Earnings release
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1 TOPAZ ANNOUNCES SECOND QUARTER 2026 FINANCIAL RESULTS, TUCK-IN ACQUISITION AND GUIDANCE INCREASE July 27, 2026 Calgary, Alberta – Topaz Energy Corp. (TSX:TPZ) (“Topaz” o r the “Company”) is pleased to provide second quarter 2026 financial results. Select financial information is outlined below and should be read in conjunction with T opaz's interim condensed consolidated financial statements (“Financial Statements”) and related management's discussion and analysis ("MD&A") as at and for the three and six months ended June 30, 202 6, which are available on SEDAR + at www.sedarplus.ca and on Topaz's website at www.topazenergy.ca. Highlights • Q2 and YTD 2026 average royalty production of 24,233 boe/d and 24,420 boe/d(4) each increased 9% from the prior year, contributing to increased 2026 royalty production guidance between 23,900 boe/d and 24,300 boe/d. • During Q2 2026, 160 gross wells (6.6 net) (5) were drilled on Topaz’s royalty acreage, representing the highest quarterly share of WCSB drilling activity in the Company's history at 22%. • Q2 2026 royalty production revenue of $88.9 million increased 52% from the prior year and processing revenue of $20.7 million increased 3% from the prior year. • Q2 2026 cash flow and net income per share increased 16% and 21%, respectively, from Q2 2025, despite Topaz becoming taxable in 2026. • Q2 2026 FCF per share increased 17% from Q2 2025, providing a 3% higher dividend ($0.35 per share) and 17% higher excess FCF. • Completed a tuck -in, core area royalty acquisition for $38.7 million that provides developed and undeveloped royalty value including upside multi-zone, liquids-rich natural gas and oil-focused exploration optionality. • Declared the third quarter dividend of $0.35 per share ($1.40 per share annualized)(7) representing a 4.3% trailing annualized yield to Topaz’s current share price(6). Second Quarter 2026 Update Financial Overview • Topaz generated total revenue and other inco me of $111.2 million, 66% from total liquids royalties, 13% from natural gas royalties, and 21% from the infrastructure portfolio. • Cash flow of $0.57 per share(2) ($88.4 million) was 16% higher than the prior year driven by 9% higher royalty production, 3% higher processing revenue and 8% lower interest expense, offset by $10.2 million of current income tax ($0.07 per share(2)). • Free cash flow of $86.6 million increased 17% from the prior year, providing for the $54.2 million second quarter dividend ($0.35 per share and 61% payout ratio(1)) and $32.4 million of Excess FCF(1). • Invested $39.0 million in Acquisitions during the quarter, funded by Excess FCF(1) and debt. • Topaz exited Q2 2026 with $497.4 million of net debt(1) (1.2x net debt to Q2 2026 annualized EBITDA(1)). As at July 27, 2026, Topaz has approximately $0.5 billion of available credit capacity which provides financial flexibility for strategic growth opportunities.
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2 Royalty and Infrastructure Activity • Q2 2026 average royalty production of 24, 233 boe/d(4) includes record total liquids of 7,178 bbl/d, 6% higher than the prior year, driven by a record 49% of Topaz acreage drilling activity in the Clearwater. • During the quarter, Topaz generat ed $88.9 million royalty production revenue which increased 52% from the prior year. • Topaz estimates that operators invested $0.6 billion to $0.7 billion of development capital across the Company’s royalty acreage in Q2 2026, with drilling activity ( 160 gross wells spud(5)) diversified as follows: 78 Clearwater, 40 NEBC & Alberta Montney, 22 Deep Basin, 7 Peace River, 9 SE Saskatchewan, and 3 in Central AB. • During Q2 2026, 126 gross wells were brought on production (5) and based on planned operator drilling activity, Topaz expects 26 to 31 drilling rigs to be active across its royalty acreage through the third quarter of 2026 (3). • During Q2 2026, Topaz generated $22.3 million in processing revenue and other income. The infrastructure assets generated 96% utilization and $20.4 million of operating margin (92%)(1). Acquisition Activity • Completed a tuck -in royalty acquisition on June 30, 2026 across 0.3 million gross acres in Topaz’s NEBC Montney and Deep Basin core royalty areas (the “Acquisition Lands”) for total cash consideration of $38.7 million, before customary closing adjustments (the “Acquisition”). The Acquisition Lands feature acquired royalty interest in over 500 gross future drilling locations(9), multi-zone liquids-rich natural gas and oil-focused exploration upside optionality, and incremental royalty production. The Acquisition was funded using the Company’s existing credit facilities. 