Good morning. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Topaz Energy Corp Fourth Quarter 2022 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, please press the star followed by the 2. Thank you. Mr. Kirker, you may begin your conference. Thank you, Michelle, and welcome everyone to our discussion of Topaz Energy Corp's results for the three months and years ended December 31, 2022, and 2021. My name is Scott Kirker, and I'm the General Counsel for Topaz. Before we get started, I refer you to the advisories on forward-looking statements contained in the news release, as well as the advisories contained in the Topaz annual information form and its 10-K and A available on SEDAR and on the Topaz website. I also draw your attention to the material factors and assumptions in those advisories. I'm here with Marty Staples, who's Topaz President and Chief Executive Officer, and Cheree Stephenson, Vice President of Finance and Chief Financial Officer. We will start by giving you some of the highlights for the last quarter and the year so far, and after the remarks, we will open for questions. Marty, Cheree, go ahead. Good day. Thanks, Scott. Appreciate that. Thanks for everyone for attending. 2022 was an exceptional year for Topaz. We achieved record production of 18.3 thousand BOE per day in the fourth quarter, and average production for the year was just under 17,000 BOE per day. Our average royalty production grew 20%, which includes the impact of the contractual term and gross overriding royalty changes, which came into effect January 1, 2022. Without the GORR changes, our production growth was 26%. Fourth quarter production demonstrates the full impact of our acquisition and diversification strategy as the Deltastream acquisition was effective for the entire fourth quarter. Most of our acquisitions have been liquids focused in order to diversify and complement our premium natural gas royalty portfolio. Q4 total liquids volume weighting was 29%, which has changed significantly from 7% total liquid volume at inception of the company. For the fourth quarter, 52% of our royalty revenue was from total liquids, and 44% of royalty revenue was natural gas. Our 2022 reserve report demonstrates the strong organic development activity of our strategic operators. Year-over-year, our total proved plus probable developed reserve volume increased 13% to 47.5 million BOE. Drilling additions combined with positive technical revisions added 9.1 million BOE of reserves, which represents 1.5 times the replacement of 2022 royalty production, 6.2 million BOE. Our acquisitions added 2.6 million BOE of reserves. Please note that as a royalty entity not responsible for the capital, we do not book probable locations or future development capital. The probable and developed reserves attributed to our royalty acreage should be obtained through our strategic operator reserve reports, which are available or will be available on SEDAR. Our infrastructure business continues to provide stable, inflation-protected income, which enables strong dividend support. Through 2022, we realized 99% utilization of our natural gas processing capacity and generated total processing revenue, another income of CAD 65.8 million. Our exposure to operating costs is limited to approximately 50% of our infrastructure assets as per the 10-15 year contract we have in place. This, in addition to certain contractual inflation adjustment mechanisms, provides strong inflation protection for Topaz. We incurred CAD 6.4 million in operating expenses in 2022, resulting in infrastructure operating income of CAD 59.4 million, which represents 38% of our total 2022 dividends. In the fourth quarter, Topaz generated cash flow of CAD 86.3 million, 11% higher than the prior quarter. For 2022, Topaz generated cash flow of CAD 270 million, which represents 75% growth over 2021. In 2022, we distributed 47% of our cash flow to shareholders through dividends. We allocated CAD 172 million of excess free cash flow and used just over 1 times leverage to complete a combination of royalty and infrastructure acquisitions. In total, we completed CAD 436 million in our acquisitions during 2022. The royalty acquisitions are 80% liquid weighted and increased our royalty acreage 16%, which are estimated to provide 2,000 BOE per day of 2023 royalty production. The infrastructure acquisition increased our 2022 fixed revenue by 7%. Our hedging strategy is designed to protect acquisition economics and dividend sustainability, which generated a CAD 1.6 million gain in Q4, and the mark-to-market gain of all outstanding contracts as of February 28 forward pricing is approximately CAD 11 million. Our 2023 natural gas fixed price hedging contracts represent approximately 15% of our 2023 estimated natural gas production and provide an average of CAD 0.38 per Mcf above current strip, Topaz's 2022 guidance. Recently, we financially diversified approximately 9% of our 2023 natural gas pricing exposure to the AECO basis of CAD 0.78 per MMBtu, which is equivalent to the actual transport cost to deliver to U.S. markets. During the fourth quarter, we expanded and extended our four-year covenant-based credit facility to CAD 700 million, which