Tamarack Valley Energy Stock

Good morning. Welcome, everyone, to the Tamarack Valley Energy Limited Conference Call and Webcast on Tuesday, July 28, 2026, discussing the recent Q2 2026 results press release. I would like to introduce today's speakers, Mr. Brian Schmidt, Founder and CEO; Mr. Steve Buytels, President and Kevin Johnson, CFO.

[Operator Instructions]

Mr. Schmidt, you may begin your conference.

Thank you, Sylvie. Good morning, and welcome, everyone, joining this morning to discuss our operating and financial results for the second quarter of 2026. My name is Brian Schmidt. I'm the CEO and Founder of Tamarack Valley Energy. And today, I'm joined by Steve Buytels, President; and Kevin Johnston, CFO. We are proud to report our Q2 results, which delivered record cash flows accompanied by robust production and shareholder returns. Our results are underpinned by strong operational execution and bolstered by elevated commodity prices in the quarter with global conflicts giving -- driving higher demand for responsibly sourced and reliable Canadian group. .

We continue to build upon our operational momentum in the Clearwater. We are delivering efficient production growth through the drill bit, and we continue to observe strong reservoir response from the ongoing waterflood expansion across our core fields. We are on track to grow our Clearwater production by over 15% year-over-year and raised our exit water rate injection volumes by 75%, setting a stage for '27 and beyond.

This quarter included the previously announced divestment of our Charting Lake assets for over $800 million. This transaction reflects the culmination of a tremendous portfolio transformation over the last 5 years. Looking ahead, the transaction has positioned Tamarack extremely well for success. We are now a pure-play Clearwater operator with run rate production of over 54,000 BOEs per day, net cash on the balance sheet of $130 million and decades of low-cost, high-margin oil inventory.

Kevin Johnston, our CFO, will now discuss our Q2 financial highlights.

Thank you, Brian. Clearwater production growth and strong operating netbacks drove record adjusted funds flow of $255 million for the second quarter or $0.53 per share. This was a 29% increase compared to the same period last year. Net of our capital program, Tamarack delivered $155 million of free funds flow in Q2.

Year-to-date, the company has generated free funds flow of $280 million or $0.58 per share. We continue to boost per share returns with our accretive share buyback program. We repurchased 6.5 million shares in the second quarter and 11 million year-to-date. Since the commencement of the program in January 2024, a we have now reduced the common share float by 15% at an average price of $5.39 per share.

Combining the buybacks with our dividends, Tamarack returned over $165 million to shareholders through the first half of the year. We declared a third quarter dividend of $0.05 per share payable on September 30, following the Charlie Lake divestiture, our dividend was increased by 25% and now equates to an annual distribution of $0.20 per share. Strength continues to be a core focus for Tamarack. We have recently redeemed our remaining 2027 senior and extended our credit facility with a 4-year term maturing in 2030.

A portion of the proceeds from the Charlie Lake sale were utilized to repay everything drawn on our credit facility. We have now eliminated our net debt position and have exited the second quarter with over $500 million of cash on hand and undrawn credit capacity of $875 million. Steve Buytels, our President, will provide an update on our Clearwater assets and outlook for the remainder of the year.

Thanks, Kevin. Execution of our first half capital investment program was largely in line with our original 2026 budget plans and was predominantly focused on primary development activities. We drilled 42 horizontals in the Clearwater Fairway utilizing a 4-rig program. First half activities also included groundwork for waterflood expansion plans in the back half of 2026.

As Brian noted, we exited the quarter producing over 54,000 BOE per day from the Clearwater and are well on track with our full year production guidance. Current waterflood injection volumes are approximately 45,000 barrels a day, and we now estimate that 8,500 barrels per day of our oil production is from waterflood uplift which represents 16% of our Q2 Clearwater production. By early August, we will be ramping up to approximately 50,000 barrels a day of injection and are on track to achieve our 2026 exit guidance of 70,000 barrels per day.

As you are aware, this year's injection is next year's production. Tamarack is observing prolific waterflood response from injection patterns commissioned in the prior year. And Martin Hills, the production under waterflood is back to 88% of the historical primary peak from more than 5 years ago and continues to trend higher. These waterflood barrels were added at a finding and development cost of less than $1 per barrel.

In West Martin, Waterflood response is establishing new production highs beyond historical primary production peaks in both the B and C Clearwater sands. Strong, consistent results from these 2 areas have provided significant momentum in the reduction of our corporate decline and future sustaining reinvestment needs. Following the Charlie Lake divestiture and in response to the higher near-term commodity prices, we elected to accelerate more growth of our high-margin Clearwater barrels in the back half of the year.

Compared with our original budget, we are now spending an additional $75 million in the Clearwater, which is balanced between primary and secondary waterflood activities. Approximately half of this capital expansion reflects the reallocation of the Charlie Lake capital that was previously scheduled in the back half of the year. All told, we are now targeting a full year capital program of up to $450 million.

We continue to be excited about our prospective lands at Pelican and SEAL and have expanded our delineation program to include 3 wells in the Pelican area targeting both Clearwater and Wabasca formation prospects. Further to this, we continue to advance our enhanced oil recovery scheme simulation in both areas.

And in addition to that, are currently executing 2 waterflood pilots in the South Clearwater Fairway. Success in these areas would reflect a meaningful opportunity for us to bring forward incremental value into our 5-year plan. Waterflood continues to be the recovery technology of choice across the main Clearwater fairway, supported by strong production response and very attractive economics. Targeted evaluation of alternative recovery technologies, including thermal, is being focused on areas with different fluid and reservoir parameters where other recovery mechanisms may be effective.

We are applying a nimble capital allocation strategy to our business. We had originally set a 2026 budget utilizing an assumed USD 60 WTI price. With higher commodity prices and cash flows, we are dedicating more capital for growth. We remain opportunistic with significant optionality and balance sheet strength to maximize the total return to shareholders. Net of our expanded capital investment program, we expect the majority of our free funds flow generated in 2026 to be returned to shareholders in the form of share buybacks, further compounding our per share value creation.

Brian Schmidt will now deliver the closing comments on the call.

Thank you, Steve. In addition, we're pleased to announce the appointment of Scott Shimek to Chief Operating Officer. Scott joined Tamarack 5 years ago as Vice President, Production Operations; and he begins -- brings significant experience from the energy industry, having is integrated and diverse technical knowledge into various leadership roles. We also wish to thank the federal and provincial government for recent developments with respect to ongoing support for major projects in Canada, including the egress solutions out of the Western Canadian sedimentary basin, which will benefit all Canadians and protect our sovereignty. .

This creates a positive visits environment that reduces egress risk and enhances the business environment. Beyond our capital allocation strategies that Steve spoke about, I want shareholders to know that we remain centered on the day-to-day business and acceleration of the vast inventory of opportunities in front of us. We are committed to precise operational execution, technical rigor and innovation. We continue to chase higher margins through our improved capital efficiencies, lower cost and higher price realizations.

Putting all these together, we believe we can continue to achieve our mission of maximizing long-term sustainable value for our shareholders. Thank you. I'll now turn it back to you, Sylvie, for questions.

[Operator Instructions]

Your first question will be from Patrick O'Rourke at ATB Cormark Capital Markets.

Maybe first, congrats to Scott on the promotion to the COO role. I guess just on the waterflood here. I think Q1, you noted 24% of production under waterflood exit targets around 38. Where do you ultimately -- what percentage of that overall Clearwater production do you ultimately see being under waterflood as you roll out the strategy here? .

Patrick, yes, it's Steve here. on the 5-year plan that we came out with and updated on the back of that Charlie Lake sale, we see that being north of 50%, approaching closer to 60% through the 5 years. But what I would say is we'll continue to refine that as we go here and we'll look to in conjunction with our 2027 budget update that. I think just with the positive results we're seeing in the incremental capital, there is a chance that, that could be higher. And ultimately, when we look at it, we put a new little update in the presentation where we talk about our sustaining investment needs moving to sub-20% of our cash flow at a $75 commodity price.

So when we think about it, I do think there is the opportunity to accelerate more of that production being under flood. And as such, that should result in more margin and more free funds flow really coming through the business in that plan.

Okay. And I was going to ask on success case at Pelican and Seal, but I think I'll leave that for someone else to maybe shift here, just given the comment you just made. You've obviously got a lot of free cash flow, low sustaining capital I'm curious where you see the optimal capital structure for this business. And I think about in excess of $100 million in positive net debt on the balance sheet, how do you think about releasing that to investors?

Yes. And that's a good question. I'll start and then if anybody wants to add. But having cash on the balance sheet has never been optimal in our view in terms of your cap stack, the cost of debt, especially after tax is cheap, and we have significant returns, obviously in our portfolio that we can bring forward. That being said, we're going to be a little bit patient here to just better understand the market.

Again, I talked about the waterflood opportunities in front of us. You brought up Pelican and Seal. We do want to bring that forward and the teams are working rigorously here on technical simulations in terms of what that looks like with respect to potential waterflood, perhaps polymer in certain circumstances and then, in some cases, even some of these similar opportunities.

So we'll sit back here. But ultimately, we do want to put that cash to work. And we likely will put the cash to work, but we'll do it in a very disciplined manner. And again, it's all about how do we bring forward more of this value that's sitting both in the plan currently with the waterflood, but also not in the plan currently that could be upside to that plan in Pelican and Seal and -- and even places like the South Clearwater, we're piloting that waterflood as we speak.

Any other?