2026 Guidance Update • YTD 2026 average royalty production of 24,420 boe/d (4) exceeds Topaz’s previously announced 2026 royalty production guidance of 23,900 boe/d(8), reflecting strong performance and increased activity therefore Topaz has increased the annual average royalty production guidance range to 23,900 boe/d to 24,300 boe/d. Based on updated estimates, Topaz’s 2026 exit net debt (1) is estimated between $435.0 and $440.0 million (3)(10), before consideration of incremental acquisitions. 2026e Guidance Update(3) Q1 2026e Update(8) Q2 2026e Update(10) US$80/bbl WTI/C$1.75/mcf AECO US$80/bbl WTI/C$1.90/mcf AECO Annual average royalty production 23,900 boe/d 23,900 – 24,300 boe/d Infrastructure processing revenue and income $93.0 million $93.0 million Dividend(7) ~$215.0 million ~$215.0 million Dividend payout ratio(1) (%) 65% 64% Exit net debt(1) (before incremental acquisitions) $407.0 million $435.0 - $440.0 million Dividend • Topaz’s Board declared the third quarter 2026 dividend at $0.35 per share (7) which is expected to be paid on September 29, 202 6, to shareholders of record o n September 15, 2026. The quarterly cash dividend is designated as an “eligible dividend” for Canadian income tax purposes. Q2 2026 CONFERENCE CALL Topaz will host a conference call tomorrow, Tuesday, July 28, 2026 starting at 9:00 a.m. MST (11:00 a.m. EST). To join the conference call without operator assistance, participants can register and enter their phone number at https://emportal.ink/43TnwVt to receive an instant automated call back. Alternatively, participants can join by calling a live operator at 1-888-510-2154 (North American toll free). The conference call ID is 20681.
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3 ABOUT THE COMPANY Topaz is a unique royalty and infrastructure energy company focused on generating free cash flow growth and paying reliable and sustainable dividends to its shareholders, through its strategic relationship with Canada's largest and most active natural gas producer, Tourmaline Oil Corp. (“Tourmaline”), an investment -grade senior Canadian E&P company, and leveraging industry relationships to execute complementary acquisitions from other high- quality energy companies. Topaz focuses on top- quartile energy resources and assets best positioned to attract capital in order to generate sustainable long-term growth and profitability. Topaz’s common shares are listed and posted for trading on the TSX under the trading symbol "TPZ" and it is included in the S&P/TSX Composite Index. This is the headline index for Canada and is the principal benchmark measure for the Canadian equity markets, represented by the largest companies on the TSX. Additional information Additional information about Topaz, including the Financial Statements and MD&A as at and for the three and six months ended June 30, 2026 are available on SEDAR+ at www.sedarplus.ca under the Company's profile, and on Topaz's website at www.topazenergy.ca.
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4 Selected Financial Information For the periods ended ($000s) except per share YTD 2026 YTD 2025 Q2 2026 Q1 2026 Q4 2025 Q3 2025 Q2 2025 Royalty production revenue 160,147 127,051 88,932 71,215 62,468 52,291 58,368 Processing revenue 41,779 39,756 20,742 21,037 21,930 21,221 20,167 Other income(4) 3,861 6,536 1,540 2,321 2,320 2,931 2,653 Total 205,787 173,343 111,214 94,573 86,718 76,443 81,188 Cash expenses: Operating (3,632) (3,958) (1,877) (1,755) (1,027) (1,545) (2,199) Marketing (1,004) (815) (532) (472) (415) (307) (370) General and administrative (4,078) (4,072) (1,880) (2,198) (3,338) (1,864) (1,893) Realized gain (loss) on financial instruments (4,308) 5,987 (2,522) (1,786) 5,102 8,737 5,166 Current income tax(8) (12,686) ─ (10,186) (2,500) ─ ─ ─ Interest (11,553) (13,121) (5,828) (5,725) (6,486) (6,620) (6,267) Cash flow 168,526 157,364 88,389 80,137 80,554 74,844 75,625 Per basic share(1)(2) $1.09 $1.02 $0.57 $0.52 $0.52 $0.49 $0.49 Per