Cavvy Energy Releases 2025 Q4 and Full Year Financial and Operating Results, 2025 Reserves, and Repays US$27 Million Debt in Q1 2026

Press Release

Third-Party Processing Growth and Hedging Gains Drive Debt Reduction; Strong Sulphur Prices Support Increase in Reserve Value

CALGARY, ALBERTA – March 18, 2026 – Cavvy Energy Ltd. (“Cavvy” or the “Company”) (TSX:CVVY) is pleased to announce the release of its fourth quarter and full year 2025 financial and operating results. The Company produced 23,904 boe/d and generated Net Operating Income (“NOI”) of $110.5 million during 2025. The Company produced 23,003 boe/d and generated NOI of $20.8 million during the fourth quarter of 2025 with an exit production rate of 24,569 boe/d.

During the first quarter of 2026, Cavvy repaid US$27.0 million of long-term debt, resulting in an undrawn senior revolving facility (US$22.0 million capacity), senior term loan balance of US$55.3 million, and subordinated loan balance of US$33.6 million at March 31, 2026.

2025 Annual Highlights

• Generated NOI of $110.5 million ($0.38 per basic and fully diluted share) and Funds Flow from Operations¹ of $62.6 million ($0.22 per basic and fully diluted share).
• Produced 23,904 boe/d (80% natural gas), 14% lower than 2024 primarily reflecting the ongoing voluntary shut-in of dry natural gas tied-in to third-party gas processing facilities, which impacted annual production by 8,700 boe/d in 2025.
• Processed 122.0 MMcf/d of third-party raw natural gas, an increase of 56.5 MMcf/d (86%) from 2024. This delivered an increase in third-party processing and marketing revenues of 92% to $38.8 million.
• Reduced Net Debt¹ by $26.9 million from 2024 to $170.6 million through repayment of long-term debt and reduction in the non-cash working capital deficit.
• Reduced operating expenses by $21.0 million (11%) to $164.8 million compared to 2024, primarily due to lower third-party processing costs following the voluntary shut-in of volumes in Central AB along with ongoing cost reductions.
• Recorded year-end 2025 NI 51-101 2P reserves of 260.5 MMboe (+7% compared to 2024) and 2P PV10 reserve value of $1,505.9 million (+20% compared to 2024) at the Jan. 1, 2026 IC4 price forecast, highlighted by an industry-leading PDP base decline of 5.9% and 2P RLI of 25.8 years.
• Rebranded to Cavvy Energy Ltd. in May 2025, completing the strategic pivot to affirm our identity as a western Canadian focused energy company.

[1] Refer to the “non-GAAP measures” section of the Company’s MD&A.

Q4 2025 Highlights

• Generated NOI of $20.8 million ($0.07 per basic and fully diluted share) and Funds Flow from Operations² of $13.5 million ($0.05 per basic and fully diluted share).
• Produced 23,003 boe/d (81% natural gas), up 2% from Q4 2024.
• Restarted 2,770 mcf/d of natural gas production in Northeast BC as AECO pricing rose above break even thresholds.
• Increased third-party raw gas processing volumes by 83% to 136.6 MMcf/d compared to fourth quarter of 2024. This resulted in a 135% increase in third-party gathering, processing and marketing revenue, or $7.2 million, for the quarter compared to the fourth quarter of 2024.
• Incurred reclamation and abandonment expenditures of $5.8 million, focused on asset retirement liability reduction in winter-access properties in Northeast BC.
• Entered into a 12-month structured sulphur pricing agreement for 2026 (the “Sulphur Pricing Agreement”), to partially mitigate the risk of sulphur price volatility while retaining the ability to participate in the spot sulphur market.

[2] Refer to the “non-GAAP measures” section of the Company’s MD&A.

“Successful execution of our strategy led to strong performance in 2025 and created the foundation for the next phase of Cavvy’s growth” stated Darcy Reding, President and CEO. “Our focus on run-time reliability, operational excellence, third-party processing revenue growth, and debt repayment drove the strong operational and financial performance reflected in our year-end results.

Compared to 2024, we reduced operating expenses by $21.0 million, grew third-party gathering and processing revenues by $18.6 million, and reduced net debt by $26.9 million, in aggregate resulting in over $100 million of net debt reduction since Q1 2022. In conjunction with new exposure to higher sulphur market pricing in 2026, our revenue stream is now more diverse than ever, improving the resiliency and financial flexibility of the Company.

We are successfully positioning Cavvy for sustainable, long-term value creation and look forward to delivering another year of debt reduction and return for our shareholders.”