Next question will be from Jamie Somerville at ROTH Capital.

I'll be happy to ask the question on Pelican and Seal. What's the timing we're likely to see initial results and an operations update on that in Q4? Or is that something that will just be more likely to see conclusive results from with the year-end reserves update.

Yes. Jamie, that's a fair question. We're going to spud the first of those 3 wells in Pelican in late September, early October. So I would say by the time we have good results to be able to share with you guys, we are probably talking more like our reserves in Q4, but we could put an ops update out sooner than that. we will be targeting, like I mentioned on the call, there are 2 Wabasca targets and then a Clearwater target.

There's 3 different area of competitors that are drilling those formations. And the rates as we continue to see public data come out, continue to be really quite positive. So we'll get after that. I think the biggest thing for us is the teams are working, like I mentioned, on the technical simulations in terms of whether we move to waterflood or polymer flood, specifically a pelican here.

So we'll want to set up the well designs and our program to accommodate the ability to take on that enhanced recovery as part of this development program. So we'll have some good updates here as we move forward through the end of the year and into reserve season. Seal will be -- it's a winter program there, so that will be a little bit later, and that probably -- we probably could potentially have an update with reserves, but it more likely would fall into the Q1 timing. And there, it's really what we're doing is, again, simulating some different waterflood design in the 3 Clearwater packages there.

And we'll finalize that here in the coming months, along with some core flood study and then move that into that exploitation and testing phase likely early in the new year.

Perfect. Maybe just 1 more. What's the hedging approach going forward with the cash on the balance sheet? Is there a minimum level that you'll stay hedged on?

Yes. It's Kevin. So going forward, we still have been layering on some hedges a year out with really wide collars. So I think our last ones we put on were actually $50 million by $100 million. So we'll still maintain a modest hedge book. But now that we're in a net cash position, it will be a much lower percentage. So where we were at 45% to 50% in the past, it will likely be somewhere closer to 20% already hedged looking at 1 year up with those white callers or even just buying the bottom end for protection. .

Next question will be from Jeremy McCrea at BMO Capital Markets.

I got a couple of questions for you here. I'll start with the first 1 just related to waterflood. What's the latest technology approaches to waterflood that you see for the coming year here? I know last year, it was about injecting faster. But what do you see for this year? Is it new types of patterns or just anything that you see on the horizon that could be a different way you've done things in the past year?

Yes, it's Brian. I'll take this question. So in terms of technology, you're absolutely right. We focused on making sure we could maximize the injection rates that we have on the wells. The interesting thing is here with horizontal wells and the speed of the water moving to the producer, it takes up to 20 years to get 1 turn of water through that whole reservoir, and that's a very long time. That is in the high profit margin of the cycle where you're putting water in and you're getting a relatively low water cut.

And so, we still remain focused on how we could get the injection rate up, and it may result in some configurations or some application for more pressure those sorts of things. So stay tuned on that piece.

In terms of the technical development going forward, Steve brought up the attention of testing in the Seal area, Canal and South Clearwater. So I see that we're going to be able to extend the -- extend some of these floods and include more IP in our inventory as we go forward.

And then the other thing we're going to be doing is most of our wells have been single leg injectors. And we believe we can cut costs by using multi-leg injectors. There's a bit of a trick there because you don't want to bypass in the heel from the injector to a producer. So we've been drilling down into the tighter shale then coming back up into the Clearwater and putting in separate legs there.

And then lastly, in the South Clearwater area, we drilled a fan wells that are designed to be waterflooded. So every second well in the fan will be converted over to injection. And when we -- when conversions probably early '27 will be starting to put water in every second fan on that. So that, hopefully, I think we're quite encouraged by how that's the simulation results turned out on there. So we're pretty excited to see what happens there.

I think, Jeremy, the 1 thing that I would tell you is that we have 2 reservoir engineering modelers on staff and Xcel adviser that I worked with years and years ago, that had been instrumental in the design of some of these floods. And I just saw some real exciting stuff this week, both on Seal and Pelican that were the guys that put together a real nice development plan using that reservoir simulator.

So I'm excited to see what this turns up.

No, that's a good detailed response. Maybe just completely a bit of a shift here. Just in terms of what Steve had mentioned having cash on the balance sheet is not optimal. Do you see more -- maybe more tuck-in acquisitions that you do with that cash or accelerating CapEx innovative acquisitions? What's generally the criteria you use here to look at acquisitions?

Yes. You know what, Jeremy, I think the key here is when you look at what we've done with our land holdings in the Clearwater just over the last year, we've quietly increased that by 30%. And that is through Crown land sales and through some salt tuck-in acquisitions. We did woodcut last year. We did the lineup Pelican private coal acquisition, which was really just a bunch of land. .

So we continue to be opportunistic but very disciplined with that strategy. And I think when you think about the cash on the balance sheet. Some of that could go to things like that. But ultimately, what we need to do is we run internally an 8-year earnings model. You guys see 5 years of that output that we put in the deck. And we need to be accretive to that ultimate earnings model, and that's set at $55 US WTI. So we never flex price on that. So we make sure that we're bringing in inventory that high grades, what we have in the plan or that sits outside the plan that we can take and make that more accretive.

So we're, very like I say, very disciplined on it, and it has to work in that model. So we see -- yes, we do see some opportunity there, I would say. But ultimately, Brian touched on Seal and Pelican, we have so much to do in our own portfolio in terms of the waterflood upside. If you look at it, there's some good charts in the core, we would hold the most what we see as acreage amenable to waterflood. And we have the least amount currently under flood. So we've got to get after that. That's part of the capital expansion that we did and some of the use of proceeds that came in, in terms of that cash.

And then bringing forward other opportunities like Pelican and Seal that currently are not in the plan, that could be highly accretive to the plan. So I could see us using and accelerating some of the cash for that. But the nice thing about this business is when your sustaining reinvestment rate is only 20% of your cash flow, you have a lot of optionality in margin for growth, for bringing and testing some of these concepts forward and then continuing with our buyback to compound that per share value.

So we see really a bunch of different potential uses there. But again, discipline is the key message I'd leave you with in terms of how we go about using that.

And I would add just so we're crystal clear there. The rationale for moving off Charlie Lake was to get at the vast inventory we have, both in terms of primary drilling and water flood. So that's really where everyone is focused over here, is trying to get at that organic growth and accelerate that. And you're seeing that come through the capital additions that we added this year.

And then the other thing, Guys, as I just think from the buyback point of view, Steve brought that up, we see a lot of good value in the stock because we don't -- we're seeing the waterflood probably in advance of -- we're just seeing some really good things happen there. And we think that the credit will come through on the reserve reports year-on-year.

But we can see things relatively already. So there's good value in the share. Probably the best acquisition we could do is our own stock right now.

And at this time, we have no other questions registered. I will turn the call back over to Mr. Schmidt.

Thank you, everybody. I appreciate. If you have further questions, please reach through our website, and we'd be happy to answer them or give us a call. Thanks for your time this morning.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the Tamarack Valley Energy Charlie Lake Divestiture Conference Call. [Operator Instructions] This call is being recorded on Thursday, May 28, 2026. I would now like to turn the conference over to Brian Schmidt, CEO. Please go ahead.

Thank you, Joelle. Welcome to everyone joining our conference call this morning. I'm Brian Schmidt, Founder and CEO of Tamarack Valley Energy. I'm thrilled to announce the completion of our transition into a pure-play Clearwater producer, the most economic and fastest-growing play in North America. We have just entered into a purchase and sale agreement to divest our Charlie Lake assets for $804 million. This divestiture provides us with significant optionality to pursue higher total returns to shareholders through a combination of accelerated growth and waterflood investment in the Clearwater, also disciplined share buybacks and an enhanced dividend as well as the elimination of our debt.

Together, with great support from our employees, field operators, our service providers, we're extremely proud of the way we have built and operated the Charlie Lake assets over the last 5 years. By all measures, the Charlie Lake was a great asset for us. The assets generated over $450 million of free funds flow and ultimately yield us a total cash return on invested capital of over 70% since we entered the play in 2021.

In the end, the Charlie Lake could not compete for capital nor keep pace with the prolific metrics that continue to surprise us to the upside in the Clearwater. The Charlie Lake divestiture gives us full value for the assets today while allowing us to bring forward a backlog of more highly accretive development opportunities in the Clearwater. In our 5-year plan, we expect to replace more than the disposed Charlie Lake volumes with higher-margin Clearwater barrels.

In our core acreage, we estimate that there's 25 years of development potential between primary, secondary drilling opportunities. In short, we have a lot of wood to chop in what has transformed into a generational oil play. Our vision is to be the most profitable Canadian energy producer with lasting inventory, and our mission is to generate long-term sustainable value for shareholders. This transaction enhances both of these objectives. I'll now turn it over to our President, Steve Buytels.

Thanks, Brian. Earlier this year, we initiated a strategic review of our Charlie Lake assets. In our view, our share price did not reflect the whole value of the play. The implication was an opportunity for us to capture more value for shareholders through further portfolio optimization. We engaged in a competitive bid process, which ultimately resulted in the divestment of our assets, a tremendous result here for Tamarack.

Our corporate transformation started in 2020. We entered the Clearwater in 2020 and Charlie Lake in 2021. The following year, we levered up to acquire a premium position in the Clearwater, a calculated risk was taken as the proven economics of the Clearwater at the time competed with our existing plays even without secondary waterflood expansion.