diluted share(1)(2) $1.09 $1.02 $0.57 $0.52 $0.52 $0.49 $0.49 Cash from operating activities 173,934 161,470 90,530 83,404 69,143 78,147 80,731 Per basic share(1)(2) $1.12 $1.05 $0.58 $0.54 $0.45 $0.51 $0.52 Per diluted share(1)(2) $1.12 $1.05 $0.58 $0.54 $0.45 $0.51 $0.52 Net income 86,522 70,474 52,483 34,039 32,694 25,573 42,463 Per basic share(2) $0.56 $0.46 $0.34 $0.22 $0.21 $0.17 $0.28 Per diluted share(2) $0.56 $0.46 $0.34 $0.22 $0.21 $0.17 $0.28 Adjusted net income(1) 83,950 63,986 45,788 38,162 32,908 30,337 26,036 Per basic share(1)(2) $0.54 $0.42 $0.30 $0.25 $0.21 $0.20 $0.17 Adjusted per diluted share(1) $0.54 $0.41 $0.29 $0.25 $0.21 $0.20 $0.17 EBITDA(7) 192,610 170,316 104,322 88,289 86,991 81,412 81,801 Per basic share(1)(2) $1.24 $1.11 $0.67 $0.57 $0.57 $0.53 $0.53 Per diluted share(1)(2) $1.24 $1.10 $0.67 $0.57 $0.56 $0.53 $0.53 FCF(1) 165,305 154,854 86,622 78,683 79,667 72,980 74,017 Per basic share(1)(2) $1.07 $1.01 $0.56 $0.51 $0.52 $0.47 $0.48 Per diluted share(1)(2) $1.06 $1.00 $0.56 $0.51 $0.52 $0.47 $0.48 FCF Margin(1)(8) 80% 89% 78% 83% 92% 95% 91% Dividends paid 106,754 103,028 54,186 52,568 52,356 52,303 52,283 Per share(1)(6) $0.69 $0.67 $0.35 $0.34 $0.34 $0.34 $0.34 Payout ratio(1) 63% 65% 61% 66% 65% 70% 69% Excess FCF(1) 58,551 51,826 32,436 26,115 27,311 20,677 21,734 Capital expenditures 3,221 2,510 1,767 1,454 887 1,864 1,608 Acquisitions, excl. decommissioning obligations(1) 41,446 43,471 38,994 2,452 10,234 71,733 26,001 Weighted average shares – basic(3) 154,710 153,772 154,809 154,609 153,885 153,794 153,774 Weighted average shares – diluted(3) 155,317 154,418 155,431 155,269 154,538 154,442 154,401 Average Royalty Production(5) Natural gas (mcf/d) 103,980 94,157 102,319 105,659 99,052 89,596 93,129 Light and medium crude oil (bbl/d) 1,894 2,030 1,871 1,918 1,928 1,910 2,133 Heavy crude oil (bbl/d) 3,724 3,234 3,789 3,657 3,515 3,386 3,314 Natural gas liquids (bbl/d) 1,471 1,376 1,518 1,423 1,446 1,365 1,320 Total (boe/d) 24,420 22,335 24,233 24,609 23,399 21,596 22,290 Total royalty production (% total liquids) 29% 30% 30% 28% 29% 31% 30% Natural gas liquids (% condensate) 69% 70% 70% 68% 71% 71% 70% Realized Commodity Prices Natural gas ($/mcf) $1.80 $1.72 $1.58 $2.01 $2.08 $0.61 $1.38 Light and medium crude oil ($/bbl) $104.36 $85.08 $119.58 $89.35 $74.92 $81.64 $79.45 Heavy crude oil ($/bbl) $92.09 $77.30 $106.39 $77.11 $63.00 $73.43 $72.31 Natural gas liquids ($/bbl) $102.28 $85.09 $115.41 $88.12 $73.87 $80.18 $78.97 Total ($/boe) $36.00 $31.43 $39.87 $32.16 $29.02 $26.32 $28.78 Benchmark Pricing Natural Gas AECO 5A (CAD$/mcf) $1.82 $1.92 $1.63 $2.01 $2.23 $0.63 $1.69 AECO 7A (CAD$/mcf) $2.00 $2.05 $1.51 $2.49 $2.34 $1.00 $2.07 Westcoast station 2 (CAD$/mcf) $1.62 $0.86 $1.37 $1.88 $1.85 $0.47 $0.46 Crude Oil, Heavy Oil and Natural Gas Liquids NYMEX WTI (USD$/bbl) $82.36 $67.55 $92.79 $71.93 $59.14 $64.95 $63.71 Edmonton Par (CAD$/bbl) $112.74 $89.93 $131.91 $93.58 $76.69 $86.52 $84.32 WCS differential (USD$/bbl) $14.37 $11.57 $14.62 $14.12 $11.19 $10.36 $10.50 Edmonton Condensate (CAD$/bbl) $114.07 $93.14 $130.93 $97.20 $78.83 $86.36 $86.85 CAD$/USD$ $0.7260 $0.7098 $0.7228 $0.7291 $0.7169 $0.7261 $0.7226 Selected statement of financial position results ($000s) except share amounts At Jun. 30, 2026 At Mar. 31, 2026 At Dec. 31, 2025 At Sep. 30, 2025 At Jun. 30, 2025 Total assets 2,216,659 2,202,235 2,221,715 2,230,374 2,199,745 Working capital (deficit) 54,608 47,096 55,999 (26,633) 50,640 Adjusted working capital (deficit)(1) 48,006 47,864 53,274 (30,773) 40,319 Net debt(1) 497,385 492,051 517,494 535,412 485,166 Common shares outstanding(3) 154,851 154,740 153,990 153,831 153,774 (1) Refer to “Non-GAAP and Other Financial Measures”. (2) Calculated using basic or diluted weighted average shares outstanding during the period. (3) Shown in thousand shares outstanding. (4) Includes interest income ($mm): Q2 2026 – 0.08, Q1 2026 – 0.07, Q4 2025 – 0.05, Q3 2025 - 0.05, Q2 2025: 0.09 (YTD 2026 – 0.2 and YTD 2025 – 0.2). (5) Refer to “Supplemental Information Regarding Product Types.” (6) Cumulative dividend paid as per the number of outstanding shares on the respective quarterly dividend dates. (7) Defined term under the Company's Syndicated Credit Facility. (8) Topaz first became taxable in 2026. Refer to the Financial Statements and MD&A for additional information.