Subsequent to Q4 2025

On January 6, 2026, Cavvy received a cash payment of approximately USD$26.7 million representing the prepayment of a portion of sulphur sales expected over the first half of 2026 at a predefined price in accordance with the terms of the Sulphur Pricing Agreement (the “Prepayment”), which was previously disclosed with our Q3 2025 financial results on November 6, 2025. With proceeds from the Prepayment, Cavvy repaid the full USD$18.1 million outstanding balance of the senior revolving loan in January 2026 and an additional USD$8.9 million of the senior term loan during the first quarter of 2026, resulting in interest expense savings over 2026 and accelerating progress towards the Company’s year-end debt and leverage targets.

Simultaneously, the Company recognized deferred revenue of approximately $36.2 million representing the obligation to deliver sulphur volumes, which will be reduced monthly between January and June 2026 as volumes are delivered.

On March 12, 2026, Cavvy announced the exercise of common share purchase warrants (the “Warrants”) held by 2652862 Alberta Ltd., an affiliate of Erikson National Energy Inc. (“Erikson”), for proceeds of $3.5 million in exchange for the issuance of 5,120,235 common shares.

Selected 2025 Financial and Operating Highlights

($000s unless otherwise noted)	2025	2024	2023
Production
Natural gas (mcf/d)	114,730	139,710	168,821
Condensate (bbl/d)	2,320	2,397	2,339
NGLs (bbl/d)	2,462	2,082	2,296
Total production (boe/d) [1]	23,904	27,763	32,772
Sulphur (mt/d)	1,078	1,319	1,306
Third-party volumes processed (mcf/d) [2]	122,013	65,475	60,834
Reserves
Net proved plus probable (“2P”) reserves NPV10 [3]	1,505,907	1,252,170	1,371,735
Proved developed producing (“PDP”) reserves NPV10 [3]	711,083	621,393	614,072
2P reserve life index (“RLI”, years)	25.83	25.08	20.38
Financial
Natural gas price ($/mcf)
Realized before Risk Management Contracts [4]	1.74	1.58	2.67
Realized after Risk Management Contracts [4]	3.65	3.15	3.67
Benchmark natural gas price	1.68	1.45	2.63
Condensate price ($/bbl)
Realized before Risk Management Contracts [4]	85.08	94.48	97.01
Realized after Risk Management Contracts [4]	84.59	86.73	95.55
Benchmark condensate price	88.54	100.02	102.73
Sulphur price ($/mt)
Realized sulphur price [5]	31.68	13.52	21.86
Benchmark sulphur price USD (Vancouver FOB)	285.35	94.04	94.18
Revenue [6]	293,838	268,840	374,029
Net Income	(3,151)	(38,905)	8,981
Net (loss) Income $ per share basic	(0.01)	(0.20)	0.06
Net (loss) Income $ per share diluted	(0.01)	(0.20)	0.04
Net operating income [7]	110,457	64,608	130,929
Cashflow provided by operating activities	36,453	7,132	104,202
Funds flow from operations	62,625	19,115	85,692
Operating netback ($/boe) [7]	12.66	6.35	10.95
Total assets	540,136	612,423	638,541
Adjusted working capital (deficit) [7]	(19,769)	(29,777)	(31,830)
Net debt [7]	(170,617)	(197,564)	(204,046)
Non-current liabilities	290,762	326,853	300,261
Capital expenditures [8]	23,359	25,697	55,539

(1) Total production excludes sulphur.
(2) Third-party volumes processed are raw natural gas volumes reported by activity month.
(3) Estimated pre-tax net present value of discounted cash flows from reserves using a 10% discount rate.
(4) Includes physical commodity and financial risk management contracts inclusive of cash flow hedges, together (“Risk Management Contracts”).
(5) Realized sulphur price is net of customary deductions such as transportation, marketing and storage fees.
(6) Revenue is inclusive of petroleum and natural gas revenue, royalties, processing, marketing and other revenue, and realized gains and losses on risk management contracts.
(7) Refer to the “Net Operating Income”, “Capital Resources”, “Funds Flow from Operations” and “Working Capital and Capital Strategy” sections of the Company’s MD&A for reference to non-GAAP and other financial measures.
(8) Excludes reclamation and abandonment activities.

