Cavvy Releases Q2 2025 Financial and Operating Results

Executive Summary

• Cavvy Energy Ltd. reported its second quarter 2025 financial and operating results, highlighting a strategic pivot toward third-party processing and cost optimization.
• The company generated Net Operating Income (NOI) of $26.5 million and reduced net debt by $18.6 million to $166.9 million, demonstrating continued deleveraging efforts.
• Management maintained 2025 guidance, expecting full-year NOI at or above the high end of the range ($75M–$95M), driven by strong third-party processing revenue growth and cost reductions, despite a lack of new drilling activity.

Key Details

• Financial Performance (Q2 2025):
  • Net Operating Income (NOI): $26.5 million ($0.09 per basic and fully diluted share).
  • Funds Flow from Operations: $14.5 million ($0.05 per basic and fully diluted share).
  • Net Income: $4.1 million ($0.01 per share).
  • Operating Expenses: Reduced by $12.6 million (24%) year-over-year to $40.4 million.
  • Net Debt: Reduced by $18.6 million from Q1 2025 to $166.9 million.
• Production and Operations:
  • Total Production: 26,064 boe/d (81% natural gas), down 16% from Q2 2024.
  • The production decline is attributed to the voluntary shut-in of approximately 9,000 boe/d of uneconomic dry gas production.
  • Third-Party Processing Volumes: Increased by 66.0 MMcf/d (123%) year-over-year to 119.8 MMcf/d.
  • Third-Party Processing Revenue: Increased by $5.4 million (129%) to $9.6 million.
• Commodity Prices and Hedging:
  • Realized Natural Gas Price (after risk management contracts): $3.23/mcf.
  • Realized Condensate Price (after risk management contracts): $85.88/bbl.
  • Realized Sulphur Price: $32.40/tonne.
  • Hedge Portfolio: 110,000 GJ/d of 2025 natural gas production hedged at $3.32/GJ; 1,679 bbl/d of condensate hedged with a floor of $84.42/bbl and ceiling of $92.32/bbl.
  • Discounted unrealized gain on hedge portfolio: ~$52.5 million as of August 12, 2025.
• Outlook and Strategy:
  • 2025 Guidance Unchanged:
    • Total Production: 23,000–25,000 boe/d.
    • Net Operating Income: $75,000–$95,000 thousand.
    • Operating Netback: $9.00–$11.00/boe.
    • Capital Expenditures: $25,000–$30,000 thousand.
  • No new drilling planned for 2025 due to current natural gas price outlook; focus remains on debt reduction and cost structure optimization.
  • Legacy fixed-price sulphur contract expires December 31, 2025; subsequent production will be sold at market prices (spot price ~$252.50/tonne as of Aug 12, 2025).
  • Corporate rebranding to Cavvy Energy Ltd. completed on May 12, 2025.

Notable Quotes

• Darcy Reding, President and CEO: “Growing shareholder value remains the top priority for our team. Compared to the second quarter of 2024, and aligned with our strategic objectives, we grew third party processing volumes and revenue by over 120% and continued to optimize our business, including by keeping certain dry gas producing areas shut-in because they are uneconomic at current natural gas prices. Our continuing focus on lowering our debt resulted in net debt reduction of $18.6 million, to $166.9 million.”