UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR …

1 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND MARCH 31, 2017 2 | P a g e K a r v e E n e r g y I n c . CONSOLIDATED STATEMENT OF FINANCIAL POSITION ( UNAUDITED ) Approved on behalf of the Board of Directors: Signed Donald A. Engle Signed James C. Lough Donald A. Engle James C. Lough Chairman of the Board Director As a tAs a t(Ca na di a n $000s )Ma r. 31, 2018De c. 31, 2017 ASSETSC urre nt As s e tsCa s h a nd ca s h e qui va l e nts13,455 11,524 Tra de a nd othe r re ce i va bl e s (NOTE 5)19,776 18,614 Pre pa i ds a nd de pos i ts (NOTE 6)7,074 6,030 De ri va ti ve a s s e ts (NOTE 18)- 54 TOTAL CURRENT ASSETS40,305 36,222 As s e ts he l d for s a l e (NOTE 9)39,791 - Prope rty, pl a nt a nd e qui pme nt (NOTE 10)174,580 198,573 Expl ora ti on a nd e va l ua ti on (NOTE 11)22,828 23,281 De fe rre d i ncome ta x- 2,607 TOTAL ASSETS277,504 260,683 LIABILITIESC urre nt Li a bi l i ti e sTra de a nd othe r pa ya bl e s (NOTE 7)

2 32,510 25,059 De ri va ti ve l i a bi l i ty (NOTE 18)2,176 - De commi s s i oni ng l i a bi l i ty (NOTE 13)1,044 3,945 TOTAL CURRENT LI ABI LI TI ES35,730 29,004 Li a bi l i ti e s a s s oci a te d wi th a s s e ts he l d for s a l e (NOTE 9)12,602 - De fe rre d l e a s e l i a bi l i ty (NOTE 17)386 339 De commi s s i oni ng l i a bi l i ty (NOTE 13)9,968 20,266 De fe rre d i ncome ta x l i a bi l i ty228 - TOTAL LIABILITIES58,914 49,609 SHAREHOLDERS' EQUITYSha re ca pi ta l (NOTE 14)216,061 216,061 Contri bute d s urpl us (NOTE 14)14,300 12,215 Accumul a te d de fi ci t (11,771) (17,202) TOTAL SHAREHOLDERS' EQUITY 218,590 211,074 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY277,504 260,683 COMMITMENTS (NOTE 17)SUBSEQUENT EVENTS (NOTE 22)The a ccompa nyi ng note s a re a n i nte gra l pa rt of the s e i nte ri m fi na nci a l s ta te me nts.

3 K a r v e E n e r g y I n c . 3 | P a g e CONSOLIDATED STATEMENT OF NET income (LOSS) AND comprehensive income (LOSS) ( UNAUDITED ) (Ca na di a n $000s , e xce pt pe r s ha re a mounts )Ma r. 31, 2018Ma r. 31, 2017 REVENUEPe trol e um a nd na tura l ga s s a l e s (NOTE 20)42,475 6,136 Roya l ti e s(2,228) (362) NET REVENUE 40,247 5,774 Othe r i ncome (NOTE 15)1,583 - Ga i n (l os s ) on fi na nci a l de ri va ti ve contra cts (NOTE 18) (2,982) 206 I nte re s t i ncome 13 60 TOTAL REVENUE AND OTHER income 38,861 6,040 EXPENSESOpe ra ti ng14,895 2,089 Tra ns porta ti on 1,134 344 Ge ne ra l a nd a dmi ni s tra ti on 1,623 386 De pl e ti on, de pre ci a ti on a nd a morti za ti on (NOTE 10)

4 10,041 2,040 Accre ti on (NOTE 13)446 133 Sha re -ba s e d compe ns a ti on (NOTE 16)2,085 1,365 Expl ora ti on a nd e va l ua ti on - e xpi ri e s (NOTE 11)371 - NET income BEFORE TAX EXPENSE8,266 (317) TAX EXPENSEDe fe rre d i ncome ta x e xpe ns e2,835 285 NET income (LOSS) AND comprehensive income (LOSS) FOR THE PERIOD5,431 (602) income (LOSS) PER SHARE ($) (NOTE 14)Ba s i c ( ) Di l ute ( ) The a ccompa nyi ng note s a re a n i nte gra l pa rt of the s e i nte ri m fi na nci a l s ta te me nts .For the thre e months e nde d 4 | P a g e K a r v e E n e r g y I n c . CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY ( UNAUDITED ) (Ca na di a n $000s )Ma r.

5 31, 2018Ma r. 31, 2017 SHARE CAPITALBa l a nce , be gi nni ng of pe ri od216,061 73,006 BALANCE, END OF PERIOD216,061 73,006 CONTRIBUTED SURPLUSBa l a nce , be gi nni ng of pe ri od12,215 6,657 Sha re -ba s e d compe ns a ti on (NOTE 16)2,085 1,365 BALANCE, END OF PERIOD14,300 8,022 DEFICITBa l a nce , be gi nni ng of pe ri od(17,202) (18,269) Ne t i ncome (l os s ) a nd compre he ns i ve i ncome (l os s ) for the pe ri od5,431 (602) BALANCE, END OF PERIOD(11,771) (18,871) The a ccompa nyi ng note s a re a n i nte gra l pa rt of the s e i nte ri m fi na nci a l s ta te me nts .For the thre e months e nde d K a r v e E n e r g y I n c . 5 | P a g e CONSOLIDATED STATEMENT OF CASH FLOWS ( UNAUDITED ) (Ca na di a n $000s )Ma r.

