Exhibit 99.1

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three month period ended March 31, 2025

Greenfire Resources Ltd.

Greenfire Resources Ltd.

Condensed Interim Consolidated Balance Sheets (unaudited)

Related party transaction (note 13)

See accompanying notes to the unaudited condensed interim consolidated financial statements

Greenfire Resources Ltd.

Condensed Interim Consolidated Statements of Comprehensive Income (Loss) (unaudited)

See accompanying notes to the unaudited condensed interim consolidated financial statements

Greenfire Resources Ltd.

Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity (unaudited)

See accompanying notes to the unaudited condensed interim consolidated financial statements

Greenfire Resources Ltd.

Condensed Interim Consolidated Statements of Cash Flows (unaudited)

See accompanying notes to the unaudited condensed interim consolidated financial statements

Notes to the Condensed Interim Consolidated Financial Statements (unaudited)

1. CORPORATE INFORMATION

Greenfire Resources Ltd. (the “Company” or “Greenfire”) was incorporated under the laws of Alberta on December 9, 2022. These condensed interim consolidated financial statements (the “financial statements”) are comprised of the accounts of Greenfire and its wholly owned subsidiaries. The Company and its subsidiaries are engaged in the exploration, development and operation of oil and gas properties in the Athabasca oil sands region of Alberta. Greenfire’s common shares are publicly traded on the New York Stock Exchange and the Toronto Stock Exchange under the symbol “GFR”. The Company’s corporate head office is located at 1900, 205 5th Avenue SW, Calgary, AB T2P 2V7.

Throughout 2024, certain limited partnerships comprising Waterous Energy Fund and its affiliates (collectively, “WEF”), through a series of transactions acquired a total of 39,300,278 common shares and 2,654,179 common share purchase warrants of Greenfire. The final transaction in this series occurred on December 23, 2024 (the “Change of Control Transaction”), which resulted in WEF holding 56.5% of the Company’s outstanding common shares. Following the completion of the Change of Control Transaction, the Company’s Board of Directors was reconstituted.

At March 31, 2025, approximately 56.2% of the Company’s common shares were owned by WEF.

2. BASIS OF PRESENTATION

Preparation

These financial statements have been prepared in accordance with IAS 34: “Interim Financial Reporting, using the same accounting policies as those set out in Note 3 of the audited annual consolidated financial statements for the year ended December 31, 2024, which were prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board (“IASB”). Certain disclosures, which are normally required to be included in the notes to the audited annual consolidated financial statements, have been condensed or omitted. The financial statements should be read in conjunction with the Company’s audited annual consolidated financial statements and notes thereto for the year ended December 31, 2024.

The Company has adopted all published standards, interpretations or amendments to accounting standards issued by the IASB, that are effective for annual periods beginning on or after January 1, 2025. There was no material impact to the financial statements.

In these financial statements, all amounts are expressed in Canadian dollars (“$CAD”), unless otherwise indicated, which is the Company’s functional currency. These financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at their fair value.

These financial statements were approved by Greenfire’s Board of Directors on May 6, 2025.

Standards issued but not effective

IFRS 18 ‘Presentation and Disclosure in Financial Statements’ was issued in April 2024 by IASB and replaces IAS 1 ‘Presentation of Financial Statements’. The standard introduces defined structure to the Statement of Comprehensive Income (Loss) with related specific disclosure requirements. IFRS 18 is effective January 1, 2027 and is required to be adopted retrospectively. Early adoption is permitted. The Company is assessing the impact of IFRS 18 on its consolidated financial statements.

3. PROPERTY, PLANT AND EQUIPMENT (“PP&E”)

4. LONG-TERM DEBT

Senior Secured Notes

On September 20, 2023, Greenfire issued US$300 million of senior secured notes (the “2028 Notes”). The 2028 Notes bear interest at the fixed rate of 12.00% per annum payable semi-annually, have a term of five years maturing on October 1, 2028, and are secured by a second priority lien on the Company’s assets, junior to the Senior Credit Facility and financial risk management contracts with the Senior Credit Facility lenders.

The 2028 Notes are not subject to any financial covenants but subject to certain exceptions and qualifications. The indenture governing the 2028 Notes (the “2028 Indenture”) contains certain non-financial covenants that limit the Company’s ability to, among other things, incur additional indebtedness, create or permit liens to exist, pay dividends, redeem stock, make certain restricted payments, and sell assets. In addition, the Company is required to maintain financial hedges for a minimum of 50% of the forward twelve calendar month forecasted production(1) until the outstanding principal is less than US$100 million, and to limit capital expenditures to US$150(2) million annually until the outstanding principal is less than US$150 million. As at March 31, 2025 the Company was compliant with all covenants.

As the result of a Change of Control Transaction (Note 1), Greenfire was required to make an offer to repurchase the 2028 Notes, or a portion thereof. This repurchase offer expired on February 19, 2025, with $7,000 (US$5,000) principal amount tendered for repurchase.

The 2028 Indenture requires the Company to redeem the 2028 Notes at 105% of the principal amount plus accrued and unpaid interest with 75% of its Excess Cash Flow (as defined in the 2028 Indenture) every six-months (the “ECF Sweep”). When consolidated indebtedness(3) is less than US$150 million, the ECF Sweep is reduced to 25% of Excess Cash Flow until the principal outstanding on the 2028 Notes is US$100 million. The next redemption, if applicable, is due by September 3, 2025.

The Company may make additional redemptions of some or all of the 2028 Notes on or after October 1, 2025, inclusive of a “make whole” premium, as set out in the table below. At any time before October 1, 2025, the Company may redeem up to 40% of the aggregate principal amount of the notes using the net proceeds from certain equity issuances as a redemption price equal to 112% of the principal amount plus accrued and unpaid interest. The following table discloses the redemption amount including the “make whole” premium on redemption of the 2028 Notes:

As at March 31, 2025, the carrying value of the Company’s long-term debt was $329.6 million and the fair value was $364.1 million (December 31, 2024 carrying value – $328.9 million, fair value - $371.2 million).

Senior Credit Facility

Greenfire has a reserve-based credit facility (the “Senior Credit Facility”) comprised of an operating facility and a syndicated facility. Total credit available under the Senior Credit Facility is $50.0 million comprised of a $20.0 million operating facility and a $30.0 million syndicated facility.

