SEDAR Interim Financial Statements

TENAZ ENERGY CORP. | FINANCIAL STATEMENTS | 1 INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) As at ($000) Note September 30, 2025 December 31, 2024 ASSETS Current Assets Cash 213,787 139,906 Restricted cash 40,020 40,252 Accounts receivable 73,050 6,230 Prepaid expenses and deposits 31,477 2,144 Derivative instruments 11 1,205 5 Total current assets 359,539 188,537 Prepaid expenses 2,970 2,622 Deposit on acquisition 3 - 34,036 Investment in associate 24,941 21,460 Right-of-use assets 10 32,083 155 Exploration and evaluation assets 91,075 10,830 Property, plant and equipment 5 1,733,353 133,187 Total assets 2,243,961 390,827 LIABILITIES Current Liabilities Accounts payable and accrued liabilities 116,966 20,994 Taxes payable 68,407 16,999 Contingent consideration 3 47,761 - Decommissioning liability 7 5,611 2,311 Lease liabilities 10 10,753 - Derivative instruments 11 245 - Total current liabilities 249,743 40,304 Contingent consideration 3 25,369 - Long-term debt 6 138,508 138,275 Lease liabilities 3,10 20,545 268 Decommissioning liability 3,7 333,130 61,896 Deferred taxes 3 1,164,075 57,959 Total liabilities 1,931,370 298,702 SHAREHOLDERS' EQUITY Share capital 8 66,039 63,405 Warrants 2,539 2,774 Contributed surplus 12,669 12,090 Retained earnings 217,698 12,906 Accumulated other comprehensive income 13,646 950 Total shareholders' equity 312,591 92,125 Total liabilities and shareholders' equity 2,243,961 390,827 See accompanying notes to the interim condensed consolidated financial statements, including Subsequent events Note 12. TENAZ ENERGY CORP. | FINANCIAL STATEMENTS | 2 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME (unaudited) Three months ended September 30, Nine months ended September 30, ($000's except per share amounts) Note 2025 2024 2025 2024 REVENUE Petroleum and natural gas sales 95,636 14,822 173,436 46,715 Royalties (1,854) (1,037) (4,950) (3,980) Petroleum and natural gas revenue 93,782 13,785 168,486 42,735 EXPENSES Transportation 2,340 459 5,008 2,023 Operating 39,764 7,901 70,868 23,097 Income from associate (1,497) (1,418) (3,855) (3,466) General and administrative 2,758 2,389 6,549 7,396 Transaction costs 3 2,903 1,315 12,414 2,822 Interest expense (income) 3,357 (104) 10,153 (1,407) Foreign exchange (gain) loss (599) 156 (1,746) 387 Gain on derivative instruments (2,157) (293) (2,283) (367) Share-based compensation 8 2,852 628 5,481 1,980 Depletion, depreciation and amortization 5 36,654 5,581 63,856 15,487 Accretion of decommissioning liability 7 8,610 1,376 16,211 3,975 Gain on acquisition 3 - - (192,247) 470 Remeasurement of contingent consideration 3 (17,716) - (17,716) - Total expenses 77,269 17,990 (27,307) 52,397 Net income (loss) before income taxes 16,513 (4,205) 195,793 (9,662) Provision for income taxes Current expense (recovery) 5,548 63 11,155 (3,263) Deferred recovery (13,791) (1,814) (23,420) (4,723) Total income taxes (8,243) (1,751) (12,265) (7,986) Net income (loss) 24,756 (2,454) 208,058 (1,676) Other comprehensive income Currency translation adjustments 3,558 919 12,696 1,022 Comprehensive income (loss) 28,314 (1,535) 220,754 (654) Net income (loss) per share Basic 8 0.87 (0.09) 7.43 (0.06) Diluted 8 0.75 (0.09) 6.36 (0.06) See accompanying notes to the interim condensed consolidated financial statements. TENAZ ENERGY CORP. | FINANCIAL STATEMENTS | 3 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHA --- NGES IN SHAREHOLDERS’ EQUITY (unaudited) ($000) Note Share capital Warrants Contributed surplus Retained earnings AOCI(1) Total equity December 31, 2023 60,875 3,203 10,918 21,103 254 96,353 Normal course issuer bid 8 (746) - - (484) - (1,230) Share-based compensation 8 - - 2,033 - - 2,033 PSUs vested(2) 8 1,630 - (1,630) - - - Options exercised 8 786 (283) - - 503 Warrants exercised 8 200 (99) - - - 101 Net loss - - - (1,676) - (1,676) CTA(3) - - - - 1,022 1,022 September 30, 2024 62,745 3,104 11,038 18,943 1,276 97,106 December 31, 2024 63,405 2,774 12,090 12,906 950 92,125 Normal course issuer bid 8 (555) - - (3,266) - (3,821) Share-based compensation 8 - - 3,299 - - 3,299 PSUs and RSUs vested 8 2,660 - (2,660) - - - Options exercised 8 60 - (60) - - - Warrants exercised 8 469 (235) - - - 234 Net income - - - 208,058 - 208,058 CTA(3) - - - - 12,696 12,696 September 30, 2025 66,039 2,539 12,669 217,698 13,646 312,591 (1) Accumulated other comprehensive income (“AOCI”) (2) Performance share units (“PSUs”) and restricted share units (“RSUs”) (3) Currency Translation Adjustments (“CTA”) See accompanying notes to the interim condensed consolidated financial statements. TENAZ ENERGY CORP. | FINANCIAL STATEMENTS | 4 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three months ended September 30, Nine months ended September 30, ($000) Note 2025 2024 2025 2024 OPERATING ACTIVITIES Net income (loss) 24,756 (2,454) 208,058 (1,676) Items not involving cash: Income from associate (1,497) (1,418) (3,855) (3,466) Deferred