result in an increase from the current estimate of 15 bcf. N-MGH was not included in previously resource reports and with successful testing of MGH-20 and MGH-32, Management anticipates volumes will be included in the 2025 Reserve Report.
• Criterium provides flood relief and assistance: In December 2025, Criterium’s Indonesian management and team members traveled to Aceh province in Sumatra to help communities displaced by major flash flooding events. This involved providing water tanks and mattresses and underpins the Company’s commitment to supporting the communities in which we operate, going beyond just producing oil and gas.
• 2025 production below forecast: Production averaged 845 bbl/d in 2025, below prior management estimates. The reduction was due to mechanical issues at key production wells in PLT and MGH during the SEM-01 re-entry operations, and lower production than anticipated from the 2025 workover campaign.
• 2026 Budget Approved: In December 2025, the Company’s Board of Directors approved a capital budget for 2026 which prioritizes the development to first gas from SE-MGH and N-MGH, in addition to supporting the development of Macan Gedang and Cerah gas discoveries.
Tungkal PSC Gas Development – Building and Diversifying the Production Portfolio
Management intends to develop the Company’s gas assets with an eye toward diversifying production beyond oil, backed by long-term GSAs and funded by expected operating cash flow. The intent is to develop SE-MGH (base case 2C contingent resource of 15 bcf) targeting production in Q2 2026, followed by production from N-MGH (currently assessing resource potential based upon recent well testing) thereafter. Both developments will produce gas from existing wells and utilize existing processing facilities via a new pipeline.
Subsequently, Criterium intends to develop additional gas assets within the Tungkal PSC, specifically (i) the Macan Gedang gas field (base case 2C contingent resource of 13 bcf), where the Macan Gedang-1 well encountered gas in the Gumai formation and tested at 4.6 mmcf/d, and (ii) the Cerah gas discovery (base case 2U prospective resource of 34 bcf), where the Cerah-1 well also encountered gas in the Gumai formation but was not tested at the time due to low prices and a lack of accessible infrastructure.
All produced gas from the Tungkal PSC will be sold via a long-term gas sales agreement. Initially signed for SE-MGH, the GSA will allow for gas to be produced from multiple fields on similar terms. Key terms of the GSA have been agreed upon with PGN, and the parties are progressing through the regulatory process which involves SKK MIGAS providing a Gas Allocation Letter and approving the binding GSA.
SE-MGH Development
The Company has continued with the development of SE-MGH after the successful re-entry and production test of the SEM-01 well. The well sustained rates of 7 mmcf/d through a 40/64” choke over a 48-hour period and achieved rates up to 8 mmcf/d through a 48/64” choke.
SE-MGH is being developed with the existing SEM-01 well with a base case production plateau of 5–7 mmcf/d for a period of six years. Management estimates that a second production well, to be drilled at a later date, may increase production, extend the plateau period, and increase ultimate recovery beyond the current base case estimate of 15 bcf.
On January 30, 2026 Criterium signed a binding contract with Dredolf for the construction, operation, and maintenance of a 21-km pipeline, connecting SE-MGH to existing gas processing and transportation facilities. The length of the pipeline has increased from the initial scope due to the need to replace approximately 7 km of an existing pipeline that failed hydrostatic pressure testing conducted in late 2025. The new pipeline will be appropriately sized to accommodate potential incremental volumes from N-MGH and gas produced from the MGH field.
Under the contract, Dredolf will fund, construct, and operate the pipeline with Criterium paying a monthly transportation fee commencing upon first production. The average monthly cost is fixed during the production period, and the contract has a term of 10 years, which can be extended upon mutual agreeance.
N-MGH Development
The N-MGH field consists of four wells drilled to date which were all shut-in in 2014 due to high gas production rates and no means of offtake. Criterium intends to produce gas from two wells (MGH-20 and MGH-32) with incremental oil production also expected. Gas from N-MGH is anticipated to be produced via a newly constructed pipeline connecting the field to the SE-MGH Pipeline (the “N-MGH Pipeline”).
The N-MGH Pipeline will conveniently utilize existing rights of way and connect the MGH Central Processing Facility to gas egress, thus allowing any associated gas within the MGH field or identified gas zones within the MGH field to flow to sales markets at minimal additional costs. Oil produced from N-MGH can be stored on site and transported via truck to the MGH Central Processing Facility located 7 km away on existing roads owned by Criterium.
