CALGARY, AB, May 5, 2026 /CNW/ - Topaz Energy Corp. (TSX: TPZ) ("Topaz" or the "Company") is pleased to provide first quarter 2026 financial results. Select financial information is outlined below and should be read in conjunction with Topaz's interim condensed consolidated financial statements ("Financial Statements") and related management's discussion and analysis ("MD&A") as at and for the three months ended March 31, 2026, which are available on SEDAR+ at www.sedarplus.ca and on Topaz's website at www.topazenergy.ca.
Highlights
-- First quarter average royalty production of 24,609 boe/d(4) exceeded the
high end of the previously announced 2026 guidance range, and includes 7%
higher total oil and liquids from Q1 2025.
-- First quarter cash flow of $80.1 million ($0.52 per share(2)), free cash
flow $(FCF)$(1) of $78.7 million ($0.51 per share(2)) and 5% net debt(1)
reduction.
-- 55% of first quarter drilling activity was directed into oil-focused
plays, with 138 gross wells (5.1 net)(5) drilled and 4 gross wells
reactivated.
-- 7% higher processing revenue compared to Q1 2025 and during the quarter,
Topaz invested $2.4 million in certain existing infrastructure for
increased fees under the respective processing arrangement.
-- Including the $52.6 million first quarter dividend, Topaz has now
distributed $1.0 billion in dividends, representing over 20% of Topaz's
current market capitalization and 57% of total revenue.
-- Increased the second quarter dividend to $0.35 per share ($1.40 per share
annualized)(8) representing Topaz's tenth quarterly dividend increase and
a 4.6% trailing annualized yield to Topaz's current share price(6).
-- 2026 guidance is reconfirmed with annual average royalty production
estimated at the high end of the range and 4% lower exit net debt(1)
inclusive of the dividend increase(3)(11).
First Quarter 2026 Update
Financial Overview
-- Topaz generated total revenue and other income of $94.6 million, 55% from
total liquids royalties, 20% from natural gas royalties, and 25% from the
infrastructure portfolio.
-- Cash flow of $80.1 million was in line with the prior year as 10% higher
royalty production, 7% higher processing revenue and 16% lower interest
costs offset 6% lower commodity pricing, initial recognition of cash
income tax expense(9), and a net realized hedging loss.
-- Excess FCF(1) of $26.1 million was allocated to acquisitions ($2.5
million) and debt reduction, resulting in 5% lower net debt(1) from
December 31, 2025.
-- Paid $52.6 million in dividends ($0.34 per share and 66% payout ratio(1))
which represents a 4.6% trailing annualized yield to the Q1 2026 average
share price(7) and generated $26.1 million of excess FCF(1) which was
allocated to acquisitions and debt reduction.
-- Topaz exited Q1 2026 with $492.1 million of net debt(1) (1.4x net debt to
Q1 2026 annualized EBITDA(1)). As at May 5, 2026, Topaz has
approximately $0.5 billion of available credit capacity which provides
financial flexibility for strategic growth opportunities.
Dividend Increase
-- Topaz's Board approved a quarterly dividend increase and declared the
second quarter 2026 dividend at $0.35 per share(8) which is expected to
be paid on June 30, 2026, to shareholders of record on June 15, 2026.
The quarterly cash dividend is designated as an "eligible dividend" for
Canadian income tax purposes.
-- Topaz's 2026e dividend remains sustainable below $0.01 per mcf natural
gas and US$55.00 per bbl crude oil(3) attributable to: (i) the Company's
high-margin, stable infrastructure revenue which represents 43% of the
2026e increased dividend(3); (ii) hedging strategy and financial
derivative contracts in place(11); (iii) lower decline royalty production
supported by secondary recovery; and (iv) diversification between oil and
natural gas focused undeveloped royalty acreage.
2026 Guidance Update
-- First quarter royalty production of 24,609 boe/d(4) exceeded the high end
of Topaz's 2026 guidance range(10), reflecting strong performance and
production attributed to significant Q4 2025 operator development
activity. Consistent with prior years, Topaz estimates that production
will normalize during the second and third quarters in part due to spring
break-up conditions that typically restrict accessibility. Based on
operator plans, 15 to 18 drilling rigs will remain active across Topaz's
royalty acreage through spring break-up(3), following which activity is
expected to resume to 22 to 27 drilling rigs(3). Topaz's royalty
guidance range purposefully remains flexible to allow for adjustments by
operators in response to supply/demand and commodity price factors in the
WCSB.
