Topaz Energy Corp ((TSE:TPZ)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Topaz Energy Corp’s recent earnings call painted a picture of robust growth and strategic acquisitions, tempered by concerns over debt levels. The company reported strong growth in royalty production and infrastructure processing revenue, alongside a successful acquisition, while also acknowledging the challenges posed by its financial leverage.
Strong Third Quarter Royalty Production Growth
Topaz Energy Corp reported a significant increase in its third-quarter royalty production, reaching 21,600 BOE per day. This marks a 15% rise from the previous year, driven by record heavy oil production of 3,400 barrels per day, a 17% increase in natural gas royalty production, and an 11% increase in total oil and liquids royalty production.
Record Clearwater Royalty Production Volumes
The company achieved record production volumes in the Clearwater region during the third quarter of 2025, underscoring its strong operational capabilities and strategic focus on high-potential areas.
Infrastructure Processing Revenue Growth
Topaz’s infrastructure processing revenue saw a 16% increase over the prior year, totaling $24.2 million. The company’s infrastructure assets demonstrated exceptional performance, with a 99% average daily utilization rate, highlighting the efficiency and demand for its processing capabilities.
Successful Northeast BC Montney Acquisition
In a strategic move, Topaz completed a $71.7 million acquisition of a Northeast BC Montney tuck-in royalty from Tourmaline. This acquisition aligns with Tourmaline’s future growth projects and expands Topaz’s interests in the region, particularly with 65% of the acquired 134,000 gross acres being undeveloped.
Debt Level and Financial Leverage
Despite the positive growth metrics, Topaz’s debt levels remain a concern. The company expects to end 2025 with net debt between $500 million and $510 million, maintaining a net debt to EBITDA ratio of 1.5x. This financial leverage is a critical area for the company to monitor as it continues its growth trajectory.
Forward-Looking Guidance
Topaz Energy Corp’s forward-looking guidance remains optimistic, with expectations to close the year with net debt in the range of $500 million to $510 million, equating to a net debt-to-EBITDA ratio of 1.5x. The company also highlighted its robust free cash flow margin of 95% and a hedging gain of $8.7 million, which have contributed to its financial flexibility and ability to pursue future acquisitions.
In summary, Topaz Energy Corp’s earnings call conveyed a positive sentiment, driven by strong production growth and strategic acquisitions. However, the company’s financial leverage remains a point of concern, necessitating careful management as it continues to expand. Investors will be keenly watching how Topaz balances its growth ambitions with its debt management strategies.