The Senior Credit Facility is a committed facility available on a revolving basis until May 31, 2025. The Senior Credit Facility may, subject to the lenders’ approval, be extended for a 364-day period. If the revolving period is not extended, the undrawn portion of the facility will be cancelled and any amounts outstanding would be repayable on May 31, 2026. The Senior Credit Facility is subject to a semi-annual borrowing base review, occurring in May and November of each year. The borrowing base is determined based on the lenders’ evaluation of the Company’s hydrocarbon reserves and their commodity price outlook at the time of each borrowing base review.

The Senior Credit Facility is secured by a first priority security interest on substantially all of the assets of the Company and is senior in priority to the 2028 Notes. The Senior Credit Facility contains certain covenants that limit the Company’s ability to, among other things, incur additional indebtedness, create or permit liens to exist, pay dividends, redeem stock, and sell assets. The Senior Credit Facility is not subject to any financial covenants.

Amounts borrowed under the Senior Credit Facility bear interest at a floating rate based on the applicable Canadian prime rate, US base rate, adjusted secured overnight financing rate or adjusted Canadian overnight repo rate average, plus a margin of 1.75% to 6.25% based on Debt to EBITDA ratio. A standby fee on the undrawn portion of the Senior Credit Facility ranges from 0.6875% to 1.5625% based on Debt to EBITDA ratio. As at March 31, 2025 and December 31, 2024, the Company had no amounts drawn under the Senior Credit Facility.

Letter of Credit Facility

Greenfire maintains a separate $55.0 million letter of credit facility (the “EDC Facility”) with a Canadian bank that is supported by a performance security guarantee from Export Development Canada (“EDC”). The EDC Facility is available on a demand basis. As at March 31, 2025, the Company had $54.0 million (December 31, 2024 - $54.0 million) in letters of credit outstanding under the EDC Facility.

5. DECOMMISSIONING LIABILITIES

The Company’s decommissioning liabilities result from net ownership interests in petroleum assets including well sites, gathering systems and processing facilities. In 2024, the Company acquired certain natural gas and heavy oil assets in the Athabasca region of Northern Alberta and recognized $12.5 million of future decommissioning obligations. The Company estimates the total undiscounted escalated amount of cash flows required to settle its decommissioning liabilities to be approximately $341.4 million (December 31, 2024 - $340.8 million). For the period ended March 31, 2025, a credit-adjusted discount rate of 10.5% (December 31, 2024 - 10.5%) and an inflation rate of 2.0% (December 31, 2024 - 2.0%) were used to calculate the decommissioning liabilities. A 1.0% change in the credit-adjusted discount rate would impact the discounted value of the decommissioning liabilities by approximately $3.3 million with a corresponding adjustment to PP&E. The decommissioning liabilities are estimated to be settled in periods up to year 2077, with the majority being incurred between 2047 and 2077.

A reconciliation of the decommissioning liabilities is provided below:

6. WARRANT LIABILITY

The outstanding warrants entitle each warrant holder to purchase one common share of Greenfire, expire on September 19, 2028, and contain a cashless exercise feature, permitting an exercise without the payment of the exercise price by the issuance of a net, lower number of common shares. The warrants are remeasured to their fair value at each reporting period with the change recognized through the statement of comprehensive income (loss). The following table reconciles the warrant liability.

The fair value of each warrant was estimated using the Black Scholes Merton model with the following assumptions:

A 10% change in the share price would impact warrant liability by $2.8 million with a corresponding adjustment to the statement of comprehensive income (loss).

7. SHARE CAPITAL AND PER SHARE AMOUNTS

Share capital

As at March 31, 2025 the Company’s authorized share capital consists of an unlimited number of common shares without a nominal or par value. The following table summarizes the changes to the Company’s common share capital:

Per share amounts

The following table summarizes the Company’s basic and diluted net income (loss) per share:

When computing the diluted net loss per share for the three months March 31, 2024, the Company excluded the effect of 7.5 million warrants, 3.0 million performance warrants and 1.1 million share units as their effect was anti-dilutive.

The Company’s revenue from contracts with customers consists of diluted and non-diluted bitumen sales.

9. FINANCING AND INTEREST

10. STOCK-BASED COMPENSATION

Issued and Outstanding Share Units

A summary of the PWs, RSUs, PSUs and DSUs, collectively the share units, issued and outstanding is as follows:

Stock-based compensation expense

Performance warrants

Following the Change of Control Transaction (Note 1), on February 7, 2025, the Company’s Board of Directors exercised its discretion to accelerate the expiry of all performance warrants to April 30, 2025. The performance warrants were fully expensed when they vested on September 20, 2023.

11. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Fair Value of Financial Instruments

A number of the Company’s accounting policies and disclosures require the determination of fair value for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining the fair values is disclosed in the notes specific to that asset or liability.

The Company classifies the fair value of financial instruments according to the following hierarchies based on the amount of observable inputs used to value the instruments:

The carrying values of cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities included on the condensed interim consolidated balance sheets approximates the fair values of the respective assets and liabilities due to the short-term nature of those instruments.

The 2028 Notes are classified as Level 1 in the fair value hierarchy. For purposes of estimating the fair value of this instrument, the Company used the quoted market price of the 2028 Notes. The Company’s risk management contracts and warrant liability are classified as Level 2 in the fair value hierarchy. To estimate the fair value of these instruments, the Company used observable market data and/or other sources utilizing assumptions that market participants would use to determine fair value.

Market Risk

Market risk is the risk that changes in market conditions, such as commodity prices, foreign exchange rates and interest rates, will affect the Company’s cash flow, income, or the value of its financial instruments.

Commodity Price Risk

The Company’s risk management program is designed to reduce the volatility of revenue and cash flow, generate sufficient cash flows to service debt obligations, and fund the Company’s operations. The Company’s risk management liabilities may consist of hedging instruments such as fixed price swaps and option structures, including costless collars on WTI, WCS differentials, condensate differential, natural gas and electricity swaps. The Company does not use financial derivatives for speculative purposes.

The Company’s obligations under its 2028 Notes (Note 4) include a requirement to maintain a twelve-month forward commodity price risk management program covering at least 50% of the forecasted PDP production over the next twelve months, as set out in the Company’s most recent reserves report, until the outstanding principal is reduced to below US$100 million.

The Company’s commodity price risk management program does not involve margin accounts that require posting of margin with increased volatility in underlying commodity prices. Financial risk management contracts are measured at fair value, with gains and losses on re-measurement included in the consolidated statements of comprehensive income (loss) in the period in which they arise.