2025 Reserves

Deloitte LLP., Cavvy’s independent reserves evaluator, performed National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities (“NI 51-101”) compliant reserves evaluations on the Company’s assets at December 31, 2025 and 2024. The following table summarizes those evaluations based on the Deloitte NI 51-101 reserve report using the January 1, 2026 and January 1, 2025 IC4 price forecasts, respectively:

Reserve Volume and Net Present Value	<strong>Year ended December 31</strong><br><strong>MMboe</strong>			<strong>Year ended December 31</strong><br><strong>$000, NPV10</strong> [1]
	2025	2024	% Change	2025	2024	% Change
Reserves Category [2]
Net proved developed producing (PDP) reserves	106.6	114.9	(7)	711,084	621,393	14
Net proved (1P) reserves	196.2	183.2	7	1,173,560	961,492	22
Net proved plus probable (2P) reserves	260.5	244.4	7	1,505,907	1,252,170	20

(1) Estimated pre-tax net present value of discounted cash flows from reserves using a 10% discount rate at evaluator consensus (IC4) year end price forecast.
(2) Net reserves reflect working interest share of the asset prior to the deduction of royalties.

Selected 2025 Reserve Highlights

• 2P Reserve Life Index (“RLI”) increased to 25.8 years from 25.1 years in 2024.
• 2026 forecasted PDP base decline of 5.9%, one of the lowest natural decline rates among peer companies.
• Lower operating costs allocated to the Company’s producing wells due to offsetting third-party processing revenue and stronger sulphur prices drove the increase in year-end 2025 NPV10.
• Recategorized certain PDP volumes into PDNP due to the extended well shut-ins in Central AB.

Refer to the Company’s Annual Information Form (“AIF”) for the year ended December 31, 2025 for more detailed information on Cavvy’s 2025 reserves.

2025 Reserve Reconciliation

	<strong>Light & Medium Oil</strong>			<strong>Conventional Gas</strong>			<strong>Natural Gas Liquids</strong>
	Proved<br>Mbbl	Probable<br>Mbbl	Proved + Probable<br>Mbbl	Proved<br>MMcf	Probable<br>MMcf	Proved + Probable<br>MMcf	Proved<br>Mbbl	Probable<br>Mbbl	Proved + Probable<br>Mbbl
Opening Balance				913,127	315,011	1,228,138	31,046	8,607	39,653
Production	(2.6)		(2.6)	(42,158)		(42,158)	(1,708)		(1,708)
Technical Revisions	2.6		2.6	110,435	16,122	126,557	4,929	990	5,919
Extensions				249	30	279	92	5	97
Economic Factors				(9,053)	(4,273)	(13,326)	(291)	271	(20)
Closing Balance				972,600	326,890	1,299,490	34,068	9,873	43,941

Selected Q4 2025 Financial and Operating Highlights

($000s unless otherwise noted)	2025				2024
	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Production
Natural gas (mcf/d)	111,834	115,467	126,198	105,338	111,787	115,196	157,077	175,356
Condensate (bbl/d)	2,065	2,258	2,507	2,454	2,149	2,191	2,472	2,781
NGLs (bbl/d)	2,299	2,454	2,524	2,574	1,788	1,726	2,210	2,613
Total production (boe/d) [1]	23,003	23,956	26,064	22,584	22,568	23,116	30,861	34,620
Sulphur (mt/d)	989	1,120	1,128	1,076	968	1,444	1,376	1,491
Third-party volumes processed (mcf/d) [2]	136,579	138,544	121,319	90,926	74,650	72,654	55,688	58,730
Financial
Natural gas price ($/mcf)
Realized before Risk Management Contracts [3]	2.41	0.66	1.73	2.24	1.55	0.77	1.14	2.53
Realized after Risk Management Contracts [3]	3.60	3.25	3.23	3.58	3.36	3.43	2.71	3.21
Benchmark natural gas price (AECO)	2.25	0.62	1.72	2.14	1.46	0.68	1.17	2.48
Condensate price ($/bbl)
Realized before Risk Management Contracts [3]	76.62	82.65	84.60	95.15	94.87	92.13	99.96	91.18
Realized after Risk Management Contracts [3]	79.75	83.66	85.88	88.29	90.61	84.61	87.75	84.49
Benchmark condensate price (C5 at Edmonton)	79.61	86.58	87.71	100.24	98.85	97.10	105.62	98.43
Sulphur price ($/mt)
Realized sulphur price [4]	43.22	34.59	32.40	17.00	12.09	8.86	18.43	14.49
Benchmark sulphur price USD (Vancouver FOB)	414.47	268.42	271.75	184.42	135.78	97.49	73.82	68.57
Net income (loss)	122	(10,086)	4,147	2,666	(20,921)	7,496	(19,196)	(6,284)
Net income (loss) $ per share, basic	0.00	(0.03)	0.01	0.01	(0.08)	0.04	(0.12)	(0.04)
Net income (loss) $ per share, diluted	0.00	(0.03)	0.01	0.01	(0.08)	0.04	(0.12)	(0.04)
Net operating income [5]	20,785	30,631	26,491	32,550	13,720	19,818	7,652	23,418
Cashflow provided by (used in) operating	7,776	4,466	1,599	22,612	(592)	2,260	(1,555)	7,049
Funds flow from operations [5]	13,518	12,898	14,502	21,707	3,341	8,234	(4,874)	12,044
Operating netback ($/boe) [5]	9.82	13.90	11.17	16.02	6.61	9.31	2.74	7.44
Total assets	540,136	536,274	553,216	571,470	612,423	615,040	585,940	590,531
Adjusted working capital (deficit) [5]	(19,769)	(10,631)	(20,144)	(30,540)	(29,777)	(42,658)	(37,986)	(31,671)
Net debt [5]	(170,617)	(163,697)	(166,878)	(185,438)	(197,564)	(206,779)	(219,204)	(209,964)
Capital expenditures [6]	10,404	4,022	2,391	6,542	5,800	10,002	5,003	4,897