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5 NOTE REFERENCES This news release refers to financial reporting periods in abbreviated form as follows: “Q2 2026” refers to the three months ended June 30, 2026; “Q2 2025” refers to the three months ended June 30, 2025; “YTD 2026” refers to the six months ended June 30, 2026. In addition, “2026e” refers to estimated amounts or results for the year ending December 31, 2026. 1. See “Non-GAAP and Other Financial Measures”. 2. Calculated using the weighted average number of diluted common shares outstanding during the respective period. 3. See “Forward-Looking Statements”. 4. See “Supplemental Information Regarding Product Types”. 5. May include non-producing injection wells. 6. Calculated based on Topaz’s closing share price on the TSX on July 24, 2026 of $32.68. 7. Topaz’s future dividends remain subject to board of director approval. 8. Refer to the Company’s May 5, 2026 news release. 9. Estimated number of unbooked future drilling locations (gross) identified by the operator of the Acquisition Lands . See "Estimates of Drilling Locations". 10. Management’s assumptions underlying the Company’s updated 2026e guidance estimate includes: i. Estimated annual average royalty production between 23,900 boe/d and 24,300 boe/d (approximately 70% natural gas), and $92.0 to $94.0 million of processing revenue and other income, resulting in estimated exit net debt between $435.0 million and $440.0 million; ii. Topaz’s internal estimates regarding development pace and production performance including estimates of operators’ 2026 capital development plans including capital allocated to waterflood and other long-term value -enhancing projects and excluding exploration spending; all of which being subject to key operators’ revisions to 2026 capital budgets and/or operational, weather or wildfire-related issues that may impact the 2026 estimated royalty production range; iii. Management’s estimates for fixed and variable processing fees based on 95% utilization, third party income, and infrastructure utilization and cost estimates based on historic information and adjusted for inflation; iv. No incremental, (i.e. not previously announced) acquisition activity; v. Estimated 2026e expenses and expenditures of $8.0mm cash G&A; $7.0mm of operating expenses; $4.0 to $5.0mm capital expenditures (excluding acquisitions); 1% marketing fee on certain royalty production; estimated annual borrowing and standby interest costs at a combined rate of 5.0%; and $30.0 to $35.0 million estimated corporate income tax; vi. 2026 estimated total dividends of approximately $215 .0 million based on 154. 9 million shares outstanding at July 27, 2026 ($1.39 per share); vii. Topaz’s outstanding financial derivative contracts included in its most recently filed MD&A; viii. Topaz expects to become taxable in 2026 and recognized $12.7 million current income tax expense during YTD 2026 which incorporates the impact of utilizing the Company’s remaining n et operating loss carryforward balance. Topaz holds carryforward resource pool balances to apply to future periods. Refer to Topaz’s 2025 Annual Information Form available at www.sedarplus.ca; and ix. The assumptions contained under the heading " Financial Outlook" including C$1.90 per mcf natural gas (AECO) and US$80.00 per bbl crude oil (NYMEX WTI).