taxes (13,791) (1,814) (23,420) (4,723) Depletion, depreciation and amortization 5 36,654 5,581 63,856 15,487 Accretion of decommissioning liability 7 8,610 1,376 16,211 3,975 Share-based compensation 2,852 628 5,481 1,980 Unrealized (gain) loss on derivative instruments (827) 85 (954) (838) Unrealized foreign exchange (gain) loss (590) (287) (1,631) 824 Amortization of deferred financing costs 69 - 233 - Gain on acquisition 3 - - (192,247) 470 Remeasurement of contingent consideration (17,716) - (17,716) - Decommissioning liabilities settled 7 (187) (243) (1,385) (4,285) Change in non-cash working capital (3,746) 10,469 27,982 (1,527) Cash flow from operating activities 34,587 11,923 80,613 6,221 INVESTING ACTIVITIES Property and equipment asset expenditures 5 (12,811) (6,484) (32,456) (11,816) Exploration and evaluation asset expenditures (285) (462) (794) (1,447) Cash received on acquisition 3 - - 24,785 - Property acquisition - - - (2,779) Restricted cash for security arrangements 1,421 (362) 3,858 (6,373) Dividend from associate - 2,679 2,364 2,679 Deposit on acquisition 3 - (34,301) - (34,301) Change in non-cash working capital 9 3,166 (2,148) 3,355 Cash flow used in investing activities (11,666) (35,764) (4,391) (50,682) FINANCING ACTIVITIES Repayment of revolving credit facility - 9,999 - 9,999 Letter of credit posting - (150) - (150) Exercise of stock options 8 - - - 504 Exercise of warrants 37 100 235 100 Normal course issuer bid 8 (737) (76) (3,821) (1,230) Principal payments on lease liabilities (2,079) 5 (3,128) 14 Cash flow (used in) from financing activities (2,779) 9,878 (6,714) 9,237 Foreign exchange gain (loss) 1,437 616 4,373 (289) CHANGE IN CASH 21,579 (13,347) 73,881 (35,513) CASH, BEGINNING OF PERIOD 192,208 28,134 139,906 50,300 CASH, END OF PERIOD 213,787 14,787 213,787 14,787 Cash interest paid 40 302 9,440 357 Cash taxes paid (refunded) 30,536 (13,740) 33,357 457 See accompanying notes --- to the interim condensed consolidated financial statements. TENAZ ENERGY CORP. | NOTES | 5 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) For the three and nine months ended September 30, 2025 and 2024 1. REPORTING ENTITY Tenaz Energy Corp. is an energy company focused on the acquisition and sustainable development of international oil and gas assets. Tenaz is the largest gas producer in the Dutch sector of the North Sea and develops crude oil and natural gas at Leduc-Woodbend in Alberta. Tenaz is the corporation resulting from the amalgamation of Tenaz Energy Corp. and Altura Energy Inc. on October 15, 2021 under the Business Corporations Act (Alberta) (“ABCA”). The Company is headquartered in Calgary with its common shares listed on the Toronto Stock Exchange (“TSX”) under the symbol “TNZ”. Tenaz’s principal place of business is located at 700, 605 5th Avenue SW, Calgary, Alberta, T2P 3H5. 2. BASIS OF PRESENTATION These interim condensed consolidated financial statements have been prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including International Accounting Standard 34, Interim Financial Reporting (“IAS” 34) and have been prepared following the same accounting policies and methods of computation as the audited consolidated financial statements for the year ended December 31, 2024, except as noted below. These financial statements should be read in conjunction with Tenaz’s audited consolidated financial statements for the year ended December 31, 2024, which are available on SEDAR+ at www.sedarplus.ca and its website at www.tenazenergy.com. These financial statements were approved by the Board of Directors on November 5, 2025. All financial information is reported in Canadian dollars, unless otherwise noted. References to "EUR” or “€” are to Euros. Recently adopted accounting policies Contingent consideration When the consideration transferred by the Company in a business combination includes a contingent consideration arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against gain on acquisition or goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Other contingent consideration is remeasured to fair value at subsequent reporting dates with changes in fair value recognized in profit or loss. Estimating the fair value of contingent consideration requires management to use judgments, estimates, and assumptions. For the contingent consideration transferred in the Tenaz Energy Netherlands B.V. acquisition. this includes judgm --- ents relating to natural gas reserves. Contingent consideration recognized is estimated based on Tenaz’s proved plus probable natural gas reserve profile, TTF strip prices at the valuation date for each of the relevant periods, future cost and capital TENAZ ENERGY CORP. | NOTES | 6 spending assumptions, net of tax. The amount of contingent consideration recognized and ultimately paid will fluctuate as these assumptions change due to market and timing factors. Leases The Company assesses each new contract to determine whether it contains a lease. A specific