Northern Blizzard Resources Inc. Announces Revised 2016 Capital Program & Guidance; Maintains Dividend

Press Release

CALGARY, ALBERTA (February 12, 2016) – Northern Blizzard Resources Inc. (“Northern Blizzard” or the “Company”) (TSX: NBZ) announces a revised capital program for 2016 in response to the continuing weakness in oil prices. The capital program has been reduced by 60% to $40 million, which maintains the Company’s financial strength and results in estimated 2016 production of 19,000 boe/d. The monthly dividend remains at $0.04 per share.

Northern Blizzard operates and controls 99% of its development program and has the ability to increase or decrease capital spending as circumstances dictate.

Financial strength

Northern Blizzard has significant financial flexibility supported by an undrawn $475 million credit facility. The Company has US$276 million of bonds outstanding that mature in 2022. The bonds have no maintenance covenants.

Hedging

Northern Blizzard has a comprehensive hedging program to reduce revenue volatility caused by changes in commodity prices. The Company has hedges in place of approximately 60% of estimated 2016 oil production. Northern Blizzard estimates the current mark-to-market value of its hedging program to be approximately $150 million. The hedging program is expected to contribute over $15.00/boe to estimated 2016 funds from operations.

A summary of Northern Blizzard’s current hedge position is provided in the table below.

(C$)(1,2)	2016	2017
Hedged volumes (bbl/d)	11,500	2,000
Average price ($/bbl)
WTI	79.50	91.00
WTI / WCS differential	(19.38)	(19.32)
WCS	60.12	71.68

Notes:

• Contracts denominated in US dollars have been converted to Canadian dollars at CAD/USD strip prices as of February 11, 2016.

• The prices and volumes in this table represent averages for several contracts over the respective periods presented. The average price of a group of contracts is for indicative purposes only and does not have the same settlement profile as the individual contract.

Dividend

Northern Blizzard currently pays a monthly dividend of $0.04 per share. Northern Blizzard has a Stock Dividend Program (“SDP”) which allows shareholders to elect to receive common shares as payment for their dividends. Shareholders representing approximately 73% of the Company’s outstanding shares currently participate in the SDP. The total payout ratio for 2016 is estimated to be 45% including the SDP (80% excluding the SDP).

Northern Blizzard continually assesses dividend levels in light of commodity prices, hedge position, capital expenditure programs and production volumes to ensure that dividends are in line with the Company’s long-term strategy and objectives. The actual amount of future monthly dividends is subject to the discretion of the Board of Directors.

Revised 2016 guidance

As noted above, capital spending for 2016 has been revised to $40 million, $60 million less than the previous guidance of $100 million. As a result, the Company’s estimated 2016 production is 19,000 boe/d as compared to prior guidance of 20,000 boe/d. Funds from operations for 2016 is expected to be $120 million.

Revised 2016 guidance and assumptions are as follows:

	Revised(1)
Production (boe/d)	19,000
Pricing
WTI (US$/bbl)	40.00
WTI / WCS differential (US$/bbl)	(14.25)
CAD/USD exchange rate	1.370
WCS ($/bbl)	35.28
AECO ($/mcf)	2.50
Expenses
Average royalty rate (%)	9
Operating ($/boe)	17.15
Transportation ($/boe)	2.15
Corporate costs ($/boe)	7.80
Excluding hedging
Funds from operations ($ millions)	15
Funds from operations per boe ($/boe)	2.20
Including hedging
Funds from operations ($ millions)	120
Funds from operations per boe ($/boe)	17.35
Capital expenditures ($ millions)	40
Payout ratios
Including SDP	45%
Excluding SDP	80%

Note 1 – Previous 2016 guidance released on November 12, 2015 was production of 20,000 boe/d and capital expenditures of $100 million.

The Company is well positioned for the risk of continued weakness in commodity prices. Assuming a WTI price of US$35/bbl, WTI/WCS differential of US$14.00/bbl and CAD/USD exchange rate of 1.40, the Company estimates funds from operations in 2016 of $110 million ($15.80/boe). This results in an estimated total payout ratio for 2016 of 50% including the SDP (88% excluding the SDP).

The guidance provided in the table above is based on a number of material assumptions and factors set out above and under the heading “Forward-Looking Statements” in this news release. This financial outlook is included to provide readers with an understanding of the Company’s operations for 2016. Readers are cautioned that the information may not be appropriate for other purposes. The actual results of Northern Blizzard’s operations will likely vary from the amounts set forth in the table above, and such variations may be material. See “Forward-Looking Statements” in this news release for a discussion of the risks that could cause actual results to vary. The foregoing guidance has been approved by management as of the date of this news release.

Northern Blizzard

Northern Blizzard is a Calgary, Alberta based Canadian crude oil production and development company focused on maximizing oil recovery from its large-scale oil resource base. The corporation’s operations, infrastructure and concentrated land position are focused in the Kerrobert and Lloydminster areas of Saskatchewan. Northern Blizzard’s common shares trade on the Toronto Stock Exchange under the symbol NBZ.

For further information about Northern Blizzard Resources Inc., please visit our website at www.northernblizzard.com or contact:

Northern Blizzard Resources Inc.

Telephone: 403-930-3000

John Rooney
Chairman & Chief Executive Officer

Michael Makinson
Vice President, Finance & Chief Financial Officer

AB2