Following the successful testing of MGH-20 in July 2025, which flowed 2.5 mmcf/d with total associated oil production of approximately 215 bbls over a 48-hour period, the Company tested MGH-32 in January 2025 which flowed 2.1 mmcf/d through an 8/64” choke.
The regulatory pathway for N-MGH is straightforward as development and production will fall within the existing MGH plan of development and gas will be sold within the terms and conditions of the GSA currently being finalized for SE-MGH and the Tungkal PSC.
2026 Budget & Activities – Gas focused, maintaining oil investment options
The 2026 capital budget approved by the Company’s Board of Directors prioritizes the development of material gas assets and technical studies to support potential investment into a secondary recovery program to increase oil production. Key highlights from the approved program and activities include;
• SE-MGH Production: Supporting the construction of the SE-MGH Pipeline and SEM-01 commissioning and start-up.
• N-MGH Development: Supporting pipeline construction and facility tie-in for N-MGH. Total capital spend is contingent on the terms and conditions of the pipeline funding agreement for the N-MGH Pipeline.
• Preparation for Macan Gedang & Cerah: Site preparation, securing long lead items, and obtaining regulatory approvals for development wells to be drilled at Macan Gedang and Cerah in 2027.
• Oil Production: Intend to conduct four workovers, including one at the PLT field. Conducting technical studies to assess the feasibility of secondary recovery at the MGH and PLT fields, with a target to implement in 2027.
• Oil facility maintenance: Conducting a plant turnaround at the MGH Central Oil Processing Facility in H2 2026 to address underlying production issues and improve facility efficiency.
The activities outlined, highlighted by production from SE-MGH and N-MGH are set to materially increase production as well as establish a foundation for further growth in 2027 for both gas and oil, pending market conditions.
Outlook
Based on the capital program and activities for the SE-MGH development, Criterium believes it has the potential to more than double current oil equivalent production in Q2 2026 which it expects to fund from operating cash flow. By duplicating its SE-MGH development strategy on nearby N-MGH and Macan Gedang, production can be increased further with relatively modest capital expenditure, generating improved, near-term returns and cash flow.
During the next 12 months, key milestones for the Company and its gas developments in the Tungkal PSC and Bulu PSC include:
• Gas Sales Agreement and other commercial agreements: With the SE-MGH Pipeline contract completed, finalizing the GSA is a top priority. Combined, these agreements will provide Criterium with processing and transportation services, connecting produced gas from the Tungkal PSC to under-supplied gas markets.
• Updated Reserve and Resource Report: Following completion of the N-MGH testing, the Company will provide an updated Reserve and Resource report.
• SE-MGH & N-MGH site preparations: The Company will commence pipeline construction at SE-MGH and subsequently N-MGH to accommodate production and transportation of produced gas.
• Tungkal First Gas: With the successful completion of the SE-MGH Pipeline, Criterium anticipates initial production from SE-MGH to be 5–7 mmcf/d which can be further supplemented with 2–3 mmcf/d upon the completion of a N-MGH Pipeline.
Management firmly believes that current market and geopolitical volatility reinforce the Company’s strategy focused on acquiring undercapitalized assets in an energy-hungry Southeast Asian market. With a portfolio that contains contingent resources heavily weighted towards natural gas, which attracts stable long-term pricing in domestic markets the Company is primed to materially increase and diversify production in the near term.
Stay Connected to Criterium
Shareholders and other interested parties who would like to learn more about the Criterium opportunity are encouraged to visit the Company’s website, review a recent corporate presentation, and follow the Company on X (formerly Twitter), LinkedIn and YouTube for ongoing corporate updates and relevant international oil and gas industry information.
About Criterium Energy Ltd.
Criterium Energy Ltd. (TSXV: CEQ) is Canadian-based upstream energy company focused on the aggregation and sustainable development of assets in Southeast Asia that can deliver scalable growth and cash flow generation. This region is expected to reach a population approaching 800 million people within the next 25 years, driving world-leading economic growth and record-high energy demand. With international operating expertise and a local presence, Criterium intends to contribute responsible, safe and secure sources of energy to help meet this demand. The Company is committed to maximizing total shareholder return by executing across three strategic pillars that include (1) fostering a successful and sustainable reputation; (2) leveraging innovation and technology arbitrage; and (3) achieving operational excellence with an unwavering commitment to safety.