The Company’s financial risk management contracts are subject to master netting agreements that create the legal right to settle the instruments on a net basis. The following table summarizes the gross asset and liability positions of the Company’s individual risk management contracts that are offset in the consolidated balance sheets:

The following table summarizes the financial commodity risk management gains and losses:

As at March 31, 2025, the following financial commodity risk management contracts were in place:

Subsequent to March 31, 2025, Greenfire entered into the following financial commodity risk management contracts:

The following table summarizes the sensitivity to price changes for Greenfire’s WTI Fixed Price Swaps:

The Company’s commodity risk management contracts are held with two large reputable financial institutions. As a result, the Company concluded that credit risk associated with its commodity risk management contracts is low.

Foreign Currency Risk Management

The Company is exposed to foreign currency risk on the principal and interest components of its US dollar denominated 2028 Notes (Note 4) and US Dollar denominated cash, cash equivalents, accounts receivables and accounts payables, and accrued liabilities. As at March 31, 2025, Greenfire’s net foreign exchange risk exposure was a US$217.5 million liability (December 31, 2024 – US$218.4 million liability), and a 10% change in the foreign exchange rate would result in a $31.3 million change in the foreign exchange gain or loss (December 31, 2024 - $31.4 million).

Interest Rate Risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company is exposed to interest rate risk related to borrowings drawn under the Senior Credit Facility, as the interest charged on the credit facility fluctuates with floating interest rates. Currently no amounts are drawn on the Senior Credit Facility. The 2028 Notes and letters of credit issued are subject to fixed interest rates and are not exposed to changes in interest rates.

Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s accounts receivable. The Company is primarily exposed to credit risk from receivables associated with its oil sales. The Company manages its credit risk exposure by transacting with high-quality credit worthy counterparties and monitoring credit worthiness and/or credit ratings on an ongoing basis. Trade receivables from oil sales are generally collected on the 25th day of the month following production. Joint interest receivables are typically collected within one to three months of the invoice being issued. The Company has not previously experienced any material credit losses on the collection of accounts receivable.

At March 31, 2025, and December 31, 2024 the Company was exposed to concentration risk associated with its outstanding trade receivables and joint interest receivables balances. Of the Company’s trade receivables at March 31, 2025, 89% was receivable from a single company (December 31, 2024 - 99% receivable from a single company). At March 31, 2025, 100% of the Company’s joint interest receivables were held by a single company (December 31, 2024 - 100% by a single company). Maximum exposure to credit risk is represented by the carrying amount of accounts receivable on the balance sheet. Subsequent to March 31, 2025, the Company has received $4.1 million from its joint interest partner.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s objective in managing liquidity risk is to maintain sufficient available reserves to meet its financial obligations at any point in time. The Company expects to achieve this objective through prudent capital spending, an active commodity risk management program and through strategies such as continuously monitoring forecast and actual cash flows from operating, financing and investing activities, and available credit facilities. Management believes that future cash flows generated from these sources will be adequate to settle Greenfire’s financial liabilities.

The following table details the Company’s contractual maturities of its financial liabilities:

12. SUPPLEMENTAL CASH FLOW INFORMATION

The following table reconciles the net changes in non-cash working capital and other liabilities from the consolidated balance sheet to the consolidated statement of cash flows:

13. RELATED PARTY TRANSACTION

Following the Change of Control Transaction (see Note 1), Greenfire agreed to reimburse WEF for approximately $1.9 million of legal fees associated with the Company’s adoption of a shareholder rights plan and related hearings before the Alberta Securities Commission, in which WEF was successful. These events ultimately led to the Change of Control Transaction and the reconstitution of the Company’s Board of Directors. The reimbursement was reviewed and approved by the independent members of the Company’s Board of Directors.

Exhibit 99.2

MANAGEMENT’S DISCUSSION & ANALYSIS

For the three month period ended March 31, 2025

Greenfire Resources Ltd.

MANAGEMENT’S DISCUSSION AND ANALYSIS

This Management’s Discussion and Analysis of the financial condition and results of operations of Greenfire Resources Ltd. (“Greenfire” or the “Company”) is dated May 6, 2025, which is the date this MD&A was approved by the Board of Directors of the Company (the “Board of Directors”), and should be read in conjunction with the Company’s unaudited condensed interim consolidated financial statements (“financial statements”) and notes thereto for the three months ended March 31, 2025 and 2024, and the audited consolidated financial statements for the years ended December 31, 2024 and 2023 (“annual financial statements”) and the related MD&A. The financial statements, including the comparative figures, were prepared in accordance with IAS 34 “Interim Financial Reporting” as issued by the International Accounting Standards Board.

Additional information about Greenfire has been filed with Canadian securities regulatory authorities and the United States Securities and Exchange Commission (SEC) and is available on SEDAR+ at www.sedarplus.ca, including Greenfire’s Annual Information Form, dated March 17, 2025 (the ”2024 AIF”), which is also filed with the SEC under cover of Form 40-F. Information contained in or otherwise accessible through our website, even if referred to in this MD&A, does not constitute part of this MD&A and is not incorporated by reference into this MD&A.

This MD&A contains forward-looking information based on the Company’s current expectations and projections. For information on the material factors and assumptions underlying such forward-looking information, refer to the “Forward Looking Statements” section of this MD&A. Refer to the “Abbreviations” section of this MD&A for information regarding abbreviations used in this MD&A.

This MD&A contains non-GAAP financial measures, non-GAAP financial ratios the “Non-GAAP Measures”. Non-GAAP measures include adjusted EBITDA, operating netback, operating netback excluding realized gain (loss) on risk management contracts, effective royalty rate, adjusted funds flow, adjusted free cash flow, and adjusted working capital surplus (deficit). When non-GAAP measures are expressed on a per barrel basis, they are non-GAAP ratios. This MD&A also contains supplementary financial measures and ratios, derived from IFRS® Accounting Standards. Supplementary financial measures include gross profit (loss), capital expenditures and depletion. When supplementary financial measures are expressed on a per barrel basis, they are supplementary financial ratios. For additional information regarding these non-GAAP and supplementary financial measures refer to the “Non-GAAP and Other Financial Measures” section of this MD&A.

All financial information included in this MD&A is presented in Canadian dollars (“CAD”), unless otherwise noted. Certain dollar amounts have been rounded to the nearest million dollars or thousand dollars, as noted, and tables may not add due to rounding. Unless indicated otherwise, production volumes and per unit statistics are presented throughout this MD&A on a “gross” basis as determined in accordance with National Instrument 51-101 – Standards for Disclosure for Oil and Gas Activities, which is the Company’s gross working interest basis before deduction of royalties. Dollar per barrel ($/bbl) figures presented throughout this MD&A are based upon sold bitumen barrels unless otherwise noted. The Company monitors and reviews financial information on a per barrel basis for comparability to prior period results and to analyze the Company’s competitiveness relative to its peer group.