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6 FORWARD-LOOKING STATEMENTS This news release contains forward-looking statements and forward-looking information (collectively, "forward-looking statements") that relate to the Company's current expectations and views of future events. These forward-looking statements relate to future events or the Company's future performance. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as "will likely result", "are expected to", "expects", "will continue", "is anticipated", "anticipates", "believes", "estimated", "intends", "plans", "forecast", "projection", "strategy", "objective" and "outlook") are not historical facts and may be forw ard-looking statements and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward- looking statements. No assurance can be given that these expectations will prove to be correct and such forward -looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release. In particular and without limitation, this news release contains forward-looking statements pertaining to the following: Topaz's future growth outlook, guidance and strategic plans; estimated annual average royalty production range for 2026; estimated processing revenue and other income for 2026; anticipated exit 2026 net debt levels; dividend amounts, and the estimated dividend payout ratio; the sustainability of the dividend and the rationale for such sustainability; the maintenance of financial flexibility for strategic growth opportunities; the anticipated operator capital expenditures and drilling plans; the number of drilling rigs to be active on Topaz's royalty acreage; the future declaration and payment of dividends and the timing and amount thereof; the forecasts described under the headings “Second Quarter 2026 Update” (including under the sub-heading “Dividend”) and “2026 Guidance Update” and the assumptions and estimates described under the heading “Note References” above; and the Company's business as described under the heading "About the Company" above. Forward‐looking statements are based on a number of assumptions including those highlighted in this news release including future commodity prices, capital expenditures, infrastructure ownership capacity utilization and operator development plans, and is subject to a number of risks and uncertainties, many of which are beyond the Company's control, which could cause actual results and events to differ materially from those that are disclosed in or implied by such forward‐looking statements. Such risks and uncertainties include, but are not limited to, potential political, geopolitical and economic instability; trade policy, barriers, disputes or wars (including new tariffs or changes to existing international trade arrangements); the failure to complete acquisitions on the terms or on the timing announced or at all and the failure to realize some or all of the anticipated benefits of acquisitions including estimated royalty production, royalty production revenue and FCF per share growth, and the factors discussed in the Company's most recently filed Management's Discussion and Analysis (See "Forward-Looking Statements" therein), 2025 Annual Information Form (See "Risk Factors" and "Forward-Looking Statements" therein) and other reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR+ website (www.sedarplus.ca) or Topaz's website (www.topazenergy.ca). Statements relating to "reserves" are also deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future. Without limitation of the foregoing, future dividend payments, if any, and the level thereof is uncertain, as the Company's dividend policy and the funds available for the payment of dividends from time to time is dependent upon, among other things, FCF, f inancial requirements for the Company's operations and the execution of its growth strategy, fluctuations in working capital and the timing and amount of capital expenditures, debt service requirements and other factors beyond the Company's control. Further, the ability of Topaz to pay dividends will be subject to applicable laws (including the satisfaction of the solvency test contained in applicable corporate legislation) and contractual restrictions contained in the instruments governing its indebtedness, including its credit facility. Topaz does not undertake any obligation to update such forward‐ looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. FINANCIAL OUTLOOK Also included in this news release are estimated average royalty production and processing revenue and other income range for the year ending December 31, 2026 and resulting year-end exit net debt estimate for 2026, which are based on, among other things, the various assumptions as to as to production levels and capital expenditures and other assumptions disclosed in the “Note References” section above and are based on the following key assumptions: Topaz's estimated capital expenditures (excluding acquisitions) of $4.0 to $5.0 million in 2026; the Company’s tax pool balances at year-end 2025 (refer to the Company’s 2025 Annual Information Form) and the resulting future tax horizon; the working interest owners’ anticipated 2026 capital plans attributable to Topaz’s undeveloped royalty lands; estimated average annual royalty production between 23,900 and 24,300 boe/d in 2026; 2026 average infrastructure ownership capacity utilization of 95%; December 31, 2026 exit net debt between $435.0 million and $440.0 million; and 2026 average commodity prices of: $1.90/mcf (AECO 5A), US$80.00/bbl (NYMEX WTI), US$12.00/bbl (WCS oil differential), US$3.00/bbl (MSW oil differential) and US$/CAD$ foreign exchange 0.72. To the extent such estimates constitute financial outlooks, they are included to provide readers with an understanding of the estimated revenue, net debt and the other metrics described above for the year ending December 31, 2026 based on the assumptions described herein and readers are cautioned that the information may not be appropriate for other purposes.
