Topaz Energy Corp.

Good morning. My name is Jenny, and I will be your conference operator today. At this time, I would like to welcome everyone to the Topaz Energy Corp. Second Quarter 2025 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's 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 star, followed by 2. Thank you. Mr. Scott Kirker, you may begin your conference.

Thank you, Jenny, and welcome everyone to our discussion of Topaz Energy Corps results as of June 30, 2025, and for the three and six months ended June 30, 2025, and 2024. I'm 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 Forum and our MD&A available on CDAR and on our website. I also draw your attention to the material factors and assumptions in these advisors. I am here with Marty Staples, Topaz's president, and Cherie Stevenson, vice president of finance and chief financial officer for Topaz. We will start by speaking to some of the highlights of the last quarter and our year so far. After these opening remarks, we will be open for questions.

Marty, go ahead. Thanks, Scott. Good morning, everyone. Topaz had a strong second quarter marked by significant increases in royalty production, infrastructure processing revenue, drilling activity, and wells brought on production. The acquisitions completed over the last year contributed 70% of our royalty production growth and led to a 37% increase in quarterly infrastructure processing revenue. Topaz second quarter royalty production was 22.3 thousand BOE per day and increased 19% from the prior year. Q2 2025 royalty production included crude and heavy oil production of 5.4 thousand barrels per day that increased 9% and natural gas and liquids production of 16.9 thousand barrels of oil equivalent per day that increased 23% over Q2 2024. Topaz generated total second quarter revenue of $81.2 million, 46% from crude and heavy oil royalties, 26% from natural gas and NGL royalties, and 28% from our infrastructure portfolio, with total processing revenue and other income of $22.8 million, which increased 25% over the prior year. OPAS's year-to-date 2025 annualized processing revenue and other income of $92.6 million represents the high end of 2025 guidance estimates. Drilling activity on our acreage remains strong with 125 gross wells drilled and as a result we achieved our previous record 21% share of total WCSB activity which increased significantly for 15% in Q2 of last year. We estimate operator spending across our acreage year to date has been $1.3 to $1.5 billion and we feel confident in continued allocation of capital to our acreage. Drilling activity was diversified across our portfolio with 50 in the Clearwater, 42 in the Montney, 23 in Deep Basin, 5 in Southeast Saskatchewan, and 5 in Peace River High. Based on our operator drilling plans, we expect that the current 28 to 32 active rigs on our royalty acreage will be maintained through the third quarter of 2025. Topaz generated second quarter total revenue of $81.2 million and cash flow of $75.6 million, or $0.49 per share. Topaz generated free cash flow of $74.74 million, generating a 91% free cash flow margin, which increased from 89% last year due to higher royalty production, infrastructure processing revenue, hedging gain, and lower interest expenses. During Q2, Topaz generated $20.2 $28.2 million of net income, or $0.18 per share, which increased 50% from the prior year. Topaz distributed $52.3 million in quarterly dividends, $0.34 per share, during Q2, which reflects Topaz's dividend increase that was announced with the Q1 results, and represents a 5.5% trailing annualized dividend yield to the second quarter average share price. Q2 excess free cash flow of 21.7M was allocated towards the previously announced Alberta-Monte infrastructure acquisition, which closed at the end of May for a total acquisition cost of 26M. We have reconfirmed our previously announced 2025 guidance ranges and expect to exit 2025 with net debt to EBITDA of 1.2 times, and generate a payout ratio at the lower end of the 60% to 90% long-term target range, which provides financial flexibility for acquisition growth. Our 2025 dividend remains sustainable down to $0 ACO and $55 US WTI attributed to the fixed revenue provided by our infrastructure portfolio and hedging contracts that include over 30% of second half 2025 natural gas production hedged at a weighted average price of $2.88 per MCF. We're pleased to answer any questions at this time. Back to you, Jenny.