TENAZ ENERGY CORP. ANNOUNCES ACQUISITION OF NORTH SEA GAS ASSETS

Executive Summary

• Tenaz Energy Corp. completed the acquisition of the privately‑held GEMS project (Netherlands/Germany) for a total consideration of US$244 million cash, US$12 million in common shares and up to US$60 million contingent on future discoveries.
• The deal adds ~3,200 boe/d net production in 2025 (ramping to ~7,000 boe/d in 2026) and is expected to generate $160 M of funds‑flow‑from‑operations (FFO) and $95 M of free cash flow (FCF) in 2026, with a projected after‑tax acquisition payback of <3 years.
• Financing was provided via existing cash, a private placement of senior unsecured notes ($178.9 M gross proceeds at an 8.4 % premium) and a new $115 M revolving reserve‑based lending facility; the combined senior note principal now totals $305 M.

Key Details

• Purchase Price:
• Cash: US$232 M (US$323 M CAD)
• Share consideration: US$12 M (US$17 M CAD) – based on 20‑day VWAP, ~830,000 shares (~2.9% of Tenaz’s outstanding shares).

• Contingent consideration: up to US$60 M (US$83 M CAD) for up to three qualifying exploration discoveries through Dec 31 2035 (US$20 M per discovery; reduced to US$10 M if the N05‑A‑Noord prospect is an extension).

• Asset Overview:

• Five licenses covering 1,811 km² offshore (3 in NL, 2 in DE) with Tenaz working interests ranging from 22.5%–45%.
• Producing N05‑A platform (225 MMcf/d capacity) tied to the NGT gas gathering system; current net rate to Tenaz ≈25 MMcf/d (≈76 MMcf/d gross).

• Proven undeveloped fields (N04‑A, N04‑C) slated for development on a new N04 satellite platform (130 MMcf/d capacity) with production expected in 2028.

• Reserves & Resources:

• McDaniel reserves: 13.7 MMboe 1P and 19.3 MMboe 2P (99% gas).
• 2P after‑tax NPV10 ≈ $590 M; PDP decommissioning cost $35 M, 2P decommissioning $69 M.
• Contingent resources: 4 fields – mean 105 Bcf gross (66 Bcf net).

• Prospective resources: 14 prospects – mean 461 Bcf gross (179 Bcf net); three economically evaluated prospects with unrisked after‑tax NPV10 $546 M (risked $306 M).

• Financial Impact & Metrics:

• Expected net production: 3,200 boe/d (2025) → 7,000 boe/d (2026).
• 2026 FFO ≈ $160 M; 2026 FCF ≈ $95 M.
• Hedging: 14,000 MMbtu/d swapped at €30.75/MWh ($14.65/MMbtu) protecting ~€100 M of revenue (Oct 2025–Dec 2027).
• Accretion to existing shareholders: +31% production, +23% reserves, +45% FFO (2026).

• Unit operating costs & G&A expected to decline ≈23% in 2026.

• Financing Details:

• Senior unsecured notes: $178.9 M gross proceeds; issued at 8.4 % premium to $165 M par; coupon 12%; yield‑to‑maturity ~9.5%; maturity May 2027, final repayment Nov 2029.

• Combined senior note principal now $305 M.

• Reserve‑Based Lending Facility:

• New revolving RBL facility of $115 M (replaces prior $20 M).

• Two‑year term; semi‑annual borrowing base reviews; interest = benchmark + margin (≈7.13% based on CORRA & net‑debt/EBITDA).

• Updated 2025 Guidance (Q4 impact):

• Production: 9,500–10,000 boe/d (up from 9,000–9,500).
• CAPEX: $101.7–$111.7 M (up from $86.7–$96.7 M).

• Drilling & development CAPEX: $100–$110 M (up from $85–$95 M).

• Corporate Guidance:

• Corporate net‑debt/EBITDA (2026E) projected at 0.9×.
• After‑tax acquisition payout <3 years based on production profile and strip pricing.

Notable Quotes

“The GEMS acquisition delivers a high‑growth, low‑risk asset base that immediately lifts our production profile and cash flow while providing substantial upside through exploration.” – Anthony Marino, President & CEO

All forward‑looking statements are subject to risks and uncertainties detailed in the release.