Cavvy Energy Announces 2026 Guidance & Capital Program

Executive Summary

• Cavvy Energy released 2026 guidance highlighting a targeted $50 million reduction in year‑end debt (to $110‑$125 M) and net operating income of $125‑$140 M, representing >25% upside versus the midpoint of its 2025 outlook.
• Production is forecast at 22,000‑24,500 boe/d with sulphur output of 1,000‑1,150 mt/d; capital expenditures are projected at $35‑$40 M.
• The company emphasizes accelerated debt paydown, continued third‑party processing growth, and a robust hedging program that generated an unrealized gain of ~$18.6 M as of Dec 4 2025.

Key Details

• Debt Reduction: Year‑end 2026 total debt target $110‑$125 M (down $50 M from the estimated $160 M at year‑end 2025).
• 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: 1,000‑1,150 mt/d.
• Net Operating Income (NOI): $125‑$140 M (includes hedge and structured sulphur price agreement impacts).
• Capital Expenditures: $35‑$40 M, broken down as:
• $15‑$20 M for Caroline gas plant turnaround (Q3 2026) & long‑lead procurement.
• $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.
• Hedging Program:
• Natural gas hedged: ~71,140 GJ/d at weighted avg. price $3.36/GJ.
• Condensate hedged: 1,465 bbl/d with floor $CAD84.75/bbl and ceiling $CAD91.49/bbl.
• Aggregate hedge position = 12,702 boe/d (~55% of production guidance).
• Unrealized discounted gain on hydrocarbon hedge portfolio (mid‑2028 strip) ≈ $18.6 M.
• Third‑Party Processing: Record 136.1 MMcf/d raw gas processed in Q3 2025; multi‑year take‑or‑pay agreement signed at Caroline plant; additional volumes contracted at Jumping Pound after nearby facility shutdown.
• Risk Management: Structured sulphur pricing agreement for 2026 executed (previously disclosed Nov 6 2025) providing revenue protection while retaining spot market upside.
• Maintenance Outages Planned:
• Six‑week turnaround at Caroline plant (Q3 2026).
• Two‑week outage at Waterton plant (Q2 2026).
• Assumptions Used in Guidance:
• Unhedged AECO price $3.15/GJ, WTI $60.90/bbl, Vancouver FOB sulphur $237.50/mt (for guidance calculations).
• USD/CAD exchange rate assumed 0.7210.

Notable Quotes

• “We will build on our 2025 success and expect to continue delivering strong shareholder returns moving forward,” – Darcy Reding, President & 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.” – Darcy Reding, President & CEO.