asset is the subject of a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company allocates contract consideration to the lease and non- lease components on the basis of their relative stand-alone prices. The right-of-use asset is initially measured at cost, which includes: (i) the amount of the initial measurement of the lease liability, (ii) any lease payments made at or before the lease commencement date, less any lease incentives received, (iii) any initial direct costs incurred, and (iv) an estimate of restoration costs. The lease liability and initial right-of-use asset are recognized at the lease commencement date measured at the present value of fixed lease payments (including in-substance fixed payments) plus the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, discounted at a rate the Company would be required to borrow over a similar term. Key judgements include whether a contract identifies an asset (or a portion of an asset), whether the lessee obtains substantially all of the economic benefits of the asset over the contract term, whether the lessee has the right to direct the asset’s use, which components are fixed or variable in nature and the discount rate. The Company applied its incremental borrowing rate for leases where the implicit rate cannot be readily determined. After initial recognition, the lease liability is accreted for the passage of time and reduced for lease settlements made during each period. If the lease terms indicate that the Company will exercise a purchase option, the right-of-use asset is depreciated from the lease commencement date to the end of the useful life of the underlying asset. Otherwise, the right-of-use asset is depreciated to the earlier of the end of the useful life of the underlying asset or to the end of the lease term. Additionally, the Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever: ? the lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. ? the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which case the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used). ? a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified --- lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification. Share-based compensation Awards that are expected to be settled in cash are accounted for as a cash-settled share-based payment transaction where the fair value of the liability is measured at each reporting period with changes recorded through share-based compensation expense. Fluctuations in compensation expense may occur due to changes in estimating the outcome of the performance conditions as well as changes in fair value for awards that are cash-settled. Use of judgments, estimates and assumptions The preparation of financial statements requires management to use judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingencies at the date of the financial statements, and revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimated. TENAZ ENERGY CORP. | NOTES | 7 Other than those noted above, there have been no significant changes to the use of judgments, estimates, and assumptions as detailed in Note 3 of the audited consolidated financial statements for the year ended December 31, 2024. During the three and nine months ended September 30, 2025, management applied judgment, estimates, and assumptions to the purchase price allocation for the acquisition of TEN, as described in Note 3. 3. BUSINESS COMBINATIONS On May 1, 2025, Tenaz completed the acquisition of 100% of the issued and outstanding shares of NAM Offshore B.V. (“NOBV”) from Nederlandse Aardolie Maatschappij B.V. (“NAM”), a joint venture between Shell PLC and ExxonMobil Corporation (the “TEN Acquisition”). Upon closing, NOBV was renamed Tenaz Energy Netherlands B.V. (“TEN”). The acquisition included upstream and midstream assets in the Dutch North Sea. Tenaz assumed operatorship of the acquired offshore licenses and infrastructure. The economic effective date of the transaction was January 1, 2024. The acquisition delivers on Tenaz’s mergers and acquisition strategy through establishing a significant Dutch North Sea operating position and increasing the Company’s scale in terms of production, reserves, and cash flow. Consideration Tenaz paid a deposit of $35.7 million (€23 million) on signing of the share purchase agreement using cash on hand and a drawing from the Company’s revolving facility. On closing, as a result of free cash flow generation and other working capital adjustments between the effective date and the closing date, Tenaz received approximately $24.8 million (€15 million) in cash from the seller. In addition, consideration included contingent consideration consisting of a contingent earn-out, exploration volume contingent consideration, and price contingent consideration as further described below: ? Contingent earn-out – For the period from January 1, 2025 through December 31, 2027, NAM will be entitled to contingent payments equal to i) 50% of 2025 free cash flow