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7 NON-GAAP AND OTHER FINANCIAL MEASURES Certain financial terms and measures contained in this news release are "specified financial measures" (as such term is defined in National Instrument 52-112 - Non-GAAP and Other Financial Measures Disclosure ("NI 52-112")). The specified financial measures referred to in this news release are comprised of "non-GAAP financial measures", "capital management measures" and "supplementary financial measures" (as such terms are defined in NI 52-112) and do not have standardized meanings prescribed by GAAP and may not be comparable to similarly defined measures presented by other companies. These measures are defined, qualified, and where required, reconciled with the nearest GAAP measure below. Investors are cautioned that these measures should not be considered in isolation nor as an alternative to net income (loss) or other financial information determined in accordance with GAAP, as an indication of the Company’s performance. Non-GAAP Financial Measures This news release makes reference to the terms “adjusted net income”, “acquisitions, excluding decommissioning obligations” and “operating margin”, which are considered non-GAAP financial measures under NI 52-112; defined as a financial measure disclosed by an issuer that depicts the historical or expected future financial performance, financial position, or cash flow of an entity , and is not disclosed in the financial statements of the issuer. Other Financial Measures Capital management measures Capital management measures are defined as financial measures disclosed by an issuer that are intended to enable an individual to evaluate the entity’s objectives, policies and processes for managing the entity’s capital, are not a component of a line item or a line item on the primary financial statements, and which are disclosed in the notes to the financial statements. The Company’s capital management measures disclosed in this news release include adjusted working capital, net debt (cash), free cash flow (FCF) and Excess FCF. Supplementary financial measures This news release makes reference to the terms “adjusted net income per basic or diluted share”, “cash flow per basic or diluted share”, “FCF per basic or diluted share”, “EBITDA per basic or diluted share”, “FCF margin”, “operating margin percentage” and “payout ratio” which are all considered supplementary financial measures under NI 52-112; defined as a financial measure disclosed by an issuer that is, or is intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of an entity, is not disclosed in the financial statements of the issuer, and is not a non -GAAP financial measure or non- GAAP financial ratio. The following terms are financial measures as defined under the Company’s Syndicated Credit Facility, presented in the Company’s interim condensed consolidated financial statements as at and for the three and six months ended June 30, 2026: (i) consolidated senior debt, (ii) total debt, (iii) EBITDA and (iv) capitalization. Cash flow, FCF, FCF margin, and Excess FCF Management uses cash flow, FCF, FCF margin and Excess FCF for its own performance measures and to provide investors with a measurement of the Company’s efficiency and its ability to generate the cash necessary to fund or increase dividends, fund future growth opportunities and/or to repay debt; and furthermore, uses per share metrics to provide investors with a measure of the proportion attributable to the basic or diluted weighted average common shares outstanding. Cash flow is a GAAP measure which is derived of cash from operating activities excluding the change in non-cash working capital and is presented in the consolidated statements of cash flows. FCF is a capital management measure presented in the notes to th e consolidated financial statements and is defined as cash flow, less capital expenditures. The supplementary financial measure “FCF margin”, is defined as FCF divided by total revenue and other income (expressed as a percentage of total revenue and other income). The capital management measure “Excess FCF”, is defined as FCF less dividends paid. The supplementary financial measures “cash flow per basic or diluted share” and “FCF per basic or diluted share” are calculated by dividing cash flow and FCF, respectively, by the basic or diluted weighted average common shares outstanding during the period. A summary of the reconciliation from cash from operating activities (per the consolidated statements of cash flows) to cash f low (per the consolidated statements of cash flows), cash flow per basic or diluted share, FCF, Excess FCF, FCF per basic or diluted share and FCF margin is set forth below:
