Dune Oil Moves to Clear C$14 Million of Debentures Before Its November M47 Payment

Dune Oil is converting its legacy 12.0% convertible debentures into common shares at C$0.15 per share, with the principal and interest owed deemed to be C$14,000,000. The company will issue 93,333,334 settlement shares, after which all debenture obligations are extinguished, and expects to complete the settlement on or about October 27, 2026. The Canadian Securities Exchange (CSE) approved the transaction under a hardship exemption, and the company will not seek security holder approval.

Company Overview

Dune Oil Corp. (CSE: DUNE | OTCQB: DUNXF | FSE: Z62) is a Canadian oil exploration company focused on Türkiye. It is advancing the onshore M47 oil exploration block, covering the C3 and C4 licenses, in the Cudi-Gabar petroleum province of southeastern Türkiye.

Settlement Terms

The settlement deems the aggregate amount due under the debenture indenture, including principal and interest, to be C$14,000,000, and all further amounts otherwise owing are written off. Holders of at least 66⅔% of the principal amount of the debentures approved it, and a fifth supplemental indenture has been signed to give effect to the transaction. No warrants or other securities will be issued, and the settlement shares carry a contractual lock-up with a release schedule over 36 months.

President and Chief Executive Officer of Dune Oil, Scott Lower, tied the conversion to the next phase of M47 work and to regional oil prices:

"This debenture conversion significantly strengthens the Company's balance sheet and clears the way for our next stage of growth. We look forward to executing our plans for the next phase of work on the M47 oil project, in the Cudi-Gabar province of southeastern Türkiye, at times of escalating oil prices in the region as Brent oil prices reach US$117 nearing 5 year highs."

The conversion is designed to strengthen the balance sheet for the M47 oil block work program over the next 12 months.

Hardship Exemption From Shareholder Approval

The settlement shares represent approximately 132.9% of the 70,235,728 common shares outstanding at October 26, 2026, and on closing a certain debenture holder and its affiliates would own approximately 26.70%. Under CSE Policy 4, an issuance on that scale would ordinarily require security holder approval. The CSE has instead accepted the company's reliance on the hardship exemption in section 4.6(2)(b) of Policy 4.

The exemption is based principally on the pre-settlement working capital deficit and near-term cash requirements. Dune Oil has a US$4.1 million M47 work-program payment due on or before November 15, 2026 and a C$1 million settlement payable to a creditor due no later than November 30, 2026. The independent directors are free from any interest in the settlement. They determined that it is in the best interests of the company and that obtaining security holder approval was not feasible in the time available.

Share Structure After Closing

On completion of the settlement, Dune Oil will have 163,569,062 common shares outstanding, and existing shareholders will own approximately 42.94%. Three former debenture holders will each hold more than 10% of the shares and will become insiders. No debenture holder receives any board nomination, management, veto, special voting, or other governance right, and the settlement is not intended to effect a change of control.

Next Steps

Dune Oil expects to complete the settlement on or about October 27, 2026. It then has a US$4.1 million M47 work-program payment due on or before November 15, 2026, and a C$1 million creditor settlement due no later than November 30, 2026. After that, the company plans to carry out the next phase of work on the M47 oil block over the following 12 months.