from the TEN assets (“TEN FCF”), ii) 50% of 2026 TEN FCF, and iii) 25% of 2027 TEN FCF, up to a maximum of €120 million in aggregate payments. If the aggregate earn-out payments do not reach €120 million, no further payments related to the earn-out are required. ? Exploration volume contingent consideration - In the event that a future new field exploration discovery on the current TEN licenses exceeds certain cumulative production thresholds, NAM is entitled to --- receive volume contingent royalty payments. The royalty percentage depends on cumulative sales volumes from individual exploration prospects and is 7.5% for prospects between 0.5 to 1.0 bcm and 10% for prospects greater than 1.0 bcm. ? Price contingent consideration – If the average realized TTF price for a given calendar year between January 1, 2028 and December 31, 2031 exceeds certain thresholds, NAM is entitled to receive a gas price contingent payment based on incremental after-tax cash flow. NAM is entitled to receive 25% of incremental after-tax cash flow if the realized TTF price is between €50 and €60/MWh and 37.5% of incremental after-tax cash flow if the realized TTF price is greater than €60/MWh. As at May 1, 2025, management recognized $89.3 million of total consideration relating to the contingent earn out. The exploration volume contingent consideration and price contingent consideration do not have maximum payment amounts. The exploration volume contingent consideration only applies to future new field exploration and therefore does not apply to contingent or prospective resources identified on currently producing fields. The price contingent consideration applies to pricing that is significantly higher than current market pricing. Tenaz currently does not expect to pay material amounts under the exploration volume contingent consideration and the price contingent consideration. As at September 30, 2025, contingent consideration recognized on the balance sheet was $73.2 million with $47.8 million classified as current and $25.4 million classified as non-current.The decrease in the contingent consideration from May 1, 2025 to September 30, 2025 was due to lower strip TTF prices. This remeasurement resulted in a $17.7 million increase to net income for the three and nine months ended September 30, 2025. TENAZ ENERGY CORP. | NOTES | 8 The acquisition has been accounted for as a business combination in accordance with IFRS 3 – Business Combinations, with the results of operations of the acquired entity included in the consolidated financial statements from the acquisition date of May 1, 2025. Preliminary purchase price allocation The preliminary purchase price allocation is based on management’s best estimates as of the reporting date. The fair values of identifiable assets acquired and liabilities assumed are as follows: ($000) Preliminary Identifiable net assets Prepaid expenses and deposits 9,341 Accounts receivable 77,677 Right-of-use assets 32,704 Exploration and evaluation assets 74,970 Property, plant and equipment 1,524,309 Accounts payable and accrued liabilities (60,433) Income taxes payable (46,202) Lease liabilities (32,704) Decommissioning liabilities (214,227) Deferred tax liability (1,075,237) Total identifiable net assets 290,198 Consideration Deposit on acquisition (35,652) Cash received 24,785 Contingent consideration (87,084) Total consideration (97,951) Gain on acquisition 192,247 The gain on acquisition arose as the fair value of property, plant and equipment, exploration and evaluation assets, net of asset retirement obligations exceeded the total consideration paid. The value of property, plant and equipment primarily relates to the discounted value of future cash flows on proved plus probable reserves acquired by Tenaz as evaluated by the Company’s independent third-party reserves evaluator as of January 1, 2025 and updated as of the acquisition date. These reserves include the technical and commerci --- al potential that Tenaz believes is achievable through the increased investment that Tenaz plans to undertake. This planned investment further results in the recognition of exploration and evaluation assets and reduces the present value of decommissioning liabilities due to extending the life of key infrastructure and gas fields. During the nine months ended September 30, 2025, the Company incurred approximately $2.3 million in direct transaction costs for legal and advisory services related to the acquisition, which are expensed in the consolidated statements of income. In addition, the company incurred costs to prepare for the operational transition of TEN. In total, $13.0 million has been expensed relating to direct transaction costs and transition related activities from July 1, 2024 to September 30, 2025. The acquisition contributed $76.5 million to revenues and $12.7 million to net income for the three months ended September 30, 2025. Year-to-date, the acquisition contributed $119.8 million to revenues and $20.0 