DESCRIPTION OF BUSINESS

Greenfire is an oil sands producer focused on the development of its long-life and low decline thermal oil assets in the Athabasca region of Alberta, Canada, with its registered offices in Calgary, Alberta. Greenfire plans to leverage its large resource base and significant infrastructure in place to drive meaningful, capital-efficient production growth. As part of the Company’s commitment to operational excellence, safe and reliable operations remain a top priority for Greenfire.

Greenfire’s common shares are listed on the New York Stock Exchange and the Toronto Stock Exchange under the symbol “GFR”.

Throughout 2024, certain limited partnerships comprising Waterous Energy Fund and its affiliates (collectively, “WEF”), through a series of transactions acquired a total of 39,300,278 common shares and 2,654,179 common share purchase warrants of Greenfire. The final transaction in this series, which occurred on December 23, 2024 (the “Change of Control Transaction”), which resulted in WEF holding 56.5% of the Company’s outstanding common shares. Following the completion of the Change of Control Transaction, the Company’s Board of Directors was reconstituted.

At March 31, 2025, approximately 56.2% of the Company’s common shares were owned by WEF.

GREENFIRE’S ASSETS AND STRATEGY

Greenfire’s principal assets are the Hangingstone Facilities. The Hangingstone Facilities consist of two Steam-Assisted Gravity Drainage (“SAGD”) oil production facilities: the Expansion Asset and the Demo Asset. Located approximately 50 kilometers south of Fort McMurray, Alberta, these facilities are operated by Greenfire, with the Company holding a 75% working interest in the Expansion Asset and a 100% working interest in the Demo Asset.

The Company’s strategic objective is to manage and enhance its asset portfolio to maximize long-term net asset value per share for Greenfire shareholders. This goal will be achieved by investing in proven, industry-standard SAGD optimization techniques at the Hangingstone Facilities, which are designed to increase production levels to leverage existing spare facility capacities, while maintaining disciplined control over operating cost structures.

RECENT DEVELOPMENTS

Production and Steam Generation Update

Greenfire’s production for the second quarter of 2025 to date is approximately 15,650 bbls/d, due to ongoing steam generation downtime and base production declines at the Expansion Asset. At present, one of the four steam generation units is offline, with an associated production impact of approximately 1,500 to 2,250 bbls/d. The Company is targeting restoring the offline steam generator by year-end 2025 and is implementing mitigation strategies to reduce production impacts during this period.

Emissions Reporting and Regulatory Environment

Greenfire continues to engage in discussions with the Alberta Energy Regulator (“AER”) regarding previously reported sulphur dioxide emissions that exceed regulatory limits at the Expansion Asset. The Company takes its regulatory obligations very seriously and has ordered sulphur removal facilities at the Expansion Asset, at a total estimated cost of $15.0 million ($20.0 million on a 100% working interest basis), with installation and commissioning targeted for the fourth quarter of 2025. Greenfire anticipates that this measure will restore compliance with the sulphur dioxide emissions requirements at the Expansion Asset in a safe and efficient manner.

Progress Update on Future Development Plans

Greenfire is advancing its future development plans and operational strategies for the Hangingstone Facilities. To address production declines, the Company is planning on constructing new well pads and drilling new well pairs on the undeveloped reservoir north of the Expansion Asset’s Central Processing Facility (“CPF”). The final investment decision remains subject to approval by Greenfire’s Board of Directors. If approved, drilling of these well pairs could begin as early as the fourth quarter of 2025. The Company is evaluating additional development targets to the southeast of the Expansion Asset’s CPF to support further production growth.

FINANCIAL & OPERATING HIGHLIGHTS

Liquidity and Balance Sheet

PRODUCTION AND COMMODITY PRICING

Bitumen Production and Sales

Bitumen production decreased 11% (or 2,172 bbl/d) for the three months ended March 31, 2025, to 17,495 bbl/d compared to 19,667 bbl/d in the same quarter of 2024. The decrease in production relates to the unplanned loss of a steam generation unit and natural field declines (see “Recent Developments” section of this MD&A for further information).

Commodity Prices

WCS Hardisty

WCS is a blend of heavy crude oils that serves as the pricing benchmark for Canadian heavy oil at Hardisty, Alberta. Greenfire’s bitumen sales revenue is directly correlated to WCS pricing. WCS is priced at a discount to WTI, with this difference referred to as the WCS differential. The WCS differential is subject to variability driven by factors such as production volumes, egress capacity, scheduled infrastructure maintenance, refinery demand, and other market conditions in Western Canada. The May 2024 commissioning of the Trans Mountain Pipeline expansion increased Western Canadian egress capacity, narrowing the WCS differential.

Condensate

The Company uses condensate, sourced from the Edmonton area, as a blending diluent to facilitate the transportation of its produced bitumen. The price of condensate has historically been correlated to the price of WTI.

FINANCIAL RESULTS

Oil Sales

Oil sales decreased 9% (or $17.4 million) for the three months ended March 31, 2025, to $183.6 million compared to $201.0 million in the same quarter of 2024. The decrease reflects lower sales volumes, partially offset by improved Canadian-denominated WCS pricing.

Royalties

Royalties consist of crown royalties on bitumen production paid to the Province of Alberta, based on government prescribed royalty rates. Royalty rates are based on the Canadian dollar equivalent WTI benchmark price.

The effective royalty rate was 6.90% during the three months ended March 31, 2025, compared to 6.42% for the same period in 2024. The increase reflects the prescribed pre-payout royalty rate being based on one-month trailing benchmark pricing during a period of declining commodity prices in 2025, compared to a period of rising commodity prices in 2024.

Realized and Unrealized Gain (Loss) on Risk Management Contracts

Greenfire uses risk management to protect its cash flows against volatility in commodity prices. Financial contracts settled in the period result in realized gains or losses based on the market price compared to the contract price and the notional volume outstanding.

For the three months ended March 31, 2025, Greenfire recognized a $1.1 million realized loss on risk management contracts, compared to a loss of $8.8 million for the same quarter of 2024. Realized losses occur when the average price of the hedged commodity settles above the contract price, while realized gains occur in the opposite scenario. Generally, realized gains and losses on risk management contracts resulting from fluctuations in energy prices are largely offset by an inverse gain or loss on physical sales or purchases.

Changes in the fair value of unsettled financial contracts are reported as unrealized gains or losses as the forward markets for commodities fluctuate. When adjusting the risk management contracts to their March 31, 2025 fair value, Greenfire recognized a non-cash unrealized gain of $6.3 million, compared to an unrealized loss of $38.7 million for the same quarter of 2024.

