Highlights
Generated Q3 2025 cash flow of $74.8 million ($0.49 per share(2)) and free cash flow (FCF)(1) of $73.0 million ($0.47 per share(2)), both of which increased 7% per share(2) from the prior year.
Q3 2025 royalty production of 21,596 boe/d(4) increased 15% from the prior year, which includes new record heavy oil royalty production of 3,386 bbl/d, 17% higher natural gas (primarily attributed to acquisitions) and 11% higher total oil and liquids royalty production.
Topaz estimates that operators invested $0.5 billion to $0.6 billion of development capital across the Company's royalty acreage in Q3 2025 ($2.0 billion to $2.1 billion YTD 2025)(3). During Q3 2025, 161 gross wells (6.3 net)(7) were drilled and 12 gross wells were reactivated across Topaz's royalty acreage, with 52% of the drilling activity in the Montney and Clearwater operating areas.
Processing revenue of $21.2 million from Topaz's infrastructure assets increased 16% from the prior year and 5% from the prior quarter.
Paid the third quarter dividend of $0.34 per share (70% payout ratio(1)) and approved the fourth quarter dividend of $0.34 per share which represents a 5.5% annualized yield to Topaz's current share price.(9)
Topaz completed the previously announced NEBC Montney tuck-in royalty acquisition from Tourmaline on September 30, 2025 which fully aligns Topaz to each of Tourmaline's future growth projects under their multi-year NEBC Montney build-out plan.
Third Quarter 2025 UpdateFinancial Overview
Topaz generated total revenue and other income of $76.4 million, 49% from crude and heavy oil royalties, 20% from natural gas and NGL royalties, and 31% from the infrastructure portfolio.
Cash flow of $74.8 million was 12% higher than Q3 2024 attributed to 16% higher processing revenue and other income and a 13% overall reduction in operating and interest costs.
Topaz's Q3 2025 FCF Margin of 95% realized a meaningful increase from Q3 2024 (88%) attributed to 30% lower operating expense, a 24% reduction in Topaz's effective borrowing rate under the Company's credit facility and an $8.7 million hedging gain ($0.06 per share(2)) realized during the third quarter.
Paid $52.3 million in dividends ($0.34 per share and 70% payout ratio(1)) which represents a 5.3% trailing annualized yield to the Q3 2025 average share price.(8)
Topaz exited Q3 2025 with $535.4 million of net debt(1) (1.6x net debt to Q3 2025 annualized EBITDA(1)). As at November 3, 2025, Topaz has over $0.4 billion of available capacity under the facility.(6)
Royalty Activity, Commodity Pricing & Hedging
Q3 2025 average royalty production of 21,596 boe/d(4) includes natural gas production of 89.6 mmcf/d and 6,661 bbl/d of oil and liquids production which increased 17% and 11%, respectively from Q3 2024.
During the quarter, Topaz generated $52.3 million total royalty revenue (99% operating margin(1)) and an average realized price of $26.32 per boe (before hedging). Topaz's $8.7 million Q3 2025 realized hedging gain includes a $7.1 million gain attributed to natural gas contracts which represents a 144% premium relative to Topaz's Q3 2025 realized natural gas price. The third quarter natural gas price volatility is largely attributable to third-party maintenance activity that restricted natural gas transmission line flow and WCSB export, particularly during the month of September. The maintenance activity and physical egress restrictions are expected to be alleviated during the fourth quarter. For the fourth quarter of 2025, approximately 31% of natural gas is hedged at a weighted average fixed price of C$3.06 per mcf, and approximately 30% of oil and total liquids is hedged at a weighted average floor price of C$97.64 per barrel.(11)
Topaz estimates that operators invested $0.5 billion to $0.6 billion of development capital across the Company's royalty acreage in Q3 2025 ($2.0 billion to $2.1 billion YTD 2025)(3), with drilling activity (161 gross wells spud(7)) diversified as follows: 61 Clearwater, 23 NEBC & Alberta Montney, 38 Deep Basin, 12 Peace River 12, SE Saskatchewan, 9 Central AB, and 6 Manitoba.
During Q3 2025, 184 total gross wells were brought on production(7) and at September 30, 2025, 94 gross wells were drilled but not yet completed (representing 58% of Q3 2025 new wells drilled).
Topaz estimates that over 30% of its Clearwater royalty production is currently stabilized under waterflood. Waterflood application over the past four years has contributed to a significant decrease in the base decline rate attributed to the developed Clearwater reserves, increased the oil recovery rates, and together, reduced operator maintenance capital required to sustain production. Through 2025, this operator capital has been re-allocated and resulted in the identification of incremental zones and increased waterflood application across Topaz's acreage. Topaz's Clearwater royalty production achieved a new record of 3,555 boe/d(13) (92% oil) during Q3 2025, representing a 12% increase from Q3 2024.
Based on planned operator drilling activity, Topaz expects between 27 and 31 active drilling rigs on the Company's royalty acreage through the fourth quarter of 2025.(3)
Infrastructure Activity
During Q3 2025, Topaz generated $24.2 million in processing revenue and other income which increased 16% from the prior year. The infrastructure assets generated 99% utilization and Topaz incurred $1.5 million in operating expenses, providing a 94% operating margin.(1) Topaz incurred $1.1 million in maintenance-related capital expenditures (before capitalized G&A).