has an accordion feature providing CAD 300 million of incremental credit capacity for which we do not pay standby fees. During the quarter, Topaz reduced net debt by CAD 34 million and subsequent to year-end, we have repaid an additional CAD 55 million on our credit facility. We have provided a 2023 guidance range of CAD 308 million-CAD 316 million, which is based on an estimated average annual production range between 18.3 and 18.8 thousand BOE per day. The midpoint of which represents 10% growth over 2022. Our guidance is based on expected operator development plans, commodity prices of $2.82 U.S. natural gas, AECO basis, and U.S. $75.55 barrels WTI for crude oil, and incorporates post-heaven financial derivative contracts. After payment of 2023 estimated dividends of CAD 173 million, Topaz expects to generate between CAD 114 million-CAD 121 million of free cash flow, exiting 2023 with an estimated net debt below CAD 290 million before giving effect to any incremental acquisitions. We're pleased to share achievements as we continue to expand our trading liquidity despite Topaz's young history as a public company. In addition to being added to the S&P/TSX Composite Index in December 2021, Topaz was added to the FTSE Renaissance Global IPO Index in December 2022 and will be added to the FTSE Small Cap Index, effective March 2023. We have continued to improve our ESG profile to recently achieve low risk ratings from Morningstar Sustainalytics and Institutional Shareholder Services, which demonstrates Topaz's unique energy investment structure. I'll look forward to discussing Q1 with you on the next call, and we're pleased to answer any questions at this time. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star followed by the one on your touchtone phone. You will hear a 3-tone prompt acknowledging your request. Should you wish to decline from the polling process, please press the star followed by the two. If you're using a speakerphone, please lift hands up before pressing any keys. One moment please for your first question. First question comes from Aaron Bilkoski of TD Securities. Please go ahead. Thank you. Good morning. I guess my first question is how are you thinking about the proportion of revenue coming from the infrastructure business? Maybe said another way, what's the ideal weighting in your mind? Good morning, Aaron. We've always kind of talked about it and thought about being 50/50. Right now we say 20% of our revenue is infrastructure weighted, covers 38% of our dividend. We had a lot of opportunity over the last two and a half years to get involved in the royalty business and really expand that part of our business. We have grown our infrastructure business quite significantly. It's just, I think we've just grown the royalty business that much more. We have been active looking at different infrastructure opportunities. Up close some smaller opportunities as well. I think over time we do expect to step up the infrastructure business. Maybe a related question. How much leverage would you be comfortable with putting on the balance sheet to acquire some infrastructure assets? Maybe relevant to upstream assets. Yeah. You know, I think max probably 2 times, that would definitely be infrastructure focused. I think we'd be most comfortable overall with a leverage between 1 and 1.5 times. Yeah, definitely willing to push a bit further from an infrastructure perspective. Thanks, Marie. If I can ask maybe one or two more questions. In your release, you talked about the number of wells drilled on your royalty acreage in 2022. If you apply a typical cost to each one of those wells, how much gross third party capital do you think was spent on your land last year? We haven't done the exact math, but I would say there's over CAD 2 billion of capital deployed across our acreage, and we would expect somewhere in the neighborhood of CAD 2 billion-CAD 2.3 billion in 2023. I think we max drilled last year at 32 rigs on our, on our royalty acreage. Right now we're sitting around 29. Even with reduced activity in the basin, I think we still see a lot of activity just based on the quality of our acreage that we own. All right. One more sort of industry drilling question for you. Is that 564 gross wells drilled in 2022 on 210 net basis? It is. I don't have that right in front of me, but I do have that number, so I can circle that back to you after the call. Perfect. Thank you guys. Appreciate it. Thanks, Aaron. Thank you. The next question comes from Luke Davis of RBC. Please go ahead. Hey, good morning. just wondering if you guys can frame out some of the activity assumptions that are included in the low end plan of your guidance? just trying to get a sense for where your biggest swing factors are. Yeah, for sure. You know, the guidance, the midpoint essentially follows the midpoint of our most strategic operators' capital plan. We kind of ebb and flow within our guidance range to where their guidance ranges are. The midpoint would assume our other properties, call it our fee title mineral acreage, things like the Weber and Access, some of our really lower decline, resilient assets, stay flat. Recently we've seen a lot of activity technical