Since that time, our production and reserves in the Clearwater play have both more than doubled. We have distributed over $620 million to shareholders, and we expect to exit the second quarter of this year in a net cash position of more than $125 million on the balance sheet.

Substantial outperformance in the Clearwater over these past few years through higher production, improving netbacks and reserve growth has allowed us to divest of our lower-margin assets in noncore areas while advancing the more profitable, longer-duration asset development opportunities. This portfolio optimization has served to lower corporate sustaining capital requirements, lower our corporate breakeven prices, lower operating costs, nonproductive asset retirement obligations, lower our net debt and boost netbacks as well as improved capital efficiencies.

The Charlie Lake divestiture continues to drive this process forward. The company currently holds 200 million barrels of 2P Clearwater reserves with substantial running room for more growth and delineation to come. We have set out a CapEx program that can be flexed higher to provide additional growth optionality over and above what we outlined in our 5-year plan of the run rate 8% to 10% to something that could be into the mid-teens.

Beyond our core developments, we continue to expand our footprint through land acquisitions and exploration activities. We have put together positions at Seal and Pelican Lake with prospective targets in the Wabiskaw and Clearwater formations. The plays represent meaningful optionality to further enhance per share value to shareholders without -- or with success that currently is not reflected in our plan to date. I will now turn it back to Brian for closing remarks.

Thank you, Steve. I'm often asked how we make our key business decisions, both pulling the trigger on acquisitions or divestitures and how we allocate capital. For A&D, we have been consistent. We ask ourselves, how does the transaction impact long-term debt adjusted free funds flow per share. We bring in strategically aligned assets that improve our plan, and we sell assets if we can get a higher price than they are currently worth in our plan.

For capital allocation, our focus is on maximizing per share value in the environment we're in. At different commodity prices, maximizing that value may be through organic growth or buying back shares. We do not control the price of what we sell, so we must always prioritize being a low-cost producer in the commodity business. Thank you to our shareholders, employees, service and capital providers as well as the Board for your ongoing support. I'll now turn it back to the moderator for questions.

[Operator Instructions] Your first question comes from Jamie Somerville with ROTH Canada.

Just wondering a clarification on the guidance for year-end net cash and the royalty rates. Can you say what kind of oil price assumptions that you're using in there? Apologies if I missed that somewhere, but I didn't see it.

Yes, Jamie, it's Steve here. On the royalty rates there, what we did is we ran an $80 budget go forward and then we actualized prices to date. So you see a little bit of the jump in the royalty rate just reflecting the higher budget prices moving forward. And that would be reflective with that net debt or net cash, sorry, position as well for the estimate that was provided in the guidance.

Jamie, it's Kevin here. Just that greater than $125 million net cash, that's a pro forma end of Q2 number. So that's a June 30 this year.

Thank you for the correction there. Yes. And then maybe just -- I don't know if you can comment on this, but I don't really see you able to use all of the cash that this gives you and the free cash flow that I'm expecting with the dividend and maybe even a normal course issuer bid. So I think this positions you well to look at potential acquisitions. But if the Charlie Lake didn't cut it, then maybe it's only the Clearwater and maybe some other Mannville Stack that competes. There's an implied question there, and I don't know if you want to comment on it.

I'll start here, and Brian can add any color. But we did this, and we were pretty clear here that the Charlie Lake is a great asset and didn't compete anymore for capital within the opportunity set that the Clearwater has. And the Clearwater is a really advantaged asset in the sense that we can grow it while at the same time, we're reducing decline through the waterflood. So we need to pull value.

We have decades of inventory that we see here that we outlined both through primary and waterflood that we have to get after. And then outside of the plan, we still have Pelican and Seal that sit there that are seeing some really interesting competitor derisking and really good competitor results around that acreage. So we have to get after all of that and bring that value forward, too.

So at the end of the day, we felt that again, the current price environment lended well to moving off of the Charlie Lake. The Charlie Lake for us ended up being a return on investment of over 70% when you go through what we've been able to do with it in terms of generation of free cash and then the proceeds relative to the capital and the acquisition cost that we bought that at.

So that asset served us really well. But going forward here, with that opportunity set organically in front of us, that is going to be our focus. And again, we've got a pretty good history of being very disciplined in running that and making sure that anything we do is accretive to debt-adjusted free cash per share. And I think you nailed it earlier where there is a lot of free cash that this asset spins out even with the dividend and the capital program range that we outlined through the 5-year plan. I think if anything, we would look to potentially add more growth and accelerate that waterflood investment to bring more of that value forward quicker.

Yes. And I think I would add that if you kind of look historically what's been going on with the Clearwater, a couple of years ago, we drilled 140 primary wells. We're down to 85 this year, something like that. And so the number of wells that you need to drill is going down, and we've got a great growth rate over those years. So with any -- depending on how you measure, there's 1,700 to 2,100 wells in inventory. Stuff that happens beyond 10 years, it creates no shareholder value. We have to find a way to accelerate that, and this gives us some great optionality to pull that value -- pull those wells forward to create value for shareholders.

The waterflood roughly in the areas that we're going to do waterflood for every barrel of primary, you're going to get at least a couple of barrels of secondary. And so that's going to be a key focus for us is the organic growth that comes through drilling wells and waterflood.

[Operator Instructions] There are no further questions at this time. I will now turn the call over to Brian for closing remarks.

So my only closing remark, I just want to thank all the employees that worked the Charlie Lake asset and created just a ton of value, and it's just showing up here. It's been a great asset. I also want to acknowledge that in my years of working assets, I haven't worked an asset this prolific. And I think many around the table here would say the same thing. So I'm really looking forward to focusing on this asset here going forward and what it's going to be able to deliver. It's a once-in-a-career opportunity that I think all of us enjoy right now. So thank you for all your support online, and we'll close it off there. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Good morning. Welcome, everyone, to the Tamarack Valley Energy Limited Conference Call and Webcast on Wednesday, May 6, 2026, discussing the recent Q1 2026 results press release. I would like to introduce today's speakers: Mr. Brian Schmidt, Founder and CEO; and Mr. Steve Buytels, President; and also Kevin Johnston, CFO.

[Operator Instructions] Mr. Schmidt, you may begin your conference.

Good morning, and thank you, Kelsey. Welcome, everyone, to our call to discuss our first quarter operating and financial results for 2026. My name is Brian Schmidt. I'm the CEO of Tamarack Valley Energy. Today, I'm joined with Steve Buytels, President; and Kevin Johnston, CFO. This morning, Tamarack announced its Q1 2026 results with continued operational momentum in the Clearwater.

This marked Tamarack's full -- first full quarter as core Clear water and Charlie Lake producer after non-core asset dispositions in 2025.

Kevin Johnston, our CFO, will discuss the first quarter financial highlights. Kevin?

Thank you, Brian. The first quarter of 2026 was a strong start to the year for Tamarack. Tamarack's first quarter production averaged 71,329 BOE per day, approximately 86% of which was oil and liquids. Corporate production grew 5% from the first quarter of 2025.

Tamarack's Clearwater assets produced 53,000 BOE per day in the quarter, a 19% increase year-over-year compared to 2025. Tamarack's Charlie Lake assets produced 18,100 BOE per day so far in the year, which was compared to 17,800 BOE per day in the first quarter of 2025.

Tamarack generated adjusted funds flow of $222 million during the quarter with $93 million of capital expenditures. This resulted in $128 million of free funds flow in the quarter or $0.26 per share. First quarter free funds flow per share was 44% higher than in the first quarter of 2025. Tamarack repurchased 4.6 million shares during the quarter or nearly 1% of the 2025 year-end share count. Combined with our base dividend, Tamarack returned a total of $66 million to shareholders in the quarter.

Since Tamarack began its share buyback program through the NCIB in early 2024, Tamarack has repurchased 13.4% of its 2023 year-end share count or 74.6 million shares at an average cost of $4.93 per share as of March 2026. Tamarack exited the first quarter of 2026 with $623 million of net debt, which represents less than 1x the trailing 12 months adjusted funds flow.

With the release of our first quarter 2026 results, Tamarack reaffirms its full year guidance as released with our budget in December. Our President, Steve Buytels, will now provide an operational update for our core assets as well as an update on our outlook.

Thanks, Kevin. Our Clearwater assets delivered approximately 53,000 BOE a day of production in the first quarter. This represents a 19% production growth rate year-over-year and is reflective of the success of our primary development program and continued waterflood response driving lower base decline rates from the asset. We drilled 24 Clearwater wells in the quarter and held water injection volumes steady at around 40,000 barrels per day throughout, with approximately 24% of

Clearwater oil production now under waterflood.

As outlined in our budget, Tamarack plans to place a total of 65 water injectors and conversions into service over the remainder of 2026 and we remain on track to exit the year with approximately 60,000 barrels a day of water injection and greater than 35% of our Clearwater oil production under flood. Response from the waterflood continues to grow with total heavy oil uplift from waterflood estimated to be over 6,000 barrels a day to date.

Our Charlie Lake asset delivered average production of 18,100 BOE a day in the quarter, approximately 67% of which was oil and liquids compared to production of 17,800 BOE a day during the same period in the prior year. First quarter activity in the Charlie Lake was primarily focused in the Wembley area with 4 net wells drilled and 2 wells brought on production in each of the Wembley and Pipestone areas.