Diluent Expense

To facilitate the transportation of bitumen, the Company uses condensate as a blending diluent. Greenfire’s diluent expense includes the cost of condensate and its associated transportation costs. Diluent expense per barrel represents the cost difference between Greenfire’s condensate purchase price and the recovered value from selling the same volume of diluted bitumen.

Diluent expense per bbl decreased 19% (or $2.87/bbl) for the three months ended March 31, 2025, to $12.10/bbl compared to $14.97/bbl in the same quarter of 2024. The decrease in diluent expense per bbl corresponds to the lower price differential between WCS and Edmonton Condensate (C5+) (see “Production and Commodity Pricing - Commodity Prices” section of this MD&A) and an increase in undiluted bitumen sales.

Transportation and Marketing Expense

Transportation expenses include the costs to move bitumen between the Hangingstone assets and to the sales point. Marketing fees relate to exclusive marketing contracts with a reputable international energy marketing company. These exclusive marketing contracts are expected to expire between April 2026 and October 2028.

Transportation and marketing expense per bbl increased 24% (or $1.76/bbl) for the three months ended March 31, 2025, to $9.06/bbl compared to $7.30/bbl in the same quarter of 2024. The increase in marketing fees per barrel reflects a greater share of production from the Demo Asset, which is subject to higher marketing fees than the Expansion Asset. Higher undiluted bitumen sales in the first quarter of 2025, compared to the same quarter of 2024, led to increased trucking costs, driving up transportation expense per barrel.

Operating Expenses

Operating expenses include energy operating expenses and non-energy operating expenses.

For the three months ended March 31, 2025, operating expenses per bbl increased 20% (or $4.11/bbl) to $24.21/bbl compared to $20.10/bbl in the same quarter of 2024. Energy costs per bbl decreased 13% (or $0.89/bbl) to $6.03/bbl due to lower natural gas and benchmark power prices. Non-energy costs increased 38% (or $5.00/bbl) due to higher staffing costs following the transition from stock-based compensation to annual cash bonuses and higher maintenance costs.

Depletion and Depreciation Expenses

The Company’s depletion and depreciation increased 20% (or $3.6 million) for the three months ended March 31, 2025, to $21.6 million compared to $18.0 million for the same period of 2024. The increase was driven by the inclusion of future development costs related to the 72% increase in proved and probable reserves as outlined in the year-end 2024 reserve report and disclosed in the Company’s 2024 AIF.

Operating Netback(1)

Operating netback per bbl increased 28% (or $6.98/bbl) for the three months ended March 31, 2025, to $31.67/bbl compared to $24.69/bbl in the same quarter of 2024. The increase was driven by a higher Canadian-denominated WCS benchmark price and a narrowing differential to WTI, resulting in higher per-barrel oil sales and lower per-barrel diluent costs.

Gross Profit (Loss)(1)

Gross profit increased by $46.5 million for the three months ended March 31, 2025, to $34.4 million compared to a gross loss of $12.1 million in the same quarter of 2024. This increase was due to gains on risk management contracts, offset by lower oil sales, net of royalties for the three months ended March 31, 2025, compared to the same period of 2024.

General & Administrative Expenses (“G&A”)

G&A expenses include head office and corporate costs such as salaries and employee benefits, legal fees, engineering services, audit and tax-related fees, and may also include expenses related to corporate strategic initiatives if any, among other costs.

For the three months ended March 31, 2025, G&A expenses increased by 98% (or $4.7 million) to $9.4 million compared to $4.7 million for the same period of 2024. The three months ended March 31, 2025, includes a one-time expense of $1.9 million associated with challenging the Company’s adoption of a shareholder rights plan, in which WEF was successful. Refer to the “Related Party Transaction” section in this MD&A for further information. The remaining increase relates to employee incentive compensation that will be comprised solely of an annual cash bonus displacing the prior year equity grants following the suspension of the omnibus share incentive plan in January of 2025 Refer to the “Stock-Based Compensation” section of this MD&A for further information.

Stock-Based Compensation

The stock-based compensation expense relates to share awards issued under the omnibus share incentive plan (the “Incentive Plan”) adopted in February 2024. The Company’s Board of Directors suspended further grants under the Incentive Plan as the Company’s incentive compensation plan will comprise solely of an annual cash bonus. The remaining awards will be expensed over their vesting periods.

The Company recorded stock-based compensation of $1.3 million in relation to share awards issued under the Incentive Plan during the three months ended March 31, 2025, compared to $0.9 million for the same period during 2024.

Financing and Interest Expenses

Interest expense includes cash-settled interest on the 2028 Notes, Senior Credit Facility, EDC Facility, and other related charges. Accretion includes the amortization of debt issuance costs, accrual of redemption premiums on the 2028 Notes, accretion of lease liability and accretion of decommissioning liabilities.

For the three months ended March 31, 2025, financing and interest expenses decreased by 21% (or $3.2 million) to $12.3 million compared to $15.5 million for the same quarter of 2024. The decrease was primarily due to lower interest on the reduced 2028 Notes principal balance following the July 2024 repayment.

Refer to the “Capital Resources and Liquidity” section in this MD&A for more details of Greenfire’s long-term debt, revolving credit facility and EDC Facility.

Exploration Expenses

The Company’s exploration expenses primarily consist of escalating mineral lease rentals on undeveloped lands. Exploration expenses were generally consistent between the first quarters of 2025 ($0.7 million) and 2024 ($0.6 million).

Other Income

Other income primarily consists of interest earned on the Company’s cash and cash equivalent balances. Other income for the three months ended March 31, 2025, was $0.7 million, compared to other income of $1.4 million for the same period in 2024.

Foreign Exchange Loss (Gain)

The Company’s foreign exchange loss (gain) is driven by fluctuations in the US dollar to Canadian dollar exchange rate and is primarily related to the principal and interest components of the Company’s US dollar denominated debt.

In the three months ended March 31, 2025, Greenfire recorded foreign exchange gain of $0.0 million, compared to a loss of $8.3 million for the comparative period in 2024. The variance was primarily driven by the revaluation of the US$ denominated 2028 Notes.

Loss (Gain) on Revaluation of Warrants

The outstanding warrants entitle each warrant holder to purchase one common share of Greenfire and expire on September 19, 2028. The warrants contain a cashless exercise feature, permitting settlement without the cash payment of the exercise price via the issuance of a net, number of common shares. The cashless exercise feature results in the warrants being treated as a financial liability and necessitates their remeasurement at each reporting period.