million net income for the period. If the acquisition had occurred on January 1, 2025, management estimates that pro forma consolidated revenues and net income for the nine months ended September 30, 2025 would have increased by approximately $134.1 million and $38.8 million, respectively to $302.6 million and $246.9 million. These amounts are not necessarily indicative of the results that would have occurred if the acquisition had been completed on that date, nor are they necessarily indicative of future operating results. The purchase price allocation is preliminary as permitted under IFRS 3. Finalization may result in adjustments to the fair values of identifiable assets and liabilities, including property, plant and equipment, TENAZ ENERGY CORP. | NOTES | 9 exploration and evaluation assets, decommissioning liabilities, contingent consideration, and deferred income taxes. Management judgments and estimation uncertainty The purchase price allocation measures identifiable assets and liabilities (except for deferred taxes) at fair value. The determination of fair value is estimated based on information available at the date of the acquisition and requires Management to make assumptions and estimates about future events. The assumptions and estimates with respect to determining the fair value of property, plant and equipment and exploration and evaluation assets generally require significant judgment and include forward price estimates for European natural gas, volume of natural gas and natural gas liquids and associated assumptions, including future production costs, required capital expenditures and reserve life, and discount rate. Assumptions are also required to determine the fair value of the asset retirement obligation ("ARO") associated with the properties and the contingent consideration amount. Changes in any of the assumptions or estimates used in determining the fair value of acquired assets and liabilities could impact the amounts assigned to assets, liabilities, and gain on acquisition. Future net income or loss will be affected as the fair value on initial recognition impacts future depletion, depreciation and amortization; accretion; and asset impairment or reversal. TENAZ ENERGY CORP. | NOTES | 10 4. SEGMENTED INFORMATION Tenaz has a business unit structure designed to manage assets in each country in which the Company operates. Tenaz’s operating segments derive their revenues solely from the production and --- sale of petroleum and natural gas. Tenaz has two key operating segments: the Canadian business unit and the Netherlands business unit. Tenaz’s Canadian business unit includes costs incurred at the Company’s corporate head office located in Calgary, Alberta, Canada. Results from the Company’s investment in associate are included in the Netherlands business unit. Tenaz’s chief operating decision maker regularly reviews funds flow from operations generated by each of Tenaz’s operating segments. Funds flow from operations is a similar measure of earnings that provides the chief operating decision maker with the ability to assess the profitability of each operating segment and, correspondingly, the ability of each operating segment to fund its share of decommissioning liabilities and capital investments. September 30 September 30 As at and for the three months ended 2024 2025 ($000) Netherlands Canada Total Netherlands Canada Total Total assets 164,016 90,409 254,425 2,025,849 218,112 2,243,961 Exploration and evaluation asset expenditures 462 - 462 285 - 285 Property, plant and equipment asset expenditures 1,831 4,653 6,484 12,437 374 12,811 Capital expenditures 2,293 4,653 6,946 12,722 374 13,096 Heavy crude oil - 6,216 6,216 - 9,118 9,118 Natural gas liquids 28 253 281 171 403 574 Natural gas 8,035 290 8,325 85,462 482 85,944 Petroleum and natural gas sales 8,063 6,759 14,822 85,633 10,003 95,636 Royalties - (1,037) (1,037) - (1,854) (1,854) Petroleum and natural gas revenue 8,063 5,722 13,785 85,633 8,149 93,782 Transportation expenses (17) (442) (459) (1,753) (587) (2,340) Operating expenses (5,779) (2,122) (7,901) (37,657) (2,107) (39,764) Midstream income(1) 1,663 - 1,663 1,745 - 1,745 General and administrative expenses (749) (1,640) (2,389) - (2,758) (2,758) Current income taxes (63) - (63) (5,548) - (5,548) Transaction costs - - (1,315) - - (2,903) Interest and financing - - 104 - - (3,357) Realized foreign exchange gain (loss) - - (65) - - 9 Realized gain on derivative instruments - - - - - 1,330 Funds flow from operations 3,118 1,518 3,360 42,420 2,697 40,196 (1) Midstream income from Noordgastransport BV TENAZ ENERGY CORP. | NOTES | 11 September 30 September 30 As at and for the nine months ended 2024 2025 ($000) Netherlands Canada Total Netherlands Canada Total Total assets 129,665 130,511 260,176 2,025,849 218,112 2,243,961 Exploration and evaluation asset expenditures 1,265 182 1,447 794 - 794 Property, plant and equipment asset expenditures 6,777 5,039 11,816 22,934 9,522 32,456 Capital