Tamarack retains the flexibility to scale the 2026 capital program in response to near-term market strength. Our 2026 budget was based on a flat USD 60 per barrel WTI price. Given the cyclicality of the business, we think about capital allocation based on where we sit in the price cycle. At low prices, i.e., $60 TI and less, we focus on driving per share growth through buybacks and focusing on waterflood investment to continue to lower the future reinvestment needs of the company. At mid-cycle pricing, $60 to $75 oil, we see a balanced approach across organic growth, buybacks, waterflood investment and debt repayment. And at high prices of $75 per barrel or better, we focus on maximizing value through higher organic growth rates and waterflood, along with more debt repayment to provide optionality for opportunities that may present themselves in the future.

We have elected to accelerate a portion of our primary drilling activity originally scheduled for the second half of the year into the second quarter to capitalize on higher near-term commodity prices based on a measured approach, and we'll revisit our capital plans for the back half of the year over the coming months. Our goal is to ensure we are bringing forward value to shareholders in a disciplined manner and ultimately target a reinvestment ratio of 50% to 60% of funds flow. I'm going to pass it back to Brian to deliver some closing comments on the call.

Thank you, Steve. By now, you have heard of our strategic goal to be a high-profit company in the best place. Our key performance indicator is the accretion of debt adjusted free cash flow per share. This quarter's results continue to demonstrate Tamarack's commitment to that solid strategy as did the most recent impressive reserve report results. So many metrics validate that we are on track with our strategy, low and decreasing decline rate down to 22% now, dropping OpEx year-on-year, high recycle ratios that provide multiple paybacks on investment.

The waterflood injection ramp ensures declines and sustaining capital will continue to drop over time, ensuring the company trajectory of more profitability, and we also manage investment risk by driving down breakeven. Moreover, as Steve noted, we will be nimble on capital allocation decisions to maximize outcomes. What does this mean for shareholders? It means Tamarack is very well positioned to generate long-term sustainable shareholder returns through a balanced combination of share buybacks, base dividends, growth and increased debt reduction. I want to thank our dedicated employees who work tirelessly to deliver these results, and I also wish to thank the Board for their continued support. Thank you. I'll now turn it back to Kelsey for -- the moderator for questions.

[Operator Instructions]

So at this moment, there are no questions on the phone. I will now pass it back to the camera for more questions.

Our first question online is for Mr. Steve Buytels. Who is the end customer for TVE's oil? And how is it transported to them? Is pipeline capacity a limitation for TVE production?

Yes. So when we look at that, ultimately, the end customer, we sell to many different refineries on some of the different major pipe egress options that we have out of Canada. So there's not one specifically. The thing I would talk about is we have secured what we would call regional egress out of the Clearwater area that supports us getting into that main Edmonton and Hardisty market to be able to move our barrels outward, and that aligns with our 5-year plan growth objectives. So I think we're pretty well taken care of there. When we look at the bigger macro basin egress, we continue to work on various options. One of them was in the news there yesterday with respect to the South Bow project and supporting that with volumes, and there's other open seasons on the way -- along the way here coming up. So we'll continue to look at those options, participate in the various egress opportunities that are there with the goal of ultimately protecting about 50% of our volumes on pipe to ensure that we have egress out of the basin.

Our next question is for Mr. Steve Buytels again. In the Pelican area, it looks like there is quite a bit of activity with other operators in secondary recovery with promising results. Two questions. What type of development style is Tamarack planning to derisk the Clearwater and Wabasca in the area? And when is Tamarack planning to drill the Wabasca? And would it be safe to assume that this would be near offsetting wells?

Yes. I can start here and then Brian chime in as you see fit. We do have plans to drill 2 to perhaps 3 wells in the Pelican area in the greater area there, testing the Clearwater as well as the Wabasca. This will be a second half program that we'll look to execute. And I think we're watching pretty carefully what some of the competitors are doing. They've been seeing some significant results through the polymer flood. You see a lot of activity, a lot of well licensing there.

So it is pretty exciting to watch, and we look forward to looking at that, getting that program going and then understanding both polymer upside when it comes to the Wabasca, but also potential waterflood upside in the Clearwater. Brian, did you have anything you wanted to add?

Yes. The thing that I would add is that I think the correct strategy for us in Pelican is to, as Steve said, continue to monitor what competitors are doing. I think it's one area where we like being a fast follower. And one reason for those impressive recycle ratios on our reserve report is the build-out that we have in Marten Hills and Nipisi are where we can get the best results with the inventory we have there. So we're happy to kind of drill in those areas while we kind of watch and see what happens in these areas.

Our next question is for Mr. Brian Schmidt. Can you talk about potential inflationary impacts in the second half of 2026 from service providers and how you expect it to mitigate in your capital program?

Yes. So for the most part, I mean, obviously, rig day rates are the primary piece as are some of the facilities construction that we're doing. We're not seeing inflation rates and that sort of -- in those kinds of metrics right now. And the main reason, I think, is because very few operators are really ramping up capital in a significant way at this point. We have long-term rigs that have been with us for a long time and good steady programs available for those rigs. So we see some pretty consistent pricing coming out of there.

Our next question is for Mr. Brian Schmidt again. Can you speak to optionality in the back half, where you would currently prioritize incremental spend? Can you also frame out the current spending cadence based on the second half acceleration?

So as Steve mentioned, our goal is to -- we have not announced any capital increases in our program. However, we have decided to accelerate some of our program and wait and see what happens with pricing and make a decision later on increased capital. Clearly, the most profitable investment is the waterflood. So typically, what we've done is if we start getting a pretty good beat on production with capital and we have extra capital around, we've been allocating it to waterflood, and that's what we did last year. I see a continued pattern this year.

Yes. And the only thing I would add maybe there is. For us, when we think about adding incremental capital, we obviously want to add more primary to take advantage of higher prices. But at the same time, we have to balance that with that waterflood investment that Brian is talking about to ensure that we continue to drive that decline lower and ultimately grow that margin on free cash through the plant. So we're working through that here over the coming months, like I mentioned on the call, and then we'll be back with a better sense of that back half plan here probably midyear.

Our next question is for Mr. Brian Schmidt. With the decline success to date, what do you see as optimistic decline rates the Clearwater play could reach medium to longer term?

Yes. I think probably in the Clearwater, we're somewhere around the -- headed toward a 15% type decline rate over time here. As you can appreciate with the combination of Charlie Lake and Clearwater, the Charlie Lake is a little higher decline. That's how our corporate ends up at 22%. So -- but I think that as we increase our waterflood area and increase our waterflood injection rate, those will be key leading indicators as to how declines -- how fast declines will go in the future.

Thank you. We have no more questions on the online Q&A. So I'll pass it back to the moderator.

Thank you. Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation. You may now disconnect. Have a great day.

Good morning. Welcome, everyone, to the Tamarack Valley Energy Limited Conference Call and Webcast on Wednesday, February 25, 2026, discussing the recent Q4 2025 results press release. I would like to introduce today's speakers, Steve Buytels, President; Kevin Johnston, CFO; and Ben Stoodley, Vice President, Engineering. [Operator Instructions] Mr. Buytels, you may begin your conference.

Thank you, Joanne. Good morning, and welcome, everybody, to the call to discuss the fourth quarter and full year operating and financial results for 2025 as well as our year-end reserve report. My name is Steve Buytels. I'm the President of Tamarack Valley. And today, I'm joined by Kevin Johnston, Chief Financial Officer; and Ben Stoodley, our VP Engineering. This morning, we announced our Q4 and full year 2025 results and our '25 year-end reserves and an operational update.

2025 was a record-setting year for Tamarack with a focus on continued rate of change in the business to further enhance the overall profitability and maximize shareholder value and per-share results. We completed our multiyear transformation into a Clearwater and Charlie Lake oil producer, and our asset portfolio is now exclusively focused on some of the most profitable conventional oil plays in North America, as evidenced by our strong financial and reserve results.

The team delivered an exceptional '25 from an operational standpoint, which resulted in 2 positive guidance revisions through the year with capital coming in at the low end of our guidance through efficiency gains, while production significantly outperformed even after adjusting for M&A through the year on the back of strong drilling results in both the Clearwater and Charlie Lake and strong response across our waterflood program in the Clearwater.

Further, corporate costs came in below guidance, highlighted by a 17% year-over-year reduction of net operating expenses as we continue to execute margin enhancement opportunities across the business. The combination of these efforts drove free cash flow of approximately $390 million in the year. Shareholder returns were a key focus with the company repurchasing approximately 36 million shares or 6.9% of the 2024 year-end share count at an average price of approximately $5 per share.

In addition, we increased the dividend by 5%. In total, we returned $262 million to shareholders in 2025 between share buybacks and the base dividend. When we add the buybacks, the base dividend, production growth and debt repayment together, we delivered a total return for shareholders of approximately 19% in the year. Portfolio optimization and the continued investment in waterflood has had several material benefits to Tamarack.

If we compare our 2023 midpoint -- or 2023 to the midpoint of our 2026 guidance, our corporate base decline rate is 13 percentage points lower. The sustaining capital to keep production flat is approximately 30% lower and our net operating expenses on a dollar per BOE basis is approximately 25% lower.

Collectively, we estimate this has reduced our U.S. dollar WTI breakeven price by approximately $8 per barrel since 2023, with our 2026 corporate sustaining free funds flow breakeven of less than USD 40 a barrel WTI, excluding hedges or approximately USD 35 per barrel WTI, including our hedge program. We have positioned ourselves as the largest public Clearwater producer with over 12 billion barrels of original oil in place.