When revaluing the warrants to fair value, the Company recognized a non-cash gain of $8.0 million for the three months ended March 31, 2025, compared to a loss of $6.4 million for the same period of 2024. The 2025 gain primarily reflects a decrease in the closing price of the Company’s common shares on March 31, 2025, relative to December 31, 2024.

Taxes

Deferred income tax assets are recognized to the extent that the realization of the related tax benefit through future taxable profits is probable based on current tax pools and estimated future income.  For the three months ended March 31, 2025, Greenfire recognized a deferred income tax expense of $3.2 million.

Net Income (loss) and Comprehensive Income (Loss) and Adjusted EBITDA(1)

For the three months ended March 31, 2025, Greenfire generated net income of $16.2 million compared to a net loss of $46.9 million in the same quarter of 2024, an increase of $63.1 million. The majority of this increase relates to unrealized gains (losses) on risk management contracts and the revaluation of warrants.

Net income (loss) and comprehensive income (loss) is a GAAP measure, which is the most directly comparable measure to Adjusted EBITDA. Adjusted EBITDA increased 5% (or $2.0 million) for the three months ended March 31, 2025, to $41.3 million compared to $39.3 million for the same quarter of 2024. The increase was driven by a higher Canadian-denominated WCS benchmark price and a narrowing differential to WTI, resulting in higher per-barrel oil sales and lower per-barrel diluent costs.

RISK MANAGEMENT

The Company’s activities expose it to a variety of financial risks that arise as a result of its exploration, development, production and financing activities. These risks include credit risk, liquidity risk and market risk. Market risk is the risk that changes in market conditions, such as commodity prices, foreign exchange rates and interest rates, will affect the Company’s cash flow, income, or the value of its financial instruments.

Commodity Price Risk

The Company is exposed to commodity price risk on its oil sales and energy operating costs due to fluctuations in market prices. The Company continues to execute a risk management program that is primarily designed to reduce the volatility of revenue and cash flow, generate sufficient cash flows to service debt obligations and fund the Company’s operations. The Company’s risk management liabilities may consist of hedging instruments such as fixed price swaps and option structures, including costless collars on WTI, WCS differential, condensate differential, natural gas and electricity swaps. The Company does not use financial derivatives for speculative purposes.

The Company’s obligations under its 2028 Notes (as outlined in the “Capital Resources and Liquidity – Long Term Debt” section of this MD&A), includes a requirement to implement and maintain a twelve month forward commodity price risk management program encompassing not less than 50% of the hydrocarbon output under the proved developed producing (“PDP”) reserves forecast in the Company’s most recent reserves report, as determined by a qualified and independent reserves evaluator.

The Company’s risk management program does not involve margin accounts that require posting of margin, including in scenarios of increased volatility in underlying commodity prices. Financial risk management contracts are measured at fair value, with gains and losses on re-measurement included in the consolidated statements of comprehensive income (loss) in the period in which they arise.

Outstanding Financial Risk Management Contracts at March 31, 2025

Financial Risk Management Contracts Subsequent to March 31, 2025

Subsequent to March 31, 2025 Greenfire entered into the following financial commodity risk management contracts:

Foreign Exchange Risk

The Company is exposed to foreign currency risk on the principal and interest components of its US dollar denominated 2028 Notes and US Dollar denominated cash, cash equivalents, accounts receivables, and accounts payables and accrued liabilities. As at March 31, 2025, Greenfire’s net foreign exchange risk exposure was US$217.5 million liability and a 10% change in the foreign exchange rate would result in a $31.3 million change in the foreign exchange gain or loss.

Interest Rate Risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company is exposed to interest rate risk related to borrowings drawn under the Senior Credit Facility, as the interest charged on the Senior Credit Facility fluctuates with floating interest rates. Currently no amounts are drawn on the Senior Credit Facility. The 2028 Notes and letters of credit issued are subject to fixed interest rates and are not exposed to changes in interest rates.

Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s accounts receivable. The Company is primarily exposed to credit risk from receivables associated with its oil sales and joint interest partners.

The Company manages its credit risk exposure by transacting with high-quality credit worthy counterparties and monitoring credit worthiness and/or credit ratings on an ongoing basis. Trade receivables from oil sales are generally collected on the 25th day of the month following production. Joint interest receivables are typically collected within one to three months of the invoice being issued.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s objective in managing liquidity risk is to maintain sufficient available reserves to meet its financial obligations at any point in time. The Company expects to achieve this objective through prudent capital spending, an active commodity risk management program and through strategies such as continuously monitoring forecast and actual cash flows from operating, financing and investing activities, and available credit facilities. Management believes that future cash flows generated from these sources will be adequate to settle Greenfire’s financial liabilities.

CAPITAL RESOURCES AND LIQUIDITY

The Company’s capital management objective is to maintain financial flexibility and sufficient liquidity to execute on planned capital programs, while meeting short and long-term commitments, including servicing and repaying long term debt. The Company strives to actively manage its capital structure in response to changes in economic conditions and further deleverage its balance sheet. At March 31, 2025, the Company’s capital structure consists of working capital surplus (deficit), long-term debt and shareholders’ equity. Management believes its current capital resources and its ability to manage cash flow and working capital levels will allow the Company to meet its current and future obligations, to make interest and principal payments, and to fund the other needs of the business.

Long Term Debt

On September 20, 2023, Greenfire issued US$300 million of senior secured notes (the “2028 Notes”). The 2028 Notes bear interest at the fixed rate of 12.00% per annum payable semi-annually, have a term of five years maturing on October 1, 2028, and are secured by a second priority lien on the Company’s assets, junior to the Senior Credit Facility and financial risk management contracts with the Senior Credit Facility lenders.

The 2028 Notes are not subject to any financial covenants but subject to certain exceptions and qualifications. The indenture governing the 2028 Notes (the “2028 Indenture”) contains certain non-financial covenants that limit the Company’s ability to, among other things, incur additional indebtedness, create or permit liens to exist, pay dividends, redeem stock, make certain restricted payments, and sell assets. In addition, the Company is required to maintain financial hedges for a minimum of 50% of the forward twelve calendar month forecasted production(1) until the outstanding principal is less than US$100 million, and to limit capital expenditures to US$150(2) million annually until the outstanding principal is less than US$150 million. As at March 31, 2025 the Company was compliant with all covenants.

As the result of a Change of Control Transaction (see “Description of Business” section in this MD&A), Greenfire was required to make an offer to repurchase the 2028 Notes, or a portion thereof. This repurchase offer expired on February 19, 2025, with US$5,000 principal amount tendered for repurchase.