-- Topaz reconfirms the previously announced range of annual average royalty
production and processing revenue and other income, however, does expect
that annual average royalty production will track at the upper end of the
range, driven by strong oil-focused activity while allowing for prudent
natural gas-focused capital discipline. Based on updated estimates,
including the second quarter dividend increase, Topaz's 2026 exit net
debt(1) is estimated at $407.0 million(3)(11), before consideration of
incremental acquisitions. Topaz expects to maintain a modest payout
ratio at the lower end of the 60% - 90% long-term targeted range to
maintain flexibility to fund strategic growth opportunities.
2026e Guidance Update(3)
Q4 2025 Guidance(10) 2026e Update(11)
US$65/bbl WTI/C$2.25/mcf US$80/bbl WTI/C$1.75/mcf
AECO AECO
Annual average royalty 23,500 to 23,900 boe/d 23,900 boe/d
production
Infrastructure processing
revenue and income $92.0 to $94.0 million $93.0 million
Dividend(8) $210.0 million $215.0 million
Dividend payout ratio(1)
(%) 68 % 65 %
Exit net debt(1) (before
incremental
acquisitions) $420.0 to $425.0 million $407.0 million
Royalty Activity
-- Q1 2026 average royalty production of 24,609 boe/d(4) includes record
natural gas of 105.7 mmcf/d and record total liquids of 6,998 bbl/d, 11%
and 7%, respectively, higher than the prior year.
-- During the quarter, Topaz generated $71.2 million royalty production
revenue which increased 4% from the prior year, and 14% from the prior
quarter.
-- Topaz estimates that operators invested $0.5 billion to $0.6 billion of
development capital across the Company's royalty acreage in Q1 2026, with
drilling activity (138 gross wells spud(5)) diversified as follows: 48
Clearwater, 31 NEBC & Alberta Montney, 23 Deep Basin, 8 Peace River, 11
SE Saskatchewan, and 13 in Central AB (including 9 gross wells in the
Belly River oil-focused play).
-- During Q1 2026, 131 gross wells were brought on production(5) and as of
March 31, 2026, another 86 gross wells were drilled but not yet
completed.
Infrastructure Activity
-- During Q1 2026, Topaz generated $23.4 million in processing revenue and
other income. The infrastructure assets generated 98% utilization and
Topaz incurred $1.4 million in operating expenses, providing a 92%
operating margin(1). Topaz incurred $0.6 million in maintenance-related
capital expenditures (before capitalized G&A).
-- During Q1 2026, the Company elected to participate (based on Topaz's
proportionate working interest) in modification projects for two jointly
owned natural gas processing facilities. Topaz contributed total cash
consideration of $2.4 million, before customary closing adjustments, and
received a proportionate increase to the respective take-or-pay fixed fee
processing arrangement.
Q1 2026 CONFERENCE CALL
Topaz will host a conference call tomorrow, Wednesday, May 6, 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/3SCX50Z 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 54193.
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 months ended March 31, 2026 are available on SEDAR+ at www.sedarplus.ca under the Company's profile, and on Topaz's website at www.topazenergy.ca.
Selected Financial Information
For the three Q1 2026 Q1 2025 Q4 2025 Q3 2025 Q2 2025
months ended
($000s) except
per share
Royalty
production
revenue 71,215 68,683 62,468 52,291 58,368
Processing
revenue 21,037 19,589 21,930 21,221 20,167
Other income(4) 2,321 3,883 2,320 2,931 2,653
Total 94,573 92,155 86,718 76,443 81,188
Cash expenses:
Operating (1,755) (1,759) (1,027) (1,545) (2,199)
Marketing (472) (445) (415) (307) (370)
General and
administrative (2,198) (2,179) (3,338) (1,864) (1,893)
Realized gain
(loss) on
financial
instruments (1,786) 821 5,102 8,737 5,166
Current income (2,500) -- -- -- --
tax expense
Interest expense (5,725) (6,854) (6,486) (6,620) (6,267)
Cash flow 80,137 81,739 80,554 74,844 75,625
Per basic
share(1)(2) $0.52 $0.53 $0.52 $0.49 $0.49
Per diluted
share(1)(2) $0.52 $0.53 $0.52 $0.49 $0.49
Cash from
operating
activities 83,404 80,739 69,143 78,147 80,731
Per basic
share(1)(2) $0.54 $0.53 $0.45 $0.51 $0.52
Per diluted
share(1)(2) $0.54 $0.52 $0.45 $0.51 $0.52
Net income 34,039 28,011 32,694 25,573 42,463
Per basic
share(2) $0.22 $0.18 $0.21 $0.17 $0.28
Per diluted
share(2) $0.22 $0.18 $0.21 $0.17 $0.28
Adjusted net
income(1) 38,162 37,950 32,908 30,337 26,036
Per basic
share(1)(2) $0.25 $0.25 $0.21 $0.20 $0.17
Per diluted
share(1)(8) $0.25 $0.25 $0.21 $0.20 $0.17
EBITDA(7) 88,289 88,515 86,991 81,412 81,801
Per basic
share(1)(2) $0.57 $0.58 $0.57 $0.53 $0.53
Per diluted
share(1)(2) $0.57 $0.57 $0.56 $0.53 $0.53
FCF(1) 78,683 80,837 79,667 72,980 74,017
Per basic
share(1)(2) $0.51 $0.53 $0.52 $0.47 $0.48
Per diluted
share(1)(2) $0.51 $0.52 $0.52 $0.47 $0.48
FCF Margin(1) 83 % 88 % 92 % 95 % 91 %
Dividends paid 52,568 50,745 52,356 52,303 52,283
Per
share(1)(6) $0.34 $0.33 $0.34 $0.34 $0.34
Payout
ratio(1) 66 % 62 % 65 % 70 % 69 %
Excess FCF(1) 26,115 30,092 27,311 20,677 21,734
Capital
expenditures 1,454 902 887 1,864 1,608
Acquisitions,
excl.