We continue to expand our land holdings in the play, which grew by 25% in 2025 to now over 850 net sections, and they hold over 2,100 primary locations across our land base. This implies greater than 25 years of drilling inventory across the stacked horizons, not accounting for any future success in Wabiskaw formation in the Pelican region.

In addition, the waterflood provides significant recovery upside in the Clearwater, where we see the application doubling, if not tripling primary recovery. We currently have between 10% to 15% of our Clearwater acreage under waterflood with a significant runway remaining.

We believe we have an advantaged business model that stands out across commodity cycles, given the unique ability to show top-line production growth while at the same time, reducing our corporate decline through waterflood, which in turn lowers our reinvestment requirements. This allows us to compound and grow free funds flow through the plan even at low prices. I'll now turn it over to Ben Stoodley, our VP Engineering, to walk through our 2025 year-end reserves report.

Thank you, Steve. I'll begin with a summary of Tamarack's 2025 year-end corporate reserve performance, followed by a discussion of our Clearwater reserves and resources. To start at a corporate level, Tamarack delivered meaningful and capital-efficient reserves growth across all categories in 2025. proved developed producing or PDP reserves increased by 31% year-over-year.

Total proved reserves grew by 26%, while total proved plus probable reserves increased by 18%. When excluding reserves and production associated with acquisitions and divestitures completed during the year, total proved plus probable reserves increased by 30%, resulting in 413% production replacement. This performance was driven by the continued successful deployment of secondary recovery in the Clearwater, combined with strong repeatable results in the Charlie Lake.

These operational outcomes were further enhanced by our ongoing share buyback program and continued net debt reduction. On a per share basis, debt-adjusted reserve volumes also showed strong growth, increasing 42% on a PDP basis and 28% on a total proved plus probable basis year-over-year. From a cost perspective, 2025 PDP finding and development costs were $8.09 per BOE. Total proved costs were $8.01 per BOE and total proved plus probable costs were $7.93 per BOE.

With a 2025 field netback of $41.71 per BOE, Tamarack generated corporate recycle ratios exceeding 5x across all reserve categories. Turning now to the Clearwater. Reserve growth in 2025 was particularly strong. PDP reserves increased by 63%, total proved reserves grew by 64% and total proved plus probable reserves increased by 56% year-over-year.

Finding and development costs across all reserve categories averaged approximately $7 per BOE, enabling the Clearwater assets to generate recycle ratios of approximately 6x across each category. Reserves replacement was 256% on a PDP basis, 401% on a total proved basis and 534% on a total proved plus probable basis. Notably, waterflood-related PDP reserve additions achieved finding and development costs of less than $3 per BOE.

PDP reserves under waterflood expanded by 300% in 2025, while only 37% of total Clearwater reserves are currently assigned to waterflood development. Collectively, these results underscore the scale, quality and long-term value of Tamarack's Clearwater asset base. In addition to booked reserves, Tamarack continues to expand its resource inventory.

As of December 31, 2025, the company held 115 million barrels of best estimate gross unrisked contingent resources in the Clearwater, representing an 8% increase from year-end 2024. Gross unrisked prospective resources totaled 104 million barrels, a 6% increase year-over-year. As Steve mentioned, Tamarack has identified approximately 2,100 net drilling locations, of which 520 are net booked locations. And at our current pace of primary development, this represents more than 25 years of drilling inventory.

Operationally, activity in the Clearwater remained robust throughout 2025. During the year, Tamarack drilled 94.3 net horizontal heavy oil wells for primary development in the Clearwater fairway. In support of waterflood expansion, we also drilled 25 water injection wells, drilled 2 source water wells and converted 16 producing wells to water injectors.

Waterflood response continues to build with heavy oil production uplift now estimated at more than 5,000 barrels per day, representing approximately 10% of total Clearwater production. Tamarack exited 2025 with water injection rates exceeding 40,000 barrels per day, nearly 3x the rate at the end of 2024. Looking ahead, we plan to increase water injection to approximately 60,000 barrels per day by the end of 2026 with roughly 35% of Clearwater oil production under waterflood compared to approximately 24% today.

Waterflood capital expenditures in 2026 are forecasted at $100 million, representing a doubling relative to our capital expenditures in 2025. In addition, Tamarack plans to drill 2 derisked wells in the Pelican area in 2026, one targeting the Wabiskaw and one targeting the Clearwater. Finally, turning to the Charlie Lake. In 2025, Tamarack drilled 13.8 net wells and brought 16.8 net wells on stream across the Wembley and Pipestone areas.

The Charlie Lake generated approximately $190 million in asset level operating netback and $70 million in asset level free net operating income during the year. Tamarack's recently drilled 114 of 9 well in Wembley, has achieved -- or in Pipestone has achieved an IP rate of 1,400 barrels per day of oil and 2,000 barrels of oil equivalent per day. During the fourth quarter, Tamarack successfully redirected production to a new third-party CSV Albright gas plant and the AltaGas Pipestone II gas plant expansion.

With access to both owned and third-party processing and egress capacity, Tamarack retained significant capital allocation flexibility to support ongoing operations, sustain production and enable potential future growth in the Charlie Lake. For 2026, we plan to maintain a flat exit rate production profile of a 1-rig program, drilling approximately 10 wells across Pipestone and Wembley. Kevin Johnston, our CFO and VP Finance, will talk through some of our 2025 operational and financial highlights in more detail.

Thank you, Ben. 2025 was a very strong year for Tamarack. Fourth quarter production averaged 68,635 BOE per day. This represents a 4% increase over the fourth quarter of 2024 and a 9% increase if we exclude the impact of 4,000 BOE per day of non-core production that we divested in mid-October. Clearwater production was approximately 50,000 BOE per day in the quarter, a 16% increase compared to the same period in the prior year.

Charlie Lake produced 17,600 BOE per day, a 4% increase from the same period in the prior year. Average corporate production for the full year of 2025 was 68, 176 BOE per day, which represents growth of 6% from the prior year. This was in line with our revised 2025 guidance of 67,000 to 69,000 BOE per day of average annual production and was above our initial 2025 guidance of 65,000 to 67,000 BOE per day, which we had provided when we released our budget in December 2024.

This is notable because Tamarack's collective A&D activity throughout the year resulted in a net disposition of production volumes, and our original capital program was decreased by over 10%. In the fourth quarter, Tamarack delivered adjusted funds flow of $172 million, capital expenditures of $99 million and free funds flow of $71 million. For the full year 2025, Tamarack generated $390 million of free funds flow or $0.78 per basic share.

Free funds flow per share increased by 10% year-over-year despite WTI prices averaging 14% lower in 2025. Tamarack returned $262 million to shareholders in 2025 through base dividends and share buybacks. Long-term share buybacks allow us to compound organic free funds flow growth into per share returns. Tamarack invested $400 million in capital expenditures in 2025 at the low end of our revised guidance of $400 million to $420 million, and that was an 11% reduction from 2024.

This reduction reflects the impact of capital efficiencies from multi-well pad development, improved run times and reduced sustaining capital from strong base and waterflood performance. Net operating expenses declined 17% year-over-year to $7.43 per BOE, reflecting the impact of infrastructure investments, lower water handling costs and waterflood reinjection, higher production volumes and portfolio optimization from the divestment of higher-cost non-core assets over the last 2 years.

Tamarack made 2 positive revisions to guidance for net operating expenses in 2025 and full year expenses of $7.43 was still below our revised guidance of $7.75 to $8 per BOE. Tamarack is forecasting a run-rate net operating expense of $7 per BOE in 2026 at midpoint, which represents a 25% decrease compared to 2023.

Tamarack achieved its net debt target of 1x net debt-to-EBITDA at USD 50 WTI oil price in Q4 2025. Tamarack will focus on allocating additional free funds flow to shareholder returns through share buybacks in 2026. Long-term share buybacks continue to be the preferred mechanism for returning capital to shareholders.

We repurchased over 32 million shares in 2025 and reduced our share count by 6.9% from the previous year-end. Since beginning the share buyback NCIB program, Tamarack has repurchased over 12% of its 2023 year-end share count with over 70 million shares bought back at the end of January 2026. Our President, Steve Buytels, will provide our closing remarks for the call.

Thanks, Kevin. Tamarack continues to be differentiated by the scale and quality of our assets and our ability to generate growing per share returns even at modest commodity prices. With a breakeven WTI oil price of less than USD 40 per barrel WTI, a corporate base decline rate of 22%, a low-cost structure and low sustaining reinvestment requirements, Tamarack is very well positioned to generate sustainable shareholder returns.

As we look to 2026, we remain focused on maximizing shareholder value through a combination of organic growth, further waterflood investment, share buybacks and continued debt repayment. Our mantra of delivering more for less and the continued focus on driving growth and free funds flow per share through lower reinvestment requirements, organic growth and the compounding elements of the buyback positions us in a unique way to drive outsized returns.

On behalf of both Brian and myself, I would like to congratulate our team on a truly remarkable year. We would like to thank our Board of Directors, employees, stakeholders and shareholders for their continued support. Thank you. I will now turn it back to the moderator for questions.

[Operator Instructions] The first question comes from Jeremy McCrea from BMO Capital Markets.

Two questions here. The first one is, when you look at all your waterflood responses so far, how many are coming in above expectations versus -- or if any are coming in below? And I'd be curious actually if something comes in below, but how does this impact the way we should think about your guidance here going forward?