expenditures 8,042 5,221 13,263 23,728 9,522 33,250 Heavy crude oil - 21,451 21,451 - 24,826 24,826 Natural gas liquids 158 882 1,040 273 1,134 1,407 Natural gas 22,393 1,831 24,224 144,525 2,678 147,203 Petroleum and natural gas sales 22,551 24,164 46,715 144,798 28,638 173,436 Royalties - (3,980) (3,980) - (4,950) (4,950) Petroleum and natural gas revenue 22,551 20,184 42,735 144,798 23,688 168,486 Transportation expenses (511) (1,512) (2,023) (3,290) (1,718) (5,008) Operating expenses (16,061) (7,036) (23,097) (63,808) (7,060) (70,868) Midstream income(1) 4,192 - 4,192 4,580 - 4,580 General and administrative expenses (2,522) (4,874) (7,396) - (6,549) (6,549) Current income taxes 3,263 - 3,263 (11,155) - (11,155) Transaction costs - - (2,822) - - (12,414) Interest and financing - - 1,407 - - (10,153) Realized foreign exchange gain (loss) - - (34) - - 115 Realized gain on derivative instruments - - 1,329 Funds flow from operations 10,912 6 --- ,762 16,225 71,125 8,361 58,363 (1) Midstream income from Noordgastransport BV Reconciliation of funds flow from operations to net income (loss) Three months ended Nine months ended September 30 September 30 ($000) 2025 2024 2025 2024 Funds flow from operations 40,196 3,360 58,363 16,225 Unrealized foreign exchange gain (loss) 590 287 1,631 (824) Unrealized gain (loss) on derivatives 827 (85) 954 838 Share-based compensation (2,852) (628) (5,481) (1,980) Amortization of fair value increment of NGT (248) (245) (725) (726) Depletion, depreciation and amortization (36,654) (5,581) (63,856) (15,487) Accretion of decommissioning liability (8,610) (1,376) (16,211) (3,975) Gain on acquisition - - 192,247 (470) Remeasurement of contingent consideration 17,716 - 17,716 - Deferred tax recovery 13,791 1,814 23,420 4,723 Net income (loss) 24,756 (2,454) 208,058 (1,676) TENAZ ENERGY CORP. | NOTES | 12 5. PROPERTY, PLANT AND EQUIPMENT ($000) Total Cost Balance, December 31, 2024 202,771 Additions 32,456 Acquisitions (Note 3) 1,524,309 Decommissioning cost additions and change in estimates (Note 7) 29,370 Foreign exchange 78,755 Balance, September 30, 2025 1,867,661 Depletion, depreciation, amortization and impairment Balance, December 31, 2024 (69,584) Depletion and depreciation (61,591) Foreign exchange (3,133) Balance, September 30, 2025 (134,308) Carrying amounts ($000) As at December 31, 2024 133,187 Canada 78,243 Netherlands 54,944 As at September 30, 2025 1,733,353 Canada 76,200 Netherlands 1,657,153 6. LONG-TERM DEBT Bank debt is comprised of the following: As at September 30 December 31 ($000) 2025 2024 Revolving facility - - Senior unsecured notes 138,508 138,275 Total 138,508 138,275 National Bank Financial Revolving Facility The Company’s revolving facility with National Bank of Canada in the principal amount of up to $20 million, expired on August 31, 2025. There were no amounts drawn at the time of expiry. Senior unsecured notes In Q4 2024, Tenaz issued $140 million of senior unsecured notes by way of private placement with institutional investors. The notes bear interest at a rate of 12%, to be paid semi-annually on May 14 and November 14. The notes were placed at par and mature on November 14, 2029. Prior to May 14, 2027, early redemption is permitted at 106% of principal plus the present value of future interest payments. This redemption feature is an embedded derivative that has been separately accounted for, however a fair value of zero has been determined given it is out of the money. See Note 12. TENAZ ENERGY CORP. | NOTES | 13 7. DECOMMISSIONING LIABILITY ($000) Balance, December 31, 2024 64,207 Additions 37 Acquisition (Note 3) 214,227 Changes in estimates 29,333 Settled (1,385) Accretion 16,211 Foreign exchange 16,111 Balance, September 30, 2025 338,741 Canada 6,024 Netherlands 332,717 Tenaz calculated the present value of the decommissioning liability using a credit-adjusted risk-free rate, with risk-free rates based on long-term, risk-free government bonds. Tenaz’s credit spread is determined using the Company’s expected cost of borrowing at the end of the reporting period. Tenaz has estimated the decommissioning liability based on current cost estimates of $1.1 billion (December 31, 2024 - $132.0 million). Current cost estimates are inflated to the estimated time of abandonment using inflated cost estimates of $1.5 billion (December 31, 2024 - $162.9 million). The country specific rates used as inputs to inflate cost estimat --- es and discount the obligations were as follows: September 30 December 31 2025 2024 Credit spread 7.8% 7.4% Risk-free rates Canada 3.7% 3.3% Netherlands 2.9% 2.6% Inflation rates Canada 2.0% 2.0% Netherlands 2.0% 2.0% 8. SHARE CAPITAL Issued and outstanding Number of Amount Common shares (000’s) ($000) Balance, December 31, 2024 27,610 63,405 PSUs and RSUs vested 839 2,660 Options exercised 40 60 Warrants exercised 130 469 Normal course issuer bid (245) (555) Balance, September 30, 2025 28,374 66,039 Subsequent to September 30, 2025, 648,584 