decommissioning
obligations(1) 2,452 17,470 10,234 71,733 26,001
Weighted average
shares --
basic(3) 154,609 153,770 153,885 153,794 153,774
Weighted average
shares --
diluted(3) 155,269 154,430 154,538 154,442 154,401
Average Royalty
Production(5)
Natural gas
(mcf/d) 105,659 95,195 99,052 89,596 93,129
Light and medium
crude oil
(bbl/d) 1,918 1,925 1,928 1,910 2,133
Heavy crude oil
(bbl/d) 3,657 3,154 3,515 3,386 3,314
Natural gas
liquids (bbl/d) 1,423 1,434 1,446 1,365 1,320
Total (boe/d) 24,609 22,380 23,399 21,596 22,290
Total royalty
production (%
total liquids) 28 % 29 % 29 % 31 % 30 %
Natural gas
liquids (%
condensate) 68 % 70 % 71 % 69 % 70 %
Realized Commodity
Prices
Natural gas
($/mcf) $2.01 $2.06 $2.08 $0.61 $1.38
Light and medium
crude oil
($/bbl) $89.35 $91.39 $74.92 $81.64 $79.45
Heavy crude oil
($/bbl) $77.11 $82.61 $63.00 $73.43 $72.31
Natural gas
liquids ($/bbl) $88.12 $90.78 $73.87 $80.18 $78.97
Total ($/boe) $32.16 $34.10 $29.02 $26.32 $28.78
Benchmark Pricing
Natural Gas
AECO 5A
(CAD$/mcf) $2.01 $2.16 $2.23 $0.63 $1.69
AECO 7A
(CAD$/mcf) $2.49 $2.02 $2.34 $1.00 $2.07
Westcoast
station 2
(CAD$/mcf) $1.88 $1.27 $1.85 $0.47 $0.46
Crude Oil, Heavy
Oil and Natural
Gas Liquids
NYMEX WTI
(USD$/bbl) $71.93 $71.42 $59.14 $64.95 $63.71
Edmonton Par
(CAD$/bbl) $93.58 $95.60 $76.69 $86.52 $84.32
WCS differential
(USD$/bbl) $14.12 $12.66 $11.19 $10.36 $10.50
Edmonton
Condensate
(CAD$/bbl) $97.20 $99.49 $78.83 $86.36 $86.85
CAD$/USD$ $0.7291 $0.6969 $0.7169 $0.7261 $0.7226
Selected statement At Mar. At Mar. At Dec. At Sep. At Jun.
of financial 31,2026 31,2025 31,2025 30,2025 30,2025
position results
($000s) except
share amounts
Total assets 2,202,235 2,204,513 2,221,715 2,230,374 2,199,745
Working capital 47,096 46,694 55,999 (26,633) 50,640
Adjusted working
capital
(deficit)(1) 47,864 49,448 53,274 (30,773) 40,319
Net debt (cash)(1) 492,051 480,730 517,494 535,412 485,166
Common shares
outstanding(3) 154,740 153,774 153,990 153,831 153,774
(1) Refer to "Non-GAAP and Other Financial Measures".
(2) Calculated using basic or diluted weighted average
shares outstanding during the period.
(3) Shown in thousand shares outstanding.