across the Reserve and Eastland acreage. I'd say the midpoint is maybe a bit conservative to where we've seen recent activity. Those are the kind of properties we wouldn't bank on growth because you can't see the transparency of the capital deployment. There's some modest swings there, but it's less material to the portfolio. Then the overall guidance range will kind of ebb and flow between, you know, the kind of key operators', public guidance ranges. That's helpful. Also wondering where you see the most potential upside activity-wise on your royalty land if pricing trends above where your take is currently? It's absolutely always gonna be driven by Tourmaline just because the magnitude of the acreage we own, and just the sizes in our portfolio. Obviously, Clearwater has high growth rates. It's a smaller wedge relative to the Tourmaline piece. You know, I think market supply, demand, pricing, availability to services, all those kind of things will kinda dictate the Tourmaline gauge within the guidance ranges. Yeah. One thing I will say about that as well is we do see 13-14 rigs on Tourmaline acreage, and they have not communicated through their five-year plan that they would accelerate any type of drilling activity. I think that's pretty sound, that 13-14 rigs. That kinda grows Tourmaline at 3%-5% per year. The goal for Tourmaline right now, and I'm not speaking for them, but they've said this publicly, is they don't wanna disrupt supply demand and balance right now. I think that's why they're monitoring their growth. The bigger wedge, I think, ultimately ends up happening, kind of which Cheree mentioned before on some of this key land that we've seen kind of more activity on for the last kinda 8 months while oil price was higher. And not just on the oil side, but as well on the gas side through the summer as well on some of the Reserve royalty lands that we have. Very nice added surprises to the portfolio. Really helpful. Thanks. That's it for me. Thank you. Thank you. The next question comes from Joseph Schachter of Schachter Energy Research. Please go ahead. Good morning, everyone, and thanks for taking my calls. Few questions for you. You make a note in there about the Blueberry First Nations with the BC government, the potential growth there. Do you see much happening in 2023, or is this a 2024 potential upside for you, as companies start work to get volumes ready for the Coastal GasLink line? Yeah. Two questions, Joseph. We've already seen permits start to get released. I know there was a bunch in the queue and Tourmaline has been a big benefit of seeing some of those permits, Tourmaline permits released in the Blueberry River First Nations agreement. Very positive from that standpoint. It's kind of my comment before. I don't think we're gonna see a massive ramp inside 2023, but I do think it's gonna be a lot more economic to drill some of these pads that they're waiting on permits for, but they would have communicated early in January. A big positive for us. The real ramp's gonna come this decade when LNG Canada kinda comes on stream. I think that's when a lot of the producers, particularly Tourmaline, are going into this. That's, for us, where we see the biggest ramp in our portfolio, over the next decade coming. would that really start in 2024? Yeah. Do you have a timeline? It's gonna start slowly, 2023, 2024. Then a bigger ramp in 2025. Keep in mind, Conroy's facility is planned for 2025. It's a 400 million a day facility, the biggest project plan in Western Canada. We have a royalty on 99% of that acreage out there. We're a direct benefit of the Conroy facility being built. Really that's commissioned kind of 2025, That's what we're timing kind of the massive ramp for. Okay. Yeah, I remember that now. Last one for me. With the price check coming down and especially natural gas side, liquids as well, do you see more opportunity for deals? Is the deal flow more active now so that we could see announcements, you know, sometime Q2, Q3 of deals? Is it easier to do deals now with the commodity price down? Is the traffic flow higher? I think the traffic flow is relatively the same. you know, for kinda the latter part of Q4, start of Q1, interiors dipped down a lot. I think that's why you didn't see us doing a lot of transactions. It's just the quality wasn't there that we were looking for. I wouldn't say deals are ever easy. at this higher commodity cycle, you know, we're happy to sit and wait for, you know, lower commodities to kind of come around. yeah, there might be some more gas-weighted opportunity. I think more likely you see a lot of these gas transactions that were looking like they were gonna transact probably stall a little bit and wait for better gas prices. There isn't the same urgency for producers, I think, to do a disposition all of a sudden. They're healthier right now. They've got better balance sheets. I think there's always opportunity for additional asset energy, whether it be on the royalty or infrastructure side. We're going to continue to monitor, examine a lot of those opportunities that are available. Okay. That's it for me. Thank you very much. Thanks, Joseph. Thank you. The next question comes from Jamie Kubik of