common shares were issuable in relation to the Gateway to the Ems (“GEMS”) acquisition (the “GEMS Acquisition”) as described in Note 12. TENAZ ENERGY CORP. | NOTES | 14 Normal Course Issuer Bid (“NCIB”) The following table summarizes the share repurchase activities during the period: Nine months ended Year ended September 30 December 31 2025 2024 Share repurchase activities (000s) Shares repurchased 245 330 Amounts charged to ($000): Share capital 555 746 Retained earnings 3,266 484 Share repurchase cost 3,821 1,230 Average cost ($/share) 15.60 3.73 Long-term incentive plans Stock Option Plan A summary of the Company’s outstanding stock options is presented below: Number of Remaining Stock Options Weighted Average contractual (000’s) Exercise Price ($) life (years) Balance, December 31, 2024 1,245 2.70 1.71 Options exercised (40) Balance, September 30, 2025 1,205 2.70 1.14 Tenaz Incentive Plan (“TIP”) The following table summarizes the number of awards under the TIP: Number of TIP Awards (000’s) PSUs RSUs DSUs Total Balance, December 31, 2024 1,595 120 97 1,812 Granted 871 28 55 954 Vested (406) (28) - (434) Forfeited (16) (10) - (26) Balance, September 30, 2025 2,044 110 152 2,306 TENAZ ENERGY CORP. | NOTES | 15 Weighted average common shares Three months ended Nine months ended September 30 September 30 2025 2024 2025 2024 Net income ($000) 24,756 (2,454) 208,058 (1,676) Weighted average common shares (000s) Basic 28,377 27,360 27,998 26,959 Diluted (1) 33,081 27,360 32,721 26,959 Net income (loss) per share Basic 0.87 (0.09) 7.43 (0.06) Diluted 0.75 (0.09) 6.36 (0.06) (1) Diluted weighted average common shares includes the impact of 2.4 million warrants outstanding. Per share information is calculated based on the weighted average number of common shares outstanding during the period. Diluted per share information reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted to common shares. Diluted per share information is calculated using a method which assumes that any proceeds received by the Company upon the exercise of in-the-money stock options or warrants plus unamortized share-based compensation expense would be used to buy back common shares at the average market price for the period. 9. CAPITAL MANAGEMENT The Company’s policy is to maintain a strong capital base to maintain investor, creditor and market confidence and to sustain the future development of the business. The Company’s objectives when managing capital are to i) deploy capital in order to provide an appropriate return on investment to its shareholders; ii) maintain financial flexibility in order to preserve the Company’s ability to meet financial obligations; and iii) maintain a capital structure that provides financial flexibility to execute strategic acquisitions. The Company’s strategy is designed to maintain a flexible capital structure consistent w --- ith the objectives as stated above and to respond to changes in economic conditions and the risk characteristics of the underlying crude oil and natural gas properties. Tenaz considers its capital structure to include shareholders’ equity, working capital and long-term debt, including contingent consideration payable. In order to maintain or adjust its capital structure, the Company may from time to time issue new common shares, seek debt financing and adjust its capital spending to manage adjusted net debt and liquidity. In order to facilitate the management of its capital expenditures and adjusted working capital, the Company prepares annual budgets which are updated quarterly depending upon varying factors including current and forecast crude oil and natural gas prices, capital expenditures, acquisitions and general industry conditions. The annual and updated budgets are approved by the Board of Directors. Management views net debt as a key industry benchmark and measure to assess the Company’s financial position and liquidity. Net debt is calculated as current assets less current liabilities, excluding the fair value of derivative instruments, plus long-term debt and contingent consideration. TENAZ ENERGY CORP. | NOTES | 16 Net debt at September 30, 2025 and December 31, 2024 is summarized as follows: September 30 December 31 ($000) 2025 2024 Current assets 359,539 188,537 Current liabilities (249,743) (40,304) Net current assets 109,796 148,233 Fair value of net derivative instruments (960) (5) Long-term debt (138,508) (138,275) Contingent consideration, non-current portion (25,369) - Net debt(1) (55,041) 9,953 (1) See note 12 10. LEASES During the nine months ended September 30, 2025, the Company acquired lease obligations related to the TEN Acquisition (see Note 3 – Business Combination). The lease liability primarily relates to a contract with a third-party service provider for the provision of Walk-to-Work vessel services that has been assessed as a lease under IFRS 16. As at September 30, 2025, the carrying value of the associated right-of-use asset was approximately $31.9 