TOPAZ ANNOUNCES THIRD QUARTER 2025 FINANCIAL RESULTS INCLUDING 15% ROYALTY PRODUCTION GROWTH AND NEW RECORD CLEARWATER PRODUCTION

Executive Summary

• Topaz Energy Corp. reported Q3 2025 cash flow of $74.8 M ($0.49/share) and free cash flow of $73.0 M, a 7% per‑share increase year‑over‑year.
• Royalty production rose 15% to 21,596 boe/d, highlighted by a record Clearwater heavy‑oil output of 3,386 bbl/d (12% YoY growth).
• Completed the NEBC Montney tuck‑in royalty acquisition from Tourmaline for $71.7 M, adding ~134,000 gross acres and aligning with Tourmaline’s multi‑year build‑out plan.

Key Details

• Financial Highlights
• Total Q3 revenue & other income: $76.4 M (49% crude/heavy oil royalties, 20% natural gas/NGL royalties, 31% infrastructure).
• Processing revenue: $21.2 M (+16% YoY, +5% QoQ).
• Net cash flow: $74.8 M (+12% YoY) driven by higher processing income and lower operating/interest costs.
• Free‑cash‑flow margin: 95% (up from 88% YoY).

• Net debt at quarter end: $535.4 M (1.6× annualized EBITDA); credit facility capacity >$0.4 B.

• Dividend Activity

• Q3 dividend paid: $0.34 per share (70% payout, 5.3% trailing annualized yield).

• Board approved Q4 dividend of $0.34 per share (5.5% annualized yield).

• Production & Operations

• Average royalty production: 21,596 boe/d (89.6 mmcf/d gas, 6,661 bbl/d oil & liquids).
• Clearwater royalty output hit a new record of 3,555 boe/d (92% oil), +12% YoY.
• Drilling activity: 161 gross wells spudded (6.3 net) and 12 re‑activated; 52% in Montney & Clearwater areas.

• Operators invested $0.5–$0.6 B of development capital on Topaz royalty acreage in Q3 (≈$2.0–$2.1 B YTD).

• Acquisition Activity

• Completed NEBC Montney tuck‑in royalty acquisition (Tourmaline) on Sep 30, 2025 for $71.7 M, adding ~134k gross acres (65% undeveloped) and 410 tier‑one future Montney locations.

• YTD 2025 royalty & infrastructure acquisitions total $115.2 M ($72.5 M funded by excess FCF, $42.7 M via credit facilities).

• Guidance Outlook

• Reaffirmed 2025 guidance: average royalty production 21,000–23,000 boe/d; processing revenue $88‑$92 M.

• Expected year‑end net debt $500‑$510 M (net‑debt/EBITDA ≈1.5×).

• Hedging & Commodity Pricing

• Q3 realized average royalty price: $26.32/boe (pre‑hedge).
• Hedging gains of $8.7 M, primarily from natural‑gas contracts (144% premium to spot).

• For Q4 2025, ~31% of gas hedged at C$3.06/mcf; ~30% of oil/liquids hedged at a floor of C$97.64/bbl.

• Capital Expenditure

• Infrastructure CAPEX: $1.5 M operating expense, $1.1 M maintenance‑related capex (excluding G&A).

Notable Quotes

“Our Q3 results demonstrate the power of our royalty and infrastructure model—delivering strong cash flow growth, record production performance, and a sustainable dividend for shareholders.” – Marty Staples, President & CEO.