(1) Total production excludes sulphur.
(2) Third-party volumes processed are raw inlet natural gas volumes reported by activity month.
(3) Includes physical commodity and financial risk management contracts inclusive of cash flow hedges, (together “Risk Management Contracts”). The realized natural gas price after Risk Management Contracts shown above is normalized to exclude the impact of the hedge monetization.
(4) Realized sulphur price is net of deductions such as transportation, marketing and storage fees.
(5) Refer to the “Net Operating Income”, “Capital Resources”, “Funds Flow from Operations” and “Working Capital and Capital Strategy” sections of the Company’s MD&A for reference to non-GAAP and other financial measures.
(6) Excludes reclamation and abandonment activities.

The Company has filed its AIF for the year ended December 31, 2025, including the 2025 independent oil and natural gas reserves evaluation as required under NI 51-101. Cavvy’s 2025 NI 51-101 Proved Developed Producing (“PDP”) NPV10 value is $711.1 million and Total Proved plus Probable (“2P”) NPV10 value is $1,505.9 million [3]

The Company’s AIF, management’s discussion and analysis (“MD&A”) and audited consolidated financial statements and notes for the year ended December 31, 2025 are available at www.cavvyenergy.com and on SEDAR+ at www.sedarplus.ca.

[3] NPV10 at effective date of Dec. 31, 2025 using Jan. 1, 2026 evaluator consensus (“IC4”) price forecast.

Outlook

($ 000s unless otherwise noted)	Initial 2026 Guidance
	Low	High
Production (boe/d) (1)	22,000	24,500
Sulphur production (mt/d)	1,000	1,150
Net operating income (2)(3)(4)	125,000	140,000
Capital expenditures (5)	35,000	40,000
Total debt (at YE 2026) (6)	110,000	125,000

(1) Production guidance assumes persistence of previously announced shut-ins in Central AB and Northern AB, while production in Northeast BC is assumed to be on-production through 2026
(2) Refer to the “Net Operating Income” section of the Company’s MD&A for reference to non-GAAP measures
(3) Assumes unhedged average 2026 AECO price of $3.15/GJ, average unhedged 2026 WTI price of US$60.90/bbl and average unhedged 2026 Vancouver FOB Sulphur price of US$237.50/mt
(4) Includes the impact of hedge contracts and the 2026 structured sulphur price agreement
(5) Excludes asset retirement and decommissioning expenditures
(6) Assumes USD/CAD exchange rate of 0.7210

 

Momentum maintained from key milestones achieved in 2025 including operating cost reduction, third-party processing volume and revenue growth, and sustained risk management initiatives is expected to contribute to strong cash flow and material debt reduction in 2026. These support management’s increasing focus on identifying accretive growth opportunities in 2026, consistent with the Company’s long-term objective to replenish and grow its reserves and production base and enhance its inventory of investment opportunities.

Specific priorities for 2026 are:

• Sustain a safe and regulatory compliant business.
• Capture additional opportunities to grow third-party gathering and processing business value.
• Minimize facility outages to maximize sales and processing revenue.
• Reduce long-term debt to improve financial flexibility and position the Company to refinance its 2027 debt maturities.
• Identify and high-grade both organic and acquisition opportunities to replenish Cavvy’s resource base and increase development upside.