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8 Three months ended Six months ended ($000s) Jun. 30, 2026 Jun. 30, 2025 Jun. 30, 2026 Jun. 30, 2025 Cash from operating activities 90,530 80,731 173,934 161,470 Exclude net change in non-cash working capital 2,141 5,106 5,408 4,106 Cash flow 88,389 75,625 168,526 157,364 Less: capital expenditures 1,767 1,608 3,221 2,510 FCF 86,622 74,017 165,305 154,854 Less: dividends paid 54,186 52,283 106,754 103,028 Excess FCF 32,436 21,734 58,551 51,826 Cash flow per basic share(1) $0.57 $0.49 $1.09 $1.02 Cash flow per diluted share(1) $0.57 $0.49 $1.09 $1.02 FCF per basic share(1) $0.56 $0.48 $1.07 $1.01 FCF per diluted share(1) $0.56 $0.48 $1.06 $1.00 FCF 86,622 74,017 165,305 154,854 Total revenue and other income 111,214 81,188 205,787 173,343 FCF Margin 78% 91% 80% 89% (1) As noted, calculated using the basic or diluted weighted average number of shares outstanding during the respective periods. Adjusted net income Management uses adjusted net income for its own performance measure and to provide investors with a measurement of the Company’s net income prior to the non-cash effects of unrealized gains and losses on financial instruments. Adjusted net income is calculated as net income per the consolidated statement of net income and comprehensive income, less unrealized gains (losses) on financial instruments. The supplementary financial measures “adjusted net income per basic or diluted share” is calculated by dividing adjusted net income by the basic or diluted weighted average common shares outstanding during the period. A summary of the reconciliation from net income to adjusted net income and adjusted net income per basic and diluted share is set forth below: Three months ended Six months ended ($000s) Jun. 30, 2026 Jun. 30, 2025 Jun. 30, 2026 Jun. 30, 2025 Net income 52,483 42,463 86,522 70,474 Unrealized gains on financial derivatives 6,695 16,427 2,572 6,488 Adjusted net income 45,788 26,036 83,950 63,986 Adjusted net income per basic share(1) $0.30 $0.17 $0.54 $0.42 Adjusted net income per diluted share(1) $0.29 $0.17 $0.54 $0.41 (1) Calculated using basic and diluted weighted average shares outstanding. Operating margin and operating margin percentage Operating margin is a non-GAAP financial measure derived from processing revenue and other income, less operating expenses. Operating margin percentage is a supplemental financial measure, calculated as operating margin, expressed as a percentage of total processing revenue and other income. Operating margin and operating margin percentage are used by management to analyze the profitability of its infrastructure assets. A summary of the reconciliation of operating margin and operating margin percentage is set forth below: Three months ended Six months ended ($000s) Jun. 30, 2026 Jun. 30, 2025 Jun. 30, 2026 Jun. 30, 2025 Processing revenue 20,742 20,167 41,779 39,756 Other income 1,540 2,653 3,861 6,536 Total 22,282 22,820 45,640 46,292 Operating expense 1,877 2,199 3,632 3,958 Operating Margin 20,405 20,621 42,008 42,334 Operating Margin % 92% 90% 92% 91%
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9 Adjusted working capital and net debt Management uses the terms “adjusted working capital” and “net debt” to measure the Company’s liquidity position and capital flexibility, as such these terms are considered capital management measures. “Adjusted working capital” is calculated as current assets less current liabilities, adjusted for financial instruments and work in progress capital costs. “Net debt” is calculated as total debt outstanding less adjusted working capital. A summary of the reconciliation from working capital, to adjusted working capital and net debt is set forth below: ($000s) As at Jun. 30, 2026 As at Dec. 31, 2025 Working capital 54,608 55,999 Exclude fair value of financial instruments 6,602 2,725 Adjusted working capital 48,006 53,274 Less: bank debt 545,391 570,768 Net debt 497,385 517,494 EBITDA and EBITDA per basic or diluted share EBITDA, as defined under the Company’s Syndicated Credit Facility and disclosed in note 8 of the Financial Statements, is considered by the Company as a capital management measure which is used to evaluate the Company’s operating performance and provides investors with a measurement of the Company’s cash generated from its operations, before consideration of interest income or expense. “EBITDA” is calculated as consolidated net income or loss from continuing operations, excluding extraordinary items, plus interest expense, income taxes, and adjusted for non-cash items and gains or losses on dispositions. EBITDA per basic or diluted share is a supplementary financial measure that is calculated by dividing EBITDA by the basic or diluted weighted average common shares outstanding during the period and provides investors with a measure of the proportion of EBI TDA attributed to the basic or diluted weighted average common shares outstanding. A summary of the reconciliation of net income (per the consolidated statements of net income and comprehensive income), to EBITDA, is set forth below: Three months ended Six months ended ($000s) Jun. 30, 2026 Jun. 30, 2025 Jun. 30, 2026 Jun. 30, 2025 Net income 52,483 42,463 86,522 70,474 Unrealized gains on financial instruments (6,695) (16,427) (2,572) (6,488) Share-based compensation 848 834 1,564 1,623 Finance expense 6,058 6,486 11,983 13,485 Depletion and depreciation 34,210 34,585 67,887 68,237 Current income tax expense 10,186 ─ 12,686 ─ Deferred income tax expense 7,313 13,951 14,695 23,154 Less: interest income (81) (91) (155) (169) EBITDA 104,322 81,801 192,610 170,316 EBITDA per basic share ($/share)(1) $0.67 $0.53 $1.24 $1.11 EBITDA per diluted share ($/share)(1) $0.67 $0.53 $1.24 $1.10 (1) As noted, calculated using the basic or diluted weighted average number of shares outstanding during the respective periods. Payout ratio “Payout ratio”, a supplementary financial measure, represents dividends paid, expressed as a percentage of cash flow and prov ides investors with a measure of the percentage of cash flow that was used during the period to fund dividend payments. Payout rat io is calculated as cash flow divided by dividends paid. A summary of the reconciliation from cash flow to payout ratio is set forth below: Three months ended Six months ended Jun. 30, 2026 Jun. 30, 2025 Jun. 30, 2026 Jun. 30, 2025 Cash flow ($000s) 88,389 75,625 168,526 157,364 Dividends paid ($000s) 54,186 52,283 106,754 103,028 Payout Ratio (%) 61% 69% 63% 65%