6 31, 2018Ma r. 31, 2017 CASH PROVIDED BY (USED IN):OPERATING ACTIVITIESNe t i ncome (l os s ) a nd compre he ns i ve i ncome (l os s )5,431 (602) ITEMS NOT AFFECTING CASH:De pl e ti on, de pre ci a ti on a nd a morti za ti on (NOTE 10)10,041 2,040 Accre ti on e xpe ns e (NOTE 13)446 133 Expl ora ti on a nd e va l ua ti on (NOTE 11)371 - De fe rre d l e a s e e xpe ns e (NOTE 20)47 65 Sha re -ba s e d compe ns a ti on (NOTE 16)2,085 1,365 Unre a l i ze d l os s (ga i n) on fi na nci a l de ri va ti ve s (NOTE 18)2,230 (206) De fe rre d i ncome ta x e xpe ns e2,835 285 De commi s s i oni ng e xpe ndi ture s (NOTE 13)(1,118) - FUNDS FLOW FROM OPERATIONS22,368 3,080 Cha nge i n non-ca s h worki ng ca pi ta l (NOTE 20)

7 363 (1,945) CASH FLOW FROM OPERATING ACTIVITIES 22,731 1,135 INVESTING ACTIVITIESExpl ora ti on a nd e va l ua ti on (NOTE 11)(325) (1) Prope rty, pl a nt a nd e qui pme nt (NOTE 10)(25,357) (12,377) Di s conti nue d ope ra ti ons- 451 Cha nge i n non-ca s h worki ng ca pi ta l (NOTE 20)4,672 (24) CASH FLOW USED FOR INVESTING ACTIVITIES(21,010) (11,951) FINANCING ACTIVITIESCha nge i n non-ca s h worki ng ca pi ta l (NOTE 20)210 - CASH FLOW FROM FINANCING ACTIVITIES210 - I ncre a s e (de cre a s e ) i n ca s h a nd ca s h e qui va l e nts1,931 (10,816) Ca s h a nd ca s h e qui va l e nts , be gi nni ng of pe ri od11,524 21,905 CASH AND CASH EQUIVALENTS, END OF PERIOD13,455 11,089 The a ccompa nyi ng note s a re a n i nte gra l pa rt of the s e i nte ri m fi na nci a l s ta te me nts.

8 For the thre e months e nde d 6 | P a g e K a r v e E n e r g y I n c . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ( UNAUDITED ) As at March 31, 2018 and for the three months ended March 31, 2018 and 2017. (Tabular amounts in thousands of Canadian dollars, unless otherwise stated. Amounts in text are in Canadian dollars unless otherwise stated). 1. REPORTING ENTITY Karve Energy Inc. ( Karve or the Company ) is a growth-oriented, private oil and natural gas company whose principal business activities are the acquisition, exploration and development of oil and gas properties in western Canada. The Company was incorporated under the laws of the Province of Alberta on January 30, 2014, under the name 1799380 Alberta Ltd.. On June 16, 2014, the Company changed its name to Bruin Oil & Gas Inc. ( Bruin ) and on September 15, 2016, the Company changed its name to Karve Energy Inc.. The CONSOLIDATED FINANCIAL STATEMENTS of the Company are comprised of Karve and its wholly-owned subsidiary DTC Energy Inc.

9 Which was incorporated under the laws of the Province of Alberta. Karve s head office is located at Suite 1700, 205 5 Avenue SW, Calgary Alberta, T2P 2V7. 2. BASIS OF PRESENTATION Statement of Compliance and Authorization The condensed interim CONSOLIDATED FINANCIAL STATEMENTS (the FINANCIAL STATEMENTS ) have been prepared in accordance with International FINANCIAL Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ) applicable to the preparation of interim FINANCIAL STATEMENTS , including IAS 34, Interim FINANCIAL Reporting. The FINANCIAL STATEMENTS were approved and authorized for issue by Karve s Board of Directors on May 9, 2018. Basis of Measurement These FINANCIAL STATEMENTS have been prepared on the historical cost basis, except for the revaluation to fair value of certain FINANCIAL assets and FINANCIAL liabilities, as required under IFRS and described in the significant accounting policies in NOTE 3 below.

10 The FINANCIAL STATEMENTS are measured and presented in Canadian dollars as the functional currency of the Company. All accounting policies and methods of computation followed in the preparation of these FINANCIAL STATEMENTS are consistent with those in the December 31, 2017 audited FINANCIAL STATEMENTS , except as noted in NOTE 3 and for income taxes. income taxes for interim periods are accrued using the income tax rate that would be applicable to the expected annual net income (loss). Use of Estimates and Judgments The preparation of FINANCIAL STATEMENTS in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the FINANCIAL STATEMENTS and revenues and expenses for the periods reported. Actual results may differ from such estimates. Estimates and underlying assumptions are reviewed on an ongoing basis and revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future years affected.