Yes. Thanks, Jeremy. The -- I would say, of course, there's some outsized responses in the short term here where we see these very dramatic IP rates coming in. We've held our EURs pretty standard, though through that period tying to the simulation results. So I think in general, we're really in line on an EUR and reserves basis with where we would expect outside of these really outlier kind of quick response, high response wells.

Okay. And maybe just a bit more of a follow-up question here just on some of the new land and exploration. Is any of those potential well results in your guidance? I'm just thinking if there's some success with the Wabiskaw and there's -- you decide to go for some quick follow-up wells. Is that in potential guidance? Like I'm trying to think of where we could see some upside here related to what you've put out for guidance here for today.

Yes. No, thanks, Jeremy. It's Steve here. I think following on what Ben talked about, we obviously simulate on our flood results. I think we've been pretty consistent with what we've seen in aggregate with recoveries there. But to Ben's point, we are seeing in certain circumstances, more in the Marten Hills area with the stack patterns and even those W patterns with the results that are coming through the public data, those are probably a little bit ahead in terms of some of that response to IP.

So I would say that's one place we continue to see some positive momentum. The other place, too, that we didn't talk a lot about today was even just on the primary well results, and we put it in our presentation, we did see a nice increase in the base outperformance of those primary wells in certain areas as well. So you're seeing lower primary declines or you're just seeing some of these wells with time outperform what our recovery and our reserves estimates would have been.

So there are those things that I think are still going on, and that's one of the beautiful things about being in the core and the heart of the play within Marten Hills and West Marten Hills and Nipisi. When you ask about what's not in the plan or some other potential upside, we have the capital in our plan with respect to going to drill a Wabiskaw well at Pelican as well as testing the Clearwater there.

You saw that we added incremental acreage in Q4. We really like that area as we build that out to be potentially another core focus for us where you could drive -- I'm going to use a wide range here depending on how things go, but that could be 5,000, 6,000, 7,000 to 10,000 barrel a day development plan potentially with success over time. So we'll drill these wells in the second half of the year.

And then there's a lot of competitor activity also going on that will help derisk some of those lands and provide some more color on those lands in terms of what that upside could be. But I just want to make sure we're clear that we don't bake any of that upside into our current plan here today. That would all be on top of it.

We have no further questions on the phone. I will turn the call back over to Tamarack for online questions.

Our first question online is for Mr. Steve Buytels. Congrats on a great year and exciting upcoming activity. For the Pelican area, are the 2 derisking wells in 2026 going to be drilled on the newly acquired lands or legacy lands?

Yes, that's a good question. So we will drill 1 well on our legacy lands, and then we will drill one well or our plan is to drill 1 well on our newly acquired lands. And again, what I would preface that with is there is a lot of competitor activity, both in the Wabiskaw and in the Clearwater that is around us there. So we'll look to build off some of that and see some of that data through the first half of the year, and then that will help inform exactly what we're going to do here in the second half and which locations we choose to go after.

Our next question is for Mr. Stoodley. Tamarack quotes 12 billion barrels of oil in place in the Clearwater with potential reserves and resources at approximately 400 million BOE, implying a roughly 3% recovery factor. What could see this recovery factor increase? And what have analog heavy oil resources typically recovered?

Yes. I think our like purpose of showing the reserves and resource report and is to show how we've been successful in growing that -- both those -- or all 3 of those categories, doing that through inventory additions as well as delineation of our inventory and the waterflood and promoting it through those categories.

It is a relatively low number there as far as recovery goes on that, that will continue to grow as we delineate. When speaking about other heavy oil resources, especially under waterflood, we see about 70% of our OIP sitting in areas that are currently proven for waterflood. And when I look to other pools and other examples, they typically have a tremendously long life.

There's many examples that started in the '50s and '60s that are still producing today and recovery factors there get 25% to 40% in a lot of cases in the successful cases. We see the Clearwater as being a very successful case at this time, but we're in the early innings of actually being able to predict where this goes in the long term. So we see it as there's quite a bit of upside on that recovery factor as we go forward.

Thanks, Ben. And one thing I would add here, it's Steve, I talked about it in my opening remarks. When we think about -- we talked about OIP there and the recovery factors associated with that in terms of the waterflood. I think the other thing that we should talk about, too, and make sure we're clear on is when we think of our total land base that's amenable to flood that we know works today, and this doesn't include the areas of the South Clearwater or Pelican or things like that.

That would all be incremental to this. We only have between 10% to 15% of our lands under flood. So when you think about the runway, Ben talked about recovery factors, but we're still so early just in terms of building out the runway and the duration of really where we're going to take this flood through the core areas of Nipisi, West Marten Hills and Marten Hills. So that's another thing to think about, too, when we look at this aside from the recovery factors just in terms of the amount of runway that we still have in front of us and have to get after.

Our next question is for Mr. Steve Buytels. On your waterflood projects in the Clearwater, have you seen any areas or patterns that have demonstrated water breakthrough thus far? When would you expect it to occur? And might it mean for oil rates in the play?

Yes. One thing I want to be clear on, breakthrough should not be a surprise when it comes to heavy oil waterfloods, and Ben can add here when I get done, but it's going to happen. This is factored into our simulation and our decline estimates that we've put out for everybody. So I want to make sure that, that's clear. There is no surprise there. The other thing, most heavy floods when we think of the analog floods that we would use here, 60% of the recovery happens at high water cuts or post breakthrough.

So we got to remember that we're still -- Ben talked about being in the early innings. You're going to see water cut increases and all of those things. It's more about are you set up and able to handle that. And when you think about it, over the last couple of years, we've put a lot of investment into infrastructure. Kevin talked about what that's done for our OpEx, but it's also about being ready to handle incremental water volumes and water cuts at our facilities.

And this year, in Q3, we're expanding and putting in a bigger water plant at our 15-15 facility in West Marten Hills. We've expanded and continue to do work at our 15-22 facility in Nipisi to handle the growth of the waterflood there in terms of we're going to be putting in a bigger free water knockout treaters, et cetera. And then last year, in the third quarter, we went through and expanded our water handling facilities and our water plant at our Marten Hills 11-4 facility.

So we are ready to handle when they come, bigger cuts. But again, this should not be panic, and this should not be any surprise to anybody. The other element of it is when you do see incremental water cuts, what do you do and how do you handle it? We have a lot of experience with heavy floods within our technical team here, and you're going to look at upsizing pumps and managing fluid rates.

And there are good examples of where we've seen higher water cut patterns in the Clearwater, where then you're upsizing pumps, you might be reducing injection for a point in time to get your oil rate back up. We do not see it as an issue, and there's lots of cases and experience here through the other heavy floods where you continue to be able to produce at a good rate and a very low decline for a long, long time. You just are dealing with higher water cuts.

And the last thing that I maybe have Ben talk on is we are designing our patterns for waterflood. So when we think about spacing and we think about managing the different viscosities and so forth in the play, we are setting up our patterns and our well designs to maximize the recovery and obviously deal with the injection and what we see there ultimately in terms of how we're going to handle that. So Ben, maybe I don't know if you want to touch on anything further there, but...

Yes. No, I think the only thing -- a couple of things I would add is when you do start to see more water show up, you see incremental total fluid show up as well and the actual oil production really sustains a plateau or a very shallow decline through a long stretch.

Some of the analog heavy oil stuff that I spoke about, especially the longer-dated stuff, they would have seen breakthrough back in like the early 1960s and have declined 5% to 7% for a long stretch following that. So that's, I think, what you can expect following the breakthrough as it comes through the field is just sustained shallow decline production there as we start to process more fluid.

Our next question is for Mr. Kevin Johnston. With your 2026 budget press release in December, Tamarack mentioned it was going to allocate additional free funds flow to share buybacks now that Tamarack had reached its debt target. Under the previous framework, Tamarack was allocating 60% of free funds flow to shareholders. Going forward, approximately what percent of free funds flow should we expect to be allocated to shareholder returns?

Yes. Our guiding principles are to maximize per share value and total shareholder returns across the commodity cycle. These principles give us greater flexibility to allocate capital depending on the environment, especially now that we've hit our debt target of 1x debt-to-EBITDA at a USD 50 WTI oil price. In the current environment, we're modeling kind of greater than 60%, so 70% to 90% this year, but we are going to be flexible depending on the environment we're in.

We have no more questions online, and I'll pass it back to Steve Buytels to end the call.

Thanks. I would, again, just like to reiterate our true appreciation to our team here internally for what a year they had. It really truly was an outstanding year here for us, both from a financial and operating standpoint, but then that really was culminated through what the reserve report was able to demonstrate in terms of the overall profitability of the business. So with that, again, we'd like to thank everybody. We appreciate everybody's time and support, and I will pass it back to the moderator to close off the call. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Good morning. Welcome, everyone, to the Tamarack Valley Energy Ltd. Conference Call and Webcast on Wednesday, October 29, 2025, discussing the recent third quarter 2025 results press release.

I would like to introduce today's speakers, Mr. Steve Buytels, President and Chief Financial Officer; Mr. Kevin Johnston, VP Finance; and Mr. Ben Stoodley, VP Engineering.

[Operator Instructions] Thank you. Mr. Buytels, you may begin your conference.

Good morning, and thank you. Welcome, everyone, to the call to discuss our third quarter operating and financial results. My name is Steve Buytels, President of Tamarack Valley. And today, I'm joined by Kevin Johnston, VP Finance; and Ben Stoodley, VP Engineering. This morning, Tamarack announced its Q3 results, another positive update to our 2025 guidance and a dividend increase.

