Cavvy Energy Announces 2026 Guidance & Capital Program

Executive Summary

• Cavvy Energy released its 2026 operating and financial guidance, highlighting a targeted $50 million reduction in year‑end debt (to $110‑$125 M) and a net operating income (NOI) increase of $25 million–$15 million versus the midpoint of 2025 guidance.
• The company reported an exceptional one‑year total shareholder return of ~333 % as of Dec 4, 2025 and expects strong free cash flow to fund debt paydown and pursue accretive growth opportunities.
• Detailed production, sulphur output, capital spending, hedging positions, and third‑party processing expectations were disclosed, providing a comprehensive outlook for 2026.

Key Details

• Debt Reduction Goal: Year‑end 2026 total debt target of $110 M–$125 M (down from an estimated $160 M at year‑end 2025), representing up to $50 M of reduction.
• Net Operating Income Guidance: $125 M–$140 M for 2026 (vs. midpoint 2025 guidance).
• Production Guidance: 22,000–24,500 boe/d (assumes continued shut‑ins in Central & Northern AB; Northeast BC production of ~800 boe/d remains on line).
• Sulphur Production Guidance: 1,000–1,150 mt/d.
• Capital Expenditures: $35 M–$40 M for 2026, broken down as:
• $15 M–$20 M for the Caroline gas plant turnaround (Q3 2026).
• $8 M for asset retirement and reclamation obligations.
• $5 M for IT and plant control system upgrades.
• Remainder for maintenance, discretionary well/facility optimization projects.
• Third‑Party Processing Volumes: Record high of 136.1 MMcf/d processed in Q3 2025; multi‑year take‑or‑pay agreement signed at Caroline plant; additional volumes contracted at Jumping Pound.
• Hedging Positions (2026):
• Natural gas: ~71,140 GJ/d hedged at $3.36/GJ weighted average.
• Condensate: 1,465 bbl/d hedged with floor $84.75 CAD/bbl and ceiling $91.49 CAD/bbl.
• Aggregate hedge covers ~12,702 boe/d (≈55 % of production guidance).
• Unrealized discounted gain on hydrocarbon hedge portfolio (to mid‑2028) ≈ $18.6 M.
• Sulphur Pricing Agreement: Structured 2026 sulphur price agreement executed in Q4 2025, providing revenue protection while retaining spot market upside.
• Maintenance Outages Planned for 2026:
• Six‑week turnaround at Caroline plant (Q3 2026).
• Two‑week downtime at Waterton plant (Q2 2026) due to non‑operated sales gas transportation system outage.
• Financial Assumptions Used in Guidance:
• Unhedged AECO price $3.15/GJ, unhedged WTI $60.90 USD/bbl, unhedged Vancouver FOB sulphur $237.50/mt (first half) and $250/mt (second half).
• USD/CAD exchange rate assumed at 0.7210.

Notable Quotes

“We will build on our 2025 success and expect to continue delivering strong shareholder returns moving forward,” said Darcy Reding, President and CEO.
“The majority of Cavvy’s growing 2026 free cash flow will be directed towards aggressively paying down long‑term debt… positioning us to pursue accretive growth opportunities.”