(4) Includes interest income ($mm): Q1 2026 -- 0.07,
Q4 2025 -- 0.05, Q3 2025 - 0.05, Q2 2025: 0.09, Q1
2025: 0.08.
(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) Adjusted to exclude the impact of non-cash, unrealized
gains or losses on financial instruments.
NOTE REFERENCES
This news release refers to financial reporting periods in abbreviated form as follows: "Q1 2026" refers to the three months ended March 31, 2026; "Q1 2025" refers to the three months ended March 31, 2025. 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 April 28, 2026 of $30.57.
7. Calculated based on Topaz's average share price on
the TSX during Q1 2026 of $29.52.
8. Topaz's future dividends remain subject to board of
director approval.
9. Topaz expects to become taxable in 2026 and recorded
$2.5 million current income tax expense during Q1
2026 which incorporates the impact of utilizing the
Company's remaining net 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.
10. Refer to the previously announced 2026e guidance estimates
including the respective notes and assumptions referenced
in Topaz's February 24, 2026 news release.
11. Management's assumptions underlying the Company's
updated 2026e guidance estimate includes:
i. Estimated annual average royalty production of 23,900
boe/d (approximately 70% natural gas), representing
the high end of the guidance range, and $93.0 million
of processing revenue and other income, representing
the midpoint of the guidance range, resulting in estimated
exit net debt of $407.0 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 154.8 million shares outstanding
at May 5, 2026 ($1.39 per share);
vii. Topaz's outstanding financial derivative contracts
included in its most recently filed MD&A; and
viii. The assumptions contained under the heading "Financial
Outlook" including C$1.75 per mcf natural gas (AECO)
and US$80.00 per bbl crude oil (NYMEX WTI).
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 forward-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 "First Quarter 2026 Update" (including under the sub-heading "Dividend Increase") 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, financial 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 of 23,900 boe/d in 2026; 2026 average infrastructure ownership capacity utilization of 95%; December 31, 2026 exit net debt of approximately $410.0 million; and 2026 average commodity prices of: $1.75/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 0.73.
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.
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 months ended March 31, 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 the 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 flow (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:
Three months ended
($000s) Mar. 31, 2026 Mar. 31, 2025
Cash from operating activities 83,404 80,739
Exclude net change in non-cash working capital 3,267 (1,000)
Cash flow 80,137 81,739
Less: capital expenditures 1,454 902
FCF 78,683 80,837
Less: dividends paid 52,568 50,745
Excess FCF 26,115 30,092
Cash flow per basic share(1) $0.52 $0.53
Cash flow per diluted share(1) $0.52 $0.53
FCF per basic share(1) $0.51 $0.53
FCF per diluted share(1) $0.51 $0.52
FCF 78,683 80,837
Total revenue and other income 94,573 92,155
FCF margin 83 % 88 %
(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
($000s) Mar. 31, 2026 Mar. 31, 2025
Net income 34,039 28,011
Unrealized gains (losses) on financial
derivatives (4,123) (9,939)
Adjusted net income 38,162 37,950
Adjusted net income per basic share(1) $0.25 $0.25
Adjusted net income per diluted share(1) $0.25 $0.25
(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
($000s) Mar. 31, 2026 Mar. 31, 2025
Processing revenue 21,037 19,589
Other income 2,321 3,883
Total 23,358 23,472
Operating expense 1,755 1,759
Operating margin 21,603 21,713
Operating margin % 92 % 93 %
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 As at
Mar. 31, 2026 Dec. 31, 2025
Working capital 47,096 55,999
Exclude fair value of financial instruments (768) 2,725
Adjusted working capital 47,864 53,274
Less: bank debt 539,915 570,768
Net Debt 492,051 517,494
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 Interim Condensed Consolidated Financial Statements as at and for the three months ended March 31, 2026, 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 EBITDA attributed to the basic or diluted weighted average common shares outstanding.
A summary of the reconciliation of net income (per the Financial Statements), to EBITDA, is set forth below:
Three months ended
($000s) Mar. 31, 2026 Mar. 31, 2025
Net income 34,039 28,011
Unrealized loss on financial instruments 4,123 9,939
Share-based compensation 716 789
Finance expense 5,925 6,999
Depletion and depreciation 33,677 33,652
Current income tax expense 2,500 --
Deferred income tax expense 7,382 9,203
Less: interest income (73) (78)
EBITDA 88,289 88,515
EBITDA per basic share ($/share)(1) $0.57 $0.58
EBITDA per diluted share ($/share)(1) $0.57 $0.57
(1) As noted, calculated using the basic or diluted weighted
average number of shares outstanding during the respective
periods.
Payout ratio
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