Highlights of the quarter. Corporate production averaged 66,126 BOE a day, reflecting the previously announced 2,000 BOE a day impact of planned service interruptions at a third-party gas processing facility in the Charlie Lake and maintenance turnarounds in the Clearwater. Our production guidance of 67,000 to 69,000 BOE per day remains on track for the full year.

In terms of portfolio optimization, we continued with that strategy during the quarter. As we previously announced, Tamarack completed a $51.5 million synergistic tuck-in acquisition of a private company in the Clearwater, adding approximately 1,100 barrels a day of production and over 114 net stacked sections of Clearwater land, primarily in the West Nipisi area. We see significant operating infrastructure and waterflood synergies on the newly acquired assets.

In October, we closed the sale of our remaining non-core producing assets in Eastern Alberta for $112 million and disposed of approximately $63 million of undiscounted asset retirement obligations. This transaction is expected to reduce net production expense corporately by approximately 10% per BOE on a full year run rate basis. Tamarack has now completed its transition to a pure-play Clearwater and Charlie Lake producer. Our strong base volumes and lower decline rates from expanded waterflood activities in the Clearwater, combined with the Clearwater tuck-in acquisition are expected to replace most of the production from the East asset divestiture in the fourth quarter of 2025 and has allowed us to maintain our full year guidance range.

In terms of shareholder returns, Tamarack repurchased 6.7 million shares during the quarter, which represents 1.3% of the 2024 year-end share count. During the quarter, we returned $57 million to shareholders through a combination of the base dividend and share buybacks. Consistent with our strategy of growing shareholder returns, we also increased our annual base dividend by 5% to $0.16 per share per year. Tamarack plans to move the timing of dividends from monthly to quarterly payments beginning in 2026. In the first 9 months of the year, we have returned $194 million to shareholders through base dividends and share buybacks, representing a 6% return yield through the combination of both the dividend and the buybacks.

In terms of the waterflood, we increased Clearwater waterflood injection volumes during the third quarter to exit at more than 30,000 barrels a day in September. This represents the updated 2025 exit target rate being achieved 3 months ahead of schedule. We expect 2025 exit injection rates to exceed 35,000 barrels a day, which would represent approximately 22% of our Clearwater production being under waterflood support. This equates to a 250% increase over 2024 exit water injection rates. This significant response in oil rates from waterflood have driven approximately 3,600 barrels a day of full year production growth this year, which has been a key driver in the positive guidance revisions.

In terms of our capital structure and net debt reduction, during the quarter, we completed a $325 million note offering of 5-year 2030 senior unsecured notes. The proceeds of the offering were used to redeem $100 million of our existing 2027 senior unsecured notes with the remaining proceeds used to reduce the drawn portion of the credit facility. Tamarack ended the third quarter with net debt of $631 million, which represents a reduction of $144 million or 19% since the beginning of the year. With this note offering, Tamarack has laddered its debt maturity structure across several years and currently has undrawn credit capacity of over $700 million.

In October, S&P raised our corporate credit rating from B to B+ as a reflection of Tamarack's ongoing debt reduction and strong operational performance.

Ben is now going to walk through the latest developments in the Clearwater and Charlie Lake.

Thanks, Steve. Operationally, waterflood and the Clearwater is driving our growth, while the Charlie Lake continues to deliver strong repeatable performance. Clearwater production has grown by 11% year-over-year. This continues to demonstrate the success of our primary development and strong response for the ongoing expansion of Tamarack's waterflood program. Response from waterflooding continues to grow with a total production uplift from waterflood now estimated to be 4,500 barrels per day of oil. Year-to-date, Tamarack has drilled 20 injection wells, a source water well and have converted 13 producing wells to injectors. Tamarack is demonstrating the long-term value creation and resource capture capability of deploying waterflood as part of a multilateral development strategy in conventional heavy oil reservoirs.

To demonstrate this, we can look at the highest producing well rates in the Clearwater during the month of September. 4 of Tamarack's wells under waterflood, the 16-02, 15-02 and 01-11 wells at Marten Hills and the 11-24 well at Nipisi were 4 of the 10 highest producing wells in the Clearwater in the month of September despite all of these wells being brought on production 3 or more years ago. In the month of September, these 4 wells produced at a daily rate of approximately 940, 930, 430 and 490 barrels a day, respectively. These 4 wells under waterflood have collectively produced nearly 2 million barrels of oil to date as of September. Tamarack plans to rig release 22 net producing wells and 2 injectors in the Clearwater in the fourth quarter of 2025.

Our Charlie Lake asset continues to deliver strong results. The Charlie Lake produced approximately 14,000 barrels of oil equivalent during the quarter, reflecting planned service interruptions at a third-party gas processing facility in the Pipestone area. We continue to await start-up of the CSV Albright plant and are prepared to commence delivery of gas as the facility is currently in the final stages of commissioning. Delays to the start-up of the CSV Albright gas processing facility are not expected to have a significant impact on Tamarack's production for 2025 or 2026 with several mitigation plans already in place.

Tamarack resumed drilling and completion activities with 4 net horizontal wells drilled and 3 net horizontal wells completed during the third quarter, and Tamarack plans to continue running a one-rig program for the remainder of 2025 and to rig release a total of 4 net wells in the Pipestone and Saddle Hills areas of the Charlie Lake in the fourth quarter of 2025.

I'll turn it over to Kevin to expand on the financial results and our updated corporate guidance.

Thank you, Ben. Q3 2025 marks the completion of our multiyear transition to a pure-play Clearwater and Charlie Lake producer. In the quarter, we generated adjusted funds flow of $201 million or $0.40 per share, which was in line with 2024. Tamarack earned $96 million of free funds flow or $0.19 a share in Q3. In the first 9 months of 2025, Tamarack has generated free funds flow of $320 million or $0.63 per share, which is 17% higher than the first 9 months of 2024, even with WTI pricing 14% lower. This year-over-year increase reflects the compounding effects of production outperformance, lower cash costs and continued share buybacks.

Since beginning our share buybacks in January 2024, Tamarack has repurchased 63 million shares, which represents over 11% of our 2023 year-end common share float. We believe that long-term share buybacks allow Tamarack to both accelerate and compound per share value. Since the fourth quarter of 2022, Tamarack has delivered debt-adjusted production per share and debt adjusted funds flow per share growth of 40%. The ongoing reduction in our share count allows us to increase our dividend while keeping the absolute dollar payout relatively unchanged. Tamarack's base dividend will increase by 5% to $0.16 per share annually, beginning with the November 2025 payment.

As Steve mentioned, during the quarter, Tamarack completed the tuck-in acquisition of a private Clearwater producer, the disposition of non-core producing assets in Eastern Alberta and the bond refinancing. With all of this, Tamarack ended the quarter with net debt of $631 million, which represents approximately 0.6x net debt to the trailing 12 months EBITDA. Since the fourth quarter of 2022, we have reduced our net debt by $750 million and our net debt to the last 12-month EBITDA by an entire turn.

Tamarack's balance sheet is in a very strong position with low leverage, a laddered maturity schedule and currently 75% undrawn on its credit facility. We announced 2 positive revisions to annual guidance with the quarter. First, given the continued margin enhancement and expected cost savings from the East asset disposition, we further reduced guidance for net production expense by 5% on the full year.

Second, we reduced guidance for royalty expenses by 1 and 2 percentage points on both the low and high end of our guidance, given lower commodity prices and greater gas cost allowance credits. Year-to-date, net production expenses have declined by 19% compared to the same period last year. The East disposition is expected to further reduce our net production expenses by 10% per BOE go forward. Tamarack will be announcing its 2026 corporate guidance and capital program in early December.

I will now turn it back to Steve for closing commentary before we open the call to questions.

Thanks, Kevin. We announced 2 executive updates this morning as well. First off, Kevin Screen, Tamarack's Chief Operating Officer, has decided to retire in January. Kevin joined Tamarack in 2011 as the Vice President, Production and Operations, and has served as the Chief Operating Officer since 2021. Kevin's 15 years of experience and integrity have been instrumental to the success of Tamarack are an important part of the company's foundation. We all wish Kevin and his family a happy, lengthy and healthy retirement.

To ensure we keep one Kevin in the C-suite, Kevin Johnston, our Vice President of Finance, has been promoted to our Chief Financial Officer, effective January 1. Kevin joined Tamarack in 2023 and has been expanding his role since then to ensure a smooth transition. We'd like to congratulate both Kevins on these upcoming changes.

Tamarack continues to be differentiated by the scale and quality of our assets. Through our recent acquisition and divestiture activity, we continue to build on both of those factors with the overarching goal of becoming one of the most profitable exploration and production companies in North America.

There are 3 important themes I'd like to emphasize about Tamarack, which have been further demonstrated this quarter. First, the margin of profit on our barrels is consistently improving as we streamline into the best-in-class assets and drive down unit costs. Second, the Clearwater, aided by waterflood continues to deliver best-in-class economics with growing production and lower declines, driving enhanced free cash flow margin. And third, we continue to increase returns to shareholders through meaningful buybacks and growing dividends.

These themes contribute to a sustainable business, where we see compounding free funds flow per share growth and sector-leading margins. This positions Tamarack uniquely across all commodity price cycles. Our focus maintains on maximizing the value of our barrels for investors, and we will continue to allocate capital and free funds flow in a manner that maximizes shareholder returns. We see the buyback and waterflood investments as our most attractive investments at modest commodity prices.