Production

Production guidance of 22,000 to 24,500 boe/d and 1,000 to 1,150 mt/d of sulphur assumes the continued shut-in of uneconomic dry gas production in CAB and Northern AB for the year, accounting for approximately 8,900 boe/d and 300 mt/d of sulphur, along with seasonal production of Northeast BC volumes as natural gas prices allow.

Production guidance also includes a planned six-week major maintenance turnaround at the Caroline Facility scheduled for the third quarter of 2026, and two weeks of unavoidable downtime at the Waterton Facility related to a scheduled maintenance outage on the TC Energy Nova Gas Transmission Ltd. system anticipated for the second quarter of 2026.

Capital Program

Cavvy’s $35 to $40 million capital guidance includes $15 million to $20 million allocated to the scheduled maintenance turnaround at the Caroline Facility in the third quarter of 2026, $9.5 million to capital maintenance including overhauls and long lead procurement for future turnarounds, $3.5 million to facility optimization projects, $5.0 million to ongoing investment in IT and plant control system upgrades, and the remainder for other capital maintenance and corporate expenditures. Capital guidance excludes $8 million of planned expenditure on asset retirement and reclamation activities.

Net Operating Income

Cavvy expects continued growth in third-party processing volumes and revenue at the Caroline and Jumping Pound Facilities. In Q4 2025, the Company entered into a multi-year take-or-pay agreement with an anchor processing customer at the Caroline Facility and has successfully contracted additional third-party volumes at the Jumping Pound Facility resulting from the permanent shutdown of a nearby third-party gas processing facility, which began processing its re-directed raw gas production at the Jumping Pound Facility in January 2026. Additionally, Cavvy continues to re-melt and process third-party sulphur at the Shantz sulphur facility, which further contributes to stable, fee-based revenue streams. This growth of the third-party processing business, hedged 2026 hydrocarbon and sulphur revenue, and continued reliable operation of major gas processing facilities underpins management’s 2026 NOI guidance of $125 to $140 million.

 

2026 NOI guidance assumes an unhedged Vancouver FOB sulphur price averaging US$250/mt for the first half of 2026 and US$225/mt for the second half of 2026, an average unhedged 2026 AECO price of $3.15/GJ, and an average unhedged 2026 WTI price of US$60.90/bbl.

Recent months have experienced price variances on certain commodities when compared to 2026 guidance assumptions, partially driven by increased demand in other sectors and global trade flow disruptions from the war in the Middle East. Spot sulphur has remained elevated at ~US$498/mt year to date, while AECO natural gas has been unexpectedly weak for the winter season at ~$1.92/GJ year to date. Management is encouraged by the continued strength in the spot sulphur market and expects net sulphur margins to contribute a larger proportion of revenue to 2026 NOI targets than previous years. Recent volatility and uncertainty in the global markets as a result of geo-political instability may continue, and Cavvy will monitor these events to effectively manage risks and opportunities that may arise.

Hedge Position

Cavvy may hedge to mitigate commodity price, interest rate and foreign exchange volatility to protect the cash flow required to fund the Company’s operations, capital requirements and debt service obligations, while maintaining exposure to commodity price upside. Cavvy continues to execute its risk management program governed by its hedge policy and in compliance with the thresholds required by senior lenders.

The Company has 71,140 GJ/d of its remaining 2026 natural gas production hedged at a weighted average fixed price of $3.36/GJ, and 1,528 bbl/d of its remaining 2026 condensate production hedged with a weighted average floor price of $84.81/bbl and a weighted average ceiling price of $91.26/bbl. The Company’s aggregate hedge position for the remainder of 2026 totals 12,765 boe/d, or approximately 55% of the production guidance range. As a result of the Sulphur Pricing Agreement, 1/3 of the Company’s 2026 sulphur sales will be sold at a fixed price of US$225/mt, 1/3 collared with a floor price of US$205/mt and ceiling price of US$250/mt, and the remaining 1/3 sold at Vancouver FOB spot price.

As of December 31, 2025, the Company is hedged in accordance with the requirements of its senior loan agreements. The discounted unrealized gain on the Company’s hedge portfolio was approximately $23 million using the forward strip on March 17, 2026.

The tables below summarize the hedge portfolio as of March 18, 2026:

(1) Includes forward physical sales contracts and financial derivative contracts as of March 18, 2026

Conference Call Details

A conference call and webcast to discuss the results will be held on Thursday, March 19, 2026, at 8:30 a.m. MDT / 10:30 a.m. EDT. To participate in the webