Topaz Energy (TPZ) Small-Cap Growth Virtual Investor Conference summary

Strategic overview and business evolution

• Spun out in 2019 from a major Canadian gas producer, capitalizing on a unique market opportunity as ESG trends reduced fossil fuel investment.

• Expanded from 2 million to 6 million acres of royalty lands and from 2 to 6 gas plants, with significant infrastructure growth and diversification.

• Portfolio diversified beyond initial parent company, now including several high-quality public operators, reducing revenue concentration from 94% to 52%.

• Achieved seven dividend increases since IPO, with a 60% rise in infrastructure business now covering 40% of dividends.

• Maintains a 90%+ free cash flow margin and 99% operating margin in infrastructure, with most contracts under long-term take-or-pay agreements.

Financial performance and capital allocation

• Generated CAD 1.3 billion in cumulative EBITDA over four years, with CAD 1.2 billion as free cash flow, supporting both acquisitions and dividends.

• Maintains a payout ratio around 65% and holds CAD 1.6 billion in tax pools, remaining non-taxable until end of 2025, then at a reduced tax rate for a decade.

• After dividends, retains CAD 100–150 million in excess free cash flow annually, redeployed into M&A or debt reduction.

• Paid down over CAD 100 million in debt, preparing for the next M&A cycle, and completed CAD 2.2 billion in acquisitions since 2020.

• Infrastructure revenue is expected to grow from CAD 71 million to 74–75 million next year, supporting incremental dividend increases.

Growth drivers and asset base

• Holds 21,000 drilling locations on 6 million acres, providing decades of inventory and organic growth potential of 30–40% over five years.

• Key growth areas include Northeast BC (tied to the largest disclosed project in Western Canada), Clearwater (most economic oil play in North America), Deep Basin, Peace River High, and Southeast Saskatchewan.

• Infrastructure assets are young (less than 10 years old) and underpinned by long-term contracts, ensuring stable cash flows.

• Water flood technology in Clearwater is doubling recovery factors, unlocking additional value at no extra cost.

• Largest royalty owner in several prolific Canadian plays, with significant exposure to high-IRR wells and robust drilling activity.