million. The following table outlines the undiscounted lease payment obligations as at September 30, 2025: As at September 30 December 31 ($000) 2025 2024 Less than 1 year 10,798 56 1 - 3 years 22,725 269 3 - 5 years 5,158 - Total lease payments 38,681 325 Amounts representing interest (7,383) (57) Present value of net lease payments 31,298 268 Current portion of lease obligations (10,753) - Non-current portion of lease obligations 20,545 268 TENAZ ENERGY CORP. | NOTES | 17 11. SUPPLEMENTAL INFORMATION Crude oil and natural gas contracts The following is a summary of the crude oil and natural gas sales contracts in place as at November 5, 2025: Reference Price Term Start Term End Volume Currency/Unit Swap Price Put Strike Call Strike Expiry Financial hedges TTF Heren DA 1-Oct-25 31-Dec-27 1,440 €/MWh 30.15 - - - TTF Heren DA 1-Oct-25 31-Mar-26 1,080 €/MWh - 30.00 38.17 - TTF Heren DA 1-Apr-26 31-Dec-27 3,740 €/MWh 29.72 - - - TTF Heren DA 1-Nov-25 31-Dec-27 360 €/MWh 29.50 - - - TTF Heren DA 1-Nov-25 31-Mar-26 1,220 €/MWh - 30.00 34.9 - WTI, CMA 1-Jul-25 31-Dec-25 250 $/bbl - 60.00 75.00 - AECO 5a 1-Jan-26 31-Dec-27 2,500 $C/GJ 3.00 - - - Swaptions(1) TTF HEREN DA 1-Jan-27 31-Dec-27 1,440 €/MWh 35.00 - 28-Nov-25 Physical hedges TTF HEREN DA 1-Jan-25 31-Dec-25 9,120 €/MWh 35.32 - - - TTF HEREN DA 1-Oct-25 31-Mar-26 384 €/MWh 42.50 - - - TTF HEREN DA 1-Oct-25 --- 31-Mar-26 408 €/MWh - 36.00 46.22 - TTF HEREN DA 1-Jan-26 31-Dec-26 7,632 €/MWh 31.38 - - - AECO 5a 1-Apr-25 31-Oct-25 1,100 $C/GJ 2.22 - - - AECO 5a 1-Nov-25 31-Mar-26 500 $C/GJ 3.32 - - - 12. SUBSEQUENT EVENTS Acquisition of GEMS Working Interest On October 6, 2025, Tenaz closed the acquisition of the issued and outstanding shares of Hansa Hydrocarbons Limited, with interests in the GEMS project on the boundary of the Dutch and German sectors of the North Sea. Purchase price was US$244 million ($340 million), comprised of US$232 million ($323 million) in cash and US$12 million ($17 million) in Tenaz common shares, with contingent consideration of up to US$60 million ($83 million) based on the success of future exploration projects. The GEMS properties consist of five highly prospective licenses, three in the Netherlands and two in Germany, that cover 1,811 km2 (447,000 acres). Tenaz non-operated working interests in the licenses range from 22.5% to 45%. Current production comes from the N05-A platform, installed in August 2024, with a nameplate capacity of 225 MMcf/d before future expansion. Cash consideration for the acquisition was funded with cash-on-hand and a private placement of senior unsecured notes of the same series as the original notes issued in November 2024. See note 6. The gross proceeds raised under the additional notes were $178.9 million, placed at an 8.4% premium to the underlying par value of $165 million. Tenaz’s early redemption options and maturity dates are the same as the original issue, being May 2027 and November 2029, respectively. At the time of the financial statements were prepared, the information required to perform a preliminary purchase price allocation was not yet available. Syndicated revolving facility On October 6, 2025, the Company established a new secured revolving reserve based lending arrangement (“RBL Facility”) with a syndicate of lenders including National Bank Capital Markets, Canadian Imperial Bank of Commerce, and Goldman Sachs. The new $115 million RBL Facility replaces the previous $20 million revolving credit facility. The new RBL Facility has a two-year term with semi-annual borrowing base redeterminations. Interest rates are determined using a benchmark rate plus a rate margin based on our total net debt-to-EBITDA ratio. The RBL Facility is subject to customary conditions for such arrangements. The RBL Facility remains undrawn after the Acquisition. BOARD OF DIRECTORS LEGAL COUNSEL Marty Proctor Torys LLP Independent Director, Chair Calgary, Alberta Anna Alderson AUDITORS Independent Director Deloitte LLP John Chambers Calgary, Alberta Independent Director BANKERS Varinia Radu Independent Director National Bank of Canada Mark Rollins Independent Director Anthony Marino President and Chief Executive Officer and Director Calgary, Alberta Canadian Imperial Bank of Commerce Calgary, Alberta Goldman Sachs Calgary, Alberta OFFICERS EVALUATION ENGINEERS Anthony Marino President and Chief Executive Officer and Director McDaniel & Associates Consultants Ltd. Calgary, Alberta Bradley Bennett Chief Financial Officer REGISTRAR & TRANSFER AGENT Jenson Tan Odyssey Trust Company Chief Operating Officer Calgary, Alberta David Burghardt STOCK TRADING Senior Vice President, Investor Relations Toronto Stock Exchange Jonathan Balkwill Trading Symbol: TNZ Vice President, Business Development Mirzeta Delkic Vice President, Human Resources and Sustainability Jamie Gagner Vice President and General Couns --- el Brian Giang Vice President, Finance Adam Iwanicki Vice President, Marketing Jennifer Russel-Houston Vice President, Geoscience