Acquisition Activity
Topaz completed the previously announced NEBC Montney tuck-in royalty acquisition from Tourmaline on September 30, 2025 for $71.7 million. The acquisition provides a new royalty interest over approximately 134,000 gross acres (over 65% undeveloped with 410 tier one future Montney drilling locations identified), multi-zone upside optionality, and fully aligns Topaz to each of Tourmaline's future growth projects under their multi-year NEBC Montney build-out plan. YTD 2025, Topaz has completed $115.2 million of royalty and infrastructure acquisitions in the Montney, $72.5 million of which was funded through YTD 2025 Excess FCF and $42.7 million using the Company's existing credit facilities.
Dividend
Topaz's Board approved the Company's fourth quarter 2025 dividend of $0.34 per share(10) which is expected to be paid on December 31, 2025, to shareholders of record on December 15, 2025. The quarterly cash dividend is designated as an "eligible dividend" for Canadian income tax purposes.
Topaz's 2025e dividend remains sustainable down to $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 2025e dividend(3); (ii) hedging strategy and financial derivative contracts in place(11); (iii) the stabilized production supported by secondary recovery in Topaz's Clearwater and Weyburn royalty areas; and (iv) the quality and financial strength of Topaz's asset portfolio and strategic partners' planned development activity.
Guidance Outlook
2025e Guidance Estimates Reconfirmed
Topaz reconfirms the Company's 2025e guidance estimates(3)(14) of average annual royalty production between 21,000 boe/d and 23,000 boe/d(3)(4) and processing revenue and other income between $88.0 and $92.0 million.(3) Based on estimated commodity pricing(5), Topaz expects to exit 2025 with net debt between $500.0 and $510.0 million(3)(12) (net debt to EBITDA 1.5x(1)(3)), before consideration of incremental acquisitions, and generate a modest payout ratio at the lower end of the 60% - 90% long-term targeted payout range.
Q3 2025 CONFERENCE CALL
Topaz will host a conference call tomorrow, Tuesday, November 4, 2025 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/47FNQDK 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 04114.
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 nine months ended September 30, 2025 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 periods ended($000s) except per share
YTD 2025
YTD 2024
Q3 2025
Q2 2025
Q1 2025
Q4 2024
Q3 2024
Royalty production revenue
179,342
173,192
52,291
58,368
68,683
60,234
52,692
Processing revenue
60,977
47,539
21,221
20,167
19,589
18,838
18,279
Other income(4)
9,467
9,488
2,931
2,653
3,883
3,107
2,626
Total
249,786
230,219
76,443
81,188
92,155
82,179
73,597
Cash expenses:
Operating
(5,503)
(5,749)
(1,545)
(2,199)
(1,759)
(1,600)
(2,209)
Marketing
(1,122)
(1,004)
(307)
(370)
(445)
(356)
(279)
General and administrative
(5,936)
(5,326)
(1,864)
(1,893)
(2,179)
(2,894)
(1,730)
Realized gain on financial instruments
14,724
7,852
8,737
5,166
821
3,464
4,716
Interest expense
(19,741)
(20,526)
(6,620)
(6,267)
(6,854)
(6,940)
(7,123)
Cash flow
232,208
205,466
74,844
75,625
81,739
73,853
66,972
Per basic share(1)(2)
$1.51
$1.42
$0.49
$0.49
$0.53
$0.49
$0.46
Per diluted share(1)(2)
$1.50
$1.41
$0.49
$0.49
$0.53
$0.49
$0.46
Cash from operating activities
239,617
211,341
78,147
80,731
80,739
64,930
71,253
Per basic share(1)(2)
$1.56
$1.46
$0.51
$0.52
$0.53
$0.43
$0.49
Per diluted share(1)(2)
$1.55
$1.45
$0.51
$0.52
$0.52
$0.43
$0.49
Net income
51,804
41,960
11,357
28,161
12,286
4,426
18,040
Adjusted net income(1)
50,080
37,071
16,121
11,734
22,225
17,581
8,252
Adjusted, per diluted share(1)(8)
$0.32
$0.26
$0.10
$0.08
$0.14
$0.12
$0.06
EBITDA(7)
251,728
225,523
81,412
81,801
88,515
80,504
73,984
Per basic share(1)(2)
$1.64
$1.56
$0.53
$0.53
$0.58
$0.53
$0.51
Per diluted share(1)(2)
$1.63
$1.55
$0.53
$0.53
$0.57
$0.53
$0.51
FCF(1)
227,834
200,554
72,980
74,017
80,837
71,435
64,789
Per basic share(1)(2)
$1.48
$1.38
$0.47
$0.48
$0.53
$0.47
$0.45
Per diluted share(1)(2)
$1.48
$1.38
$0.47
$0.48
$0.52
$0.47
$0.44
FCF Margin(1)
91 %
87 %
95 %
91 %
88 %
87 %
88 %
Dividends paid
155,331
140,550
52,303
52,283
50,745
50,617
47,827
Per share(1)(6)
$1.01
$0.97
$0.34
$0.34
$0.33
$0.33
$0.33
Payout ratio(1)
67 %
68 %
70 %
69 %
62 %
69 %
71 %
Excess FCF(1)
72,503
60,004
20,677
21,734
30,092
20,818
16,962
Capital expenditures
4,374
4,912
1,864
1,608
902
2,418
2,183
Work in progress capital costs
─
21,295
─
─
─
(21,295)
5,585
Acquisitions, excl. decommissioning obligations(1)
115,204
99,189
71,733
26,001