On behalf of the executive team, we would like to thank our staff and Board of Directors in supporting the continued success of the company. Thank you. I will now turn it back to the moderator for questions.

[Operator Instructions] There are no questions at this time. I will now hand the call back to the management team.

Thank you. We will now read through some questions from the online Q&A. Our first question is for Mr. Ben Stoodley. Today, you announced Clearwater waterflood uplift of 4,500 barrels from waterfloods implemented prior to 2025. How many wells are responsible for these 4,500 barrels? Is the maximum expected from these wells? Or is the number expected to increase?

Yes. I think for that 4,500 barrels a day of uplift, we would attribute that to approximately 40 wells currently seeing response. They're in various portion or parts of the cycle of response. So some are inclining and some are quite stable. So I don't believe all of the patterns have reached their peak yet, and that will continue to evolve, but it's about 40 there.

Thank you, Ben. Our next question is for Mr. Kevin Johnston. Given Q3 end net debt and given the disposition closed in October, it seems that net debt is in the low to mid $500 million range presently. Can you give us an update as to whether the expectation is to hit the net debt target sooner than previously communicated?

Thank you. So it's important to note that the $630 million net debt we have as at Q3 includes the East disposition. So they're on our balance sheet as assets held for sale. So those proceeds are already reflected in that $630 million number. That being said, at our Investor Day in June, we were pointing to 2027 as when we saw ourselves kind of achieving our net debt target, and we do see that being accelerated with the recent success we've seen on lowering declines, waterflood performance and margin enhancement.

Thank you, Kevin. Our next question is for Mr. Ben Stoodley. The 1602 and 1502 wells are remarkable. In September, they produced more than double their primary production high. Are these unusual performances? Or do you expect to be able to rejuvenate other old wells to exceed their primary production highs?

Yes, we do expect this trend to continue, particularly in the Marten Hills area where we do have some older patterns. That's where 15-02 and 16-02 are. The other pattern we discuss often is our longest on injection W-pattern, which is the lateral flood. And it's now showing combined from the offsetting producers showing response uplift of almost 700 barrels a day. So it's also trending towards exceeding the initial peaks. We do have a large inventory of those wells, probably about 55 currently in the ground, and we continue to drill under these various waterflood patterns to build that inventory further. So we do expect these trends to continue across that area of the play.

Thank you. Our next question is for Mr. Steve Buytels. How much does the new barrel of Clearwater oil from waterflood compared to a new barrel from new drilling?

Yes. I think just sort of easy math, it would be probably about half depending on the style of the waterflood injection. If we're drilling new injectors, I'd say you're probably going to be in that $5 to $6 a barrel range. And if you are converting wells, which are old producers into injectors, the cost of that is probably about 1/3 of drilling a new injector. So you're going to see those costs on an F&D basis trend even lower.

So again, I think we highlighted it last year in our really strong reserve report and our really strong F&D metrics. I think you'll continue to see as we put more waterflood that come through the business. And as Ben just talked about, specifically at Marten Hills, with the response we're seeing, the incremental recoveries we're seeing there, we hope to continue to see that trend of that overall cost per barrel moving lower from a finding and development perspective.

Our next question is for Mr. Steve Buytels again. With debt levels moderating, how is the company looking at M&A opportunities versus share repurchases and further dividend increases?

Yes. I think at the end of the day, as Kevin mentioned, we're ahead of where we would thought we'd be and forecasted at Investor Day with respect to debt levels. Obviously, the East asset sale has accelerated that. But at the same time, we continue to look at maximizing shareholder value. And as we've walked through, there's a combination of different things we can do with that. It's allocating capital appropriately. And here, we see waterflood investment being the most attractive at a lower commodity price. We put limited capital in the ground today, and we get a significant amount of production response in what we see is hopefully a better commodity environment.

In terms of M&A, you can see that we added the Clearwater tuck-in acquisition during the quarter in conjunction with the disposition of the non-core pieces. So you still see us shuffling the deck, if you will, in terms of coring up the Clearwater. And I think our focus going forward will be continuing to do these smaller tuck-ins that offer synergies both on the infrastructure side, the operating side and potentially the marketing side with our barrels, and we've been successful in being able to do that.

I think the other element, too, is the more we can get cored up and take advantage of our infrastructure with waterflood moving forward, you're going to see just enhanced full cycle profitability in the business. So those -- all those elements are going to play a part.

And lastly, on shareholder returns, the buyback continues to be top of mind here. We want to be front-footed at these levels, even at these commodity levels, we see a growing return profile through our business at depressed pricing, and we want to get ahead of that. And Ben just walked through what we're seeing on the waterflood and the results and what they should indicate just moving forward from a reserve growth perspective and lower declines, lower sustaining capital, more margins. So again, shareholder returns are top of mind, and we continue to want to be front-footed there and be opportunistic there at this time.

Our next question is for Mr. Ben Stoodley. At a high level, what are some of the reasons why the waterflood in the Clearwater has worked as well as it has so far?

Okay. Our modeling and testing lands on really 2 primary reasons why that waterflood has been so exceptional. One is the characteristics of the reservoir. This includes the relative permeability to oil and water. This creates a very efficient flood where the water naturally displaces oil rather than fingering through the water phase.

And then the other thing is just the large surface area we create by drilling horizontal and multilateral wells is such a large step change from a vertical waterflood. The rate at which your water is being injected is more like sweating into the reservoir or soaker hose rather than high rate injection, even though we are injecting at high rates. This caused the flood front to move very slowly through the reservoir. But despite that, the pressure front is moving quite quickly, and that's why we're seeing these disproportionate responses at the producing wells.

Our next question is for Mr. Steve Buytels. You touched on it in the financial statements, but can you speak to the strength in this quarter's production expense on a per BOE basis? How should we be thinking about the production expenses into 2026 compared to 2025 guidance?

Yes. I think when you look at that, we've guided to with the East asset disposition there, what that means for OpEx moving forward on a run rate basis. So we do see OpEx trending down into '26, and we'll update that here in December when we come out with the budget.

But again, I think really when you look at it, as we core up into the Clearwater and in the Charlie Lake, you're seeing that more efficient, higher netback barrel come through, which is a function of, in a lot of cases, that lower OpEx that comes with the Clearwater. And again, the growth in the Clearwater and the growth just in production ahead of where we would have budgeted, obviously, is driving on a per BOE basis lower costs there as well.

But I think ultimately, at the end of the day, our goal here is to core up into the 2 plays that we're in, the Charlie Lake and the Clearwater. We see best-in-class economics. And as we look at the budget here in December, that margin in that barrel should come through, and we'll provide more detail then.

Our next question is for Mr. Steve Buytels again. Tamarack mentioned it is able to mitigate the delays in onstream timing of the CSV Albright facility. But can you provide any timing updates on when the facility could be on stream?

Yes. And I want to be careful here because it feels like there's a lot of false starts with this one through the year, and there's been some different messaging. As we've highlighted in the press release on the quarter, and we've talked about previously, we've been able to do things to mitigate that. And we -- even if there is delays, we see that mitigation being handled through some other processing alternatives that we have. Again, we drill to fill those volumes corporately here to in the Charlie Lake to manage that.

However, the latest update we did receive is that the plant was in the warm-up phase and that we could be seeing gas volumes moving through that plant here this week. I have not heard any change. So I think for now, we'd leave it at that. But again, as we look at it, and I want to make sure we drive the point home is even if there are further delays, we don't see any impact to our production guidance for '25, and we have different mitigating alternatives for 2026 as well should there be further delays.

Our next question is for Mr. Steve Buytels again. What is Tamarack's general view on A&D activity now that you finished disposing of the non-core assets in your portfolio?

Yes. We screen all A&D the same way. And for that matter, we actually look at capital investment or all the business decisions very similarly. And if it is accretive to the business on a debt-adjusted free funds flow per share basis, does it make our internal 8-year plan better by competing for capital with existing assets or inventory. Those are all things that we look at and how do we sit currently versus where that opportunity set could lead us? And what threshold in terms of does that rank higher than what we currently have in the portfolio exists. So we look at a lot of different things.

But again, as I mentioned earlier, tuck-ins in the Clearwater where we can leverage our infrastructure, our operating experience, the waterflood footprint, they're going to make a lot of sense for us. However, again, we'll be very disciplined with it.

And again, the other thing I would say there, too, is it also has got to compete with our ability to buy back our own stock in many different ways. So I think we've shown the Street that we've been very disciplined. We've had a plan in terms of what we want to bring in, and we'll continue to look at all of that from an opportunity perspective. But it's got to be accretive to the underlying earnings potential of Tamarack.

Our next question is for Mr. Kevin Johnston. Are you considering adopting a DRIP program?

So we've been discussing we see great value in buying back our shares and reducing our share count. A DRIP program, you're issuing additional shares for your dividend, so kind of going the wrong way. So we're not looking at a program at this time. But any investors who want to use their dividends to buy additional Tamarack stock options available.

We have no more Q&A questions online. So I will pass it back to Steve to finish off the call.

Yes. Again, we just want to thank all our shareholders, our staff for the support here in the success of the company and the patience that you've had as we've transformed the company, but we're really excited now with where we're at in terms of being a pure-play Charlie Lake and Clearwater producer. And hopefully, here, we'll talk to you guys again in December with what could be a good update on the future of the company with those core assets in place. Thank you.

Thank you, ladies and gentlemen. The conference has now ended. Thank you all for joining. You may all disconnect your lines.