The 2028 Indenture requires the Company to redeem the 2028 Notes at 105% of the principal amount plus accrued and unpaid interest with 75% of its ECF (as defined in the 2028 Indenture) every six-months (the “ECF Sweep”). When consolidated indebtedness(3) is less than US$150 million, the ECF Sweep is reduced to 25% of Excess Cash Flow until the principal outstanding on the 2028 Notes is US$100 million. The next redemption, if applicable, is due by September 3, 2025.

As at March 31, 2025, the carrying value of the Company’s long-term debt was $329.6 million and the fair value was $364.1 million (December 31, 2024 carrying value – $328.9 million, fair value - $371.2 million).

Senior Credit Facility

Greenfire has a reserve-based credit facility (the “Senior Credit Facility”) comprised of an operating facility and a syndicated facility. Total credit available under the Senior Credit Facility is $50 million comprised of a $20 million operating facility and a $30 million syndicated facility.

The Senior Credit Facility is a committed facility available on a revolving basis until May 31, 2025. The Senior Credit Facility may, subject to the lenders’ approval, be extended for a 364-day period. If the revolving period is not extended, the undrawn portion of the facility will be cancelled and any amounts outstanding would be repayable on May 31, 2026. The Senior Credit Facility is subject to a semi-annual borrowing base review, occurring in May and November of each year. The borrowing base is determined based on the lenders’ evaluation of the Company’s hydrocarbon reserves and their commodity price outlook at the time of each borrowing base review.

The Senior Credit Facility is secured by a first priority security interest on substantially all of the assets of the Company and is senior in priority to the 2028 Notes. The Senior Credit Facility contains certain covenants that limit the Company’s ability to, among other things, incur additional indebtedness, create or permit liens to exist, pay dividends, redeem stock, and sell assets. The Senior Credit Facility is not subject to any financial covenants.

Amounts borrowed under the Senior Credit Facility bear interest at a floating rate based on the applicable Canadian prime rate, US base rate, adjusted secured overnight financing rate or adjusted Canadian overnight repo rate average, plus a margin of 1.75% to 6.25% based on debt to EBITDA ratio. Standby fees on the undrawn portion of the Senior Credit Facility range from 0.6875% to 1.5625% based on a debt to EBITDA ratio. As at March 31, 2025, the Company had no amounts drawn under the Senior Credit Facility.

Letter of Credit Facility

Greenfire maintains a separate $55.0 million letter of credit facility (the “EDC Facility”) with a Canadian bank that is supported by a performance security guarantee from Export Development Canada (“EDC”). The EDC Facility is available on a demand basis. As at March 31, 2025, the Company had $54.0 million (December 31, 2024 - $54.0 million) in letters of credit outstanding under the EDC Facility.

Adjusted Working Capital Surplus(1)

Working capital surplus (deficit) is a GAAP measure that is the most directly comparable measure to adjusted working capital surplus (deficit).

As of March 31, 2025, working capital increased to a surplus of $60.1 million, compared to a deficit of $191.6 million at December 31, 2024, representing an improvement of $251.7 million. This was driven by the Company’s offer to repurchase a portion of its 2028 Notes, resulting in those 2028 Notes being presented as a current liability at December 31, 2024. This offer expired on February 19, 2025, see the “Capital Resources and Liquidity – Long-Term Debt” section of this MD&A. Adjusted working capital surplus increased to $66.2 million as at March 31, 2025, from $57.1 million as at December 31, 2024. The increase was primarily due to a reduction in the warrant liability.

Share Capital

The Company is authorized to issue an unlimited number of Common Shares without a nominal or par value. The Company’s Board of Directors has suspended further grants under the Incentive Plan.

Following the Change of Control Transaction, on February 7, 2025, the Company’s Board of Directors exercised its discretion to accelerate the expiry of all performance warrants to April 30, 2025. The performance warrants were fully expensed when they vested on September 20, 2023.

Cash Flow Summary

Cash Provided by Operating Activities

Cash provided by operating activities in the first quarter of 2025 was $34.7 million, compared to cash provided by operating activities of $17.1 million in the same period in 2024. The increase primarily relates to changes in non-cash working capital.

Based on current and forecasted production levels, operating expenses, capital expenditures, existing commodity price risk management contracts and current outlook for commodity prices, the Company expects cash provided by operating activities will be sufficient to cover its operational commitments and financial obligations under the 2028 Indenture and the credit agreement governing the Senior Credit Facility over the next twelve months.

Cash Used in Financing Activities

Cash used in financing activities for first quarter of 2025 was $1.9 million, compared to $0.1 million in the same period of 2024. The increase relates to higher lease payments during the three months ended March 31, 2025.

Cash Used in Investing Activities

Cash used in investing activities for first quarter of 2025 was $27.8 million, compared to cash flow used in investing activities of $37.7 million in the same period of 2024. The decrease is attributable to lower capital expenditures during the three months ended March 31, 2025, compared to same period of 2024.

Capital Expenditures(1)

Adjusted Funds Flow(1) and Adjusted Free Cash Flow(1)

Adjusted funds flow was $31.4 million, during the three months ended March 31, 2025, compared to $27.6 million during the same period in 2024. The increase in adjusted funds flow relates to higher adjusted EBITDA(1) and lower interest expense compared to 2024.

Adjusted free cash flow(1) was $5.1 million, during the three months ended March 31, 2025, compared to $(6.9) million during the same period in 2024. The increase relates to higher adjusted funds flow and lower capital expenditures(2) in the first quarter of 2025 compared to the same quarter in 2024.

RELATED PARTY TRANSACTION

Following the Change of Control Transaction, Greenfire agreed to reimburse WEF for approximately $1.9 million of legal fees associated with the Company’s adoption of a shareholder rights plan and related hearings before the Alberta Securities Commission, in which WEF was successful. These events ultimately led to the Change of Control Transaction and the reconstitution of the Company’s Board of Directors. The reimbursement was reviewed and approved by the independent members of the Company’s Board of Directors.

RISK FACTORS

The Company’s business is subject to numerous risks and uncertainties, any of which may adversely affect the Company’s business and its financial results and results of its operations. Certain of these risks and uncertainties are described throughout this MD&A. For additional information refer to the “Risk Factors” section in our 2024 AIF, which is also filed with the SEC under cover of Form 40-F, is available online at www.sedarplus.ca, www.sec.gov and on our website at www.greenfireres.com.

SUMMARY OF QUARTERLY RESULTS

NON-GAAP AND OTHER FINANCIAL MEASURES

Certain financial measures in this MD&A are non-GAAP financial measures or ratios. These measures do not have a standardized meaning under IFRS Accounting Standards and therefore may not be comparable to similar measures provided by other companies. These non-GAAP measures should not be considered in isolation or as an alternative for measures of performance prepared in accordance with IFRS Accounting Standards. This MD&A also contains supplementary financial measures and ratios. Supplementary financial measures are derived from IFRS Accounting Standards.

Non-GAAP financial measures and ratios include: adjusted EBITDA, operating netback, operating netback, excluding realized gain (loss) on risk management contracts, adjusted funds flow, adjusted free cash flow, effective royalty rate, adjusted working capital surplus (deficit) and per barrel figures associated with non-GAAP financial measures.

Supplementary financial measures and ratios include: gross profit (loss), capital expenditures and depletion.

While these measures are commonly used in the oil and natural gas industry, the Company’s determination of these measures may not be comparable with calculations of similar measures presented by other reporting issuers. We believe that the inclusion of these specified financial measures provides useful information to financial statement users when evaluating the financial results of Greenfire.

Non-GAAP Financial Measures & Ratios

Adjusted EBITDA (including per barrel ($/bbl))

Net income (loss) and comprehensive income (loss) is the most directly comparable GAAP measure for adjusted EBITDA, which is a non-GAAP measure. Adjusted EBITDA is calculated as net income (loss) and comprehensive income (loss) before interest and financing, income taxes, depletion, depreciation and amortization, transaction costs, refinancing costs and is adjusted for certain non-cash items, or other items that are considered non-recurring in nature or outside of normal business operations. When adjusted EBITDA is expressed on a per barrel basis it is a non-GAAP ratio. Adjusted EBITDA ($/bbl) is calculated by dividing adjusted EBITDA by the Company’s total bitumen sales volume in a specified period. Adjusted EBITDA is used to measure Greenfire’s profitability from its underlying asset base on a continuing basis. This measure is not intended to represent net income (loss) and comprehensive income (loss) in accordance with IFRS Accounting Standards. For a reconciliation of net income (loss) and comprehensive income (loss) to adjusted EBITDA, see the “Results of Operations – Net Income (loss) and comprehensive income (loss) and Adjusted EBITDA” section in this MD&A.

Operating Netback (including per barrel ($/bbl)) and Operating Netback, excluding realized gain (loss) risk management contracts (including per barrel ($/bbl))

Gross profit (loss) is the most directly comparable GAAP measure to operating netback and operating netback, excluding realized (gain) loss on risk management contracts which are non-GAAP measures. These measures are not intended to represent gross profit (loss), net earnings or other measures of financial performance calculated in accordance with IFRS Accounting Standards. Operating netback, excluding realized gain (loss) on risk management contracts is comprised of gross profit (loss), plus loss on risk management contracts, less gain on risk management contracts and less depletion expense on the Company’s operating assets. Operating netback, excluding realized gain (loss) on risk management contracts per barrel ($/bbl) is calculated by dividing operating netback , excluding realized gain (loss) on risk management contracts by the Company’s bitumen sales volume in a specified period. Operating netback is further adjusted for realized gain (loss) risk management contracts, as appropriate. Operating netback per barrel ($/bbl) is calculated by dividing operating netback by the Company’s bitumen sales volume in a specified period. When Operating netback is expressed on a per barrel basis it is a non-GAAP ratio. Operating netback and operating netback, excluding realized gain (loss) on risk management contracts are financial measures widely used in the oil and gas industry as supplementary measures of a company’s efficiency and ability to generate cash flow for debt repayments, capital expenditures or other uses. See the “Financial Results – Operating Netback” section in this MD&A for a reconciliation of gross profit (loss) to operating netback and operating netback, excluding realized gain (loss) on risk management contracts.

Adjusted Funds Flow

Cash provided by operating activities is the most directly comparable GAAP measure for adjusted funds flow, which is a non-GAAP measure. This measure is not intended to represent cash provided by operating activities calculated in accordance with IFRS Accounting Standards.

The adjusted funds flow measure allows management and others to evaluate the Company’s ability to fund its capital programs and meet its ongoing financial obligations using cash flow internally generated from ongoing operating related activities. We compute adjusted funds flow as cash provided by operating activities, excluding the impact of changes in non-cash working capital, less transaction costs and transactions considered non-recurring in nature or outside of normal business operations. For a reconciliation of cash provided by operating activities to adjusted funds flow, see the “Capital Resources and Liquidity – Adjusted Funds Flow and Adjusted Free Cash Flow” section in this MD&A.

Adjusted Free Cash Flow

Cash provided by operating activities is the most directly comparable GAAP measure for adjusted free cash flow, which is a non-GAAP measure. Management uses adjusted free cash flow as an indicator of the efficiency and liquidity of its business, measuring its funds after capital investment that are available to manage debt levels and return capital to shareholders. By removing the impact of current period property, plant and equipment expenditures from adjusted free cash flow, management monitors its adjusted free cash flow to inform its capital allocation decisions. We compute adjusted free cash flow as cash provided by operating activities, excluding the impact of changes in non-cash working capital, less transaction costs, transactions considered non-recurring in nature or outside of normal business operations, property, plant and equipment expenditures and acquisitions. For a reconciliation of cash provided by operating activities to adjusted free cash flow, see the “Capital Resources and Liquidity – Adjusted Funds Flow and Adjusted Free Cash Flow” section in this MD&A.

Effective Royalty Rate

Effective royalty rate is a non-GAAP ratio. Management uses effective royalty rate to compare between pre and post-payout crown royalties by calculating a royalty rate on a consistent basis. Royalties consist of crown royalties on bitumen production paid to the Province of Alberta, based on government prescribed royalty rates. The pre-payout royalty rates are calculated using the Canadian dollar equivalent one-month trailing WTI benchmark price. Post-payout royalty rates are calculated using the estimated annual average Canadian dollar equivalent WTI benchmark price. These rates are applied to gross revenue (pre-payout) or the greater of gross or net revenue (post-payout). “Payout” is reached when net revenue is greater than costs for the cumulative project. Pre-payout, the gross revenue royalty—bitumen realization net of transportation and storage costs—starts at 1%, rising with the Canadian dollar WTI price to a maximum of 9%. Post-payout, the royalty is applied to the higher of the gross revenue royalty or the net revenue royalty (net of operating and capital costs).

The actual royalty rate applied will differ from the effective royalty rate. The effective royalty rate is calculated as royalty expense divided by oil sales after diluent and oil transportation expenses.