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10 Acquisitions, excluding decommissioning obligations “Acquisitions, excluding decommissioning obligations”, is considered a non-GAAP financial measure, and is calculated as: acquisitions (per the consolidated statements of cash flows) plus non- cash acquisitions but excluding non-cash decommissioning obligati ons. A summary of the reconciliation from acquisitions (per the consolidated statements of cash flow) to acquisitions, excluding decommissioning obligations is set forth below: Three months ended Six months ended ($000s) Jun. 30, 2026 Jun. 30, 2025 Jun. 30, 2026 Jun. 30, 2025 Acquisitions (consolidated statements of cash flows) 38,994 26,001 41,446 43,471 Non-cash acquisitions ─ ─ ─ ─ Acquisitions (excluding non-cash decommissioning obligations) 38,994 26,001 41,446 43,471 BOE EQUIVALENCY Per barrel of oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil equivalent (6:1). Barrel of oil equivalents (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, as the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. OIL AND GAS METRICS This news release contains certain oil and gas metrics which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included in this news release to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the Company's future performance and future performance may not compare to the Company's performance in previous periods and therefore such metrics should not be unduly relied upon. ESTIMATES OF DRILLING LOCATIONS Unbooked drilling locations are the internal estimates of the operator based on the operator’s prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves or resources (including contingent and prospective). Unbooked locations have been identified by the operator’s management as an estimation of multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. There is no certainty that the operator will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and natural gas reserves, resources or production. The drilling locations on which the operator will actually drill wells, including the number and timing thereof is ultimately dependent upon the availability of funding, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While a certain number of the unbooked drilling locations have been de-risked by the operator drilling existing wells in relative close proximity to such unbooked drilling locations, the majority of other unbooked drilling locations are farther away from existing wells where the operator’s management has less information about the characteristics of the reservoir and therefore there is m ore uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves, resources or production. INFORMATION REGARDING PUBLIC ISSUER COUNTERPARTIES Certain information contained in this news release relating to the Company's public issuer counterparties which include Tourmaline and others, and the nature of their respective businesses is taken from and based solely upon information published by such issuers. The Company has not independently verified the accuracy or completeness of any such information. CREDIT RATINGS This news release makes reference to Tourmaline's credit rating. Credit ratings are intended to provide investors with an independent measure of credit quality of an issue of securities. Credit ratings are not recommendations to purchase, hold or sell securities and do not address the market price or suitability of a specific security for a particular investor. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future if, in its judgment, circumstances so warrant.
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11 SUPPLEMENTAL INFORMATION REGARDING PRODUCT TYPES This news release includes references to actual and estimated average royalty production. The following table is intended to provide supplemental information about the product type composition for each of the production figures that are provided in this news release: For the three months ended June 30, 2026 Mar. 31, 2026 Dec. 31, 2025 Sep. 30, 2025 Jun. 30, 2025 Average daily production Light and Medium crude oil (bbl/d) 1,871 1,918 1,928 1,910 2,133 Heavy crude oil (bbl/d) 3,789 3,657 3,515 3,386 3,314 Conventional Natural Gas (mcf/d) 59,547 60,081 58,597 53,784 55,345 Shale Gas (mcf/d) 42,773 45,578 40,455 35,812 37,784 Natural Gas Liquids (bbl/d) 1,518 1,423 1,446 1,365 1,320 Total (boe/d) 24,233 24,609 23,399 21,596 22,290 For the year ended 2026e (Guidance Midpoint)(1)(2) 2025 (Actual) 2024 (Actual) Average daily production Light and medium crude oil (bbl/d) 1,918 1,974 1,791 Heavy crude oil (bbl/d) 3,775 3,343 3,083 Conventional natural gas (mcf/d) 58,578 56,022 43,269 Shale gas (mcf/d) 42,980 38,219 35,760 Natural gas liquids (bbl/d) 1,481 1,391 1,180 Total (boe/d) 24,100 22,417 19,227 (1) Represents the 2026e average annual royalty production estimate. (2) Topaz’s estimated royalty production is based on the estimated commodity mix; drilling location and corresponding royalty rate; and capital development activity on Topaz’s royalty acreage by the working interest owners, all of which are outside of Topaz’s control. For further information: please contact: Topaz Energy Corp. Marty Staples Cheree Stephenson President and Chief Executive Officer VP Finance and CFO (587) 747-4830 (587) 747-4830