CIBC. Please go ahead. Good morning. Thanks for taking my question here. A little bit already answered perhaps, but can you talk about some of the drivers of increasing the credit facility at the current time? Maybe on the back of Aaron's earlier question, can you just frame out some of the qualities that a potential acquisition might need to hit Topaz's criteria? I can speak to the credit facility. We definitely weren't in a position we needed to increase our credit capacity, but it was available to us. You know, we maintain the same pricing structure, have an opportune structure where we have M&A capital available to us with just agent consent, and we don't pay standby fees on that. You know, in a volatile credit type of market and seeing some potential further pressure in the, in the future coming, from banks from a, from a cost structure perspective, we thought it was opportunity for us to expand that capacity, to have the well cost and liquidity available to us. Not necessarily a full intention of using that. As I mentioned, we definitely have a modest leverage strategy. It's not to go use that tomorrow, as you say, but, good structure, good term, good bank support. You just never know what the market's gonna do. Nice to have that within our toolkit. I think it keeps our liquidity very well protected. you know, the message here isn't, "Hey, we're running out, so go do a transaction." The message here is we have the ability to use some debt if need be, if something really good comes along. We're ready for that. you know, the criteria hasn't changed since day 1, Jamie, I think it always starts with the quality of the asset. Number 2, the quality of the owner. Number 3, how creative it is back to Topaz and Topaz shareholders. That has not changed. That is always our criteria when we look at any asset on the infrastructure royalty side. Okay. That's helpful. Then maybe an additional question here. You know, Topaz maintains the dividend payout target of 60% to 90% and on our numbers and as you indicate in your press release as well. Forecasts look like you're trending below that this year, even with a meaningfully lower natural gas price than what we entered the year at. What would be the driver to potentially increase the dividend this year if you were to do so? We've always looked at the dividend as an output of the business. We try to time it alongside growth. you know, if M&A is just not available to us, I think that is an opportunity for us to increase the dividend. It's still out there. We're still in data rooms, looking to support transactions or kind of put together our own idea of manufacturing a GORR or streaming some type of infrastructure component. We know some things are coming to market. We wanted to make sure that we didn't increase the dividend just to increase it. I mean, we're sitting above a 6% yield right now, so I think it's quite healthy, the dividend as it stands today, even at that kind of 60% pay ratio. Okay, thanks. That's it for me. Thanks for taking my questions. Thanks, Jamie. Thank you, Jamie. Thank you. The next question comes from Mike Dunn of Cycle Six Energy. Please go ahead. Thanks. Good morning, folks. I think you've mostly answered this question. I know you've been focusing your at least your producer GORR acquisitions on oil in 2022. Did you have a I guess a target you'd wanna get to in terms of the oil versus gas split? Just wanted to hear your thoughts. Are you still sort of actively looking at you know, I guess, more gas-weighted GORR acquisitions too, just you know, just to not close off any opportunities that might come up? You know, the important part for us over the last 2.5, 3 years is to diversify our business, and I think we've done a good job of that. 30% of our revenue now liquid weighted, and that was important to us through this cycle. Ultimately, we're big gas holes. I would add more gas to the portfolio if it was in the right part of the basin. Keep in mind, being tied to this massive drill program that's gonna happen in Northeast BC with development of Conroy, it is the largest project planned in the next 10 years in the Western Canadian Sedimentary Basin. We're always gonna get bigger on the gas side just by being attached to Tourmaline. I think we're able to achieve and add very good assets at an opportune time on the oil side, being in the Clearwater, Carter Lake, northeast Saskatchewan. I mean, the CO2 project we're involved in with Whitecap is about the flattest project I've ever seen. It only declines 2% a year. It's pretty steady business and they do a great job operating up there. You know, if the right project comes along, I wouldn't say we'd say no to an oil acquisition, but at $75-$80 WTI, it better be the highest of quality if we're gonna invest in something like that. Great. Okay, thanks, Marty. That's all for me. Thank you, Mike. Thank you. There are no further questions. I will turn the call back over to Mr. Staples for closing remarks. Okay, thanks everyone. Appreciate you tuning in and look forward to catching up with you 2021. Ladies and gentlemen, this does conclude the conference call for today. Thank you for your participation and I ask that you please disconnect your lines.