TOPAZ REPORTS SECOND QUARTER 2025 FINANCIAL RESULTS DEMONSTRATING STRONG ROYALTY AND INFRASTRUCTURE GROWTH

Executive Summary

• Topaz Energy Corp. reported second quarter 2025 financial results, highlighting a 7% year-over-year increase in cash flow to $75.6 million ($0.49 per share) and free cash flow of $74.0 million ($0.48 per share).
• Royalty production increased 19% year-over-year to 22,290 boe/d, driven by 9% higher crude/heavy oil production and 23% higher natural gas/NGL production, with significant growth attributed to recent royalty acquisitions.
• The company reconfirmed its 2025 guidance, including average annual royalty production of 21,000–23,000 boe/d and processing revenue of $88.0–$92.0 million, while announcing a stable third-quarter dividend of $0.34 per share.

Key Details

• Financial Performance:
  • Total revenue and other income: $81.2 million (46% crude/heavy oil royalties, 26% natural gas/NGL royalties, 28% infrastructure).
  • Cash flow: $75.6 million (up 7% from Q2 2024).
  • Free Cash Flow (FCF): $74.0 million (up 7% from Q2 2024).
  • Net debt: $485.2 million at quarter-end (1.5x net debt to annualized EBITDA).
  • Credit Facility: Extended maturity to April 30, 2029; total capacity up to $1.0 billion with approximately $0.5 billion available.
• Production Metrics:
  • Average royalty production: 22,290 boe/d (up 19% YoY).
  • Crude and heavy oil production: 5,447 bbl/d (up 9% YoY).
  • Natural gas and NGL production: 16,841 boe/d (up 23% YoY).
  • Drilling Activity: 125 gross wells drilled (4.9 net) and 5 reactivated; Topaz’s share of WCSB drilling activity increased to 21% (from 15% in Q2 2024).
  • Operator Investment: Estimated $0.5–$0.6 billion in development capital across Topaz’s royalty acreage in Q2 2025.
• Infrastructure:
  • Processing revenue: $20.2 million (up 37% YoY).
  • Asset Utilization: 97% utilization rate with a 90% operating margin.
  • Acquisition: Allocated $26.0 million of Excess FCF toward the Alberta Montney natural gas processing facility, which closed on May 30, 2025, and was commissioned ahead of schedule.
• Dividends:
  • Q2 2025 Dividend: $0.34 per share paid (69% payout ratio).
  • Q3 2025 Dividend: $0.34 per share approved, payable September 30, 2025, to shareholders of record on September 15, 2025.
  • Yield: Represents a 5.3% annualized yield to current share price.
• Hedging:
  • Q2 2025 Hedging Gain: $5.2 million total ($3.3 million from natural gas).
  • H2 2025 Hedge Coverage: ~34% of natural gas hedged at C$2.88/mcf; ~30% of oil/liquids hedged at a floor of C$97.64/bbl.
• Guidance Reconfirmed:
  • 2025 Average Royalty Production: 21,000 – 23,000 boe/d.
  • 2025 Processing Revenue: $88.0 – $92.0 million.
  • 2025 Exit Net Debt: $430.0 – $435.0 million (1.2x net debt to EBITDA).
  • Payout Ratio: Modest payout at the lower end of the 60%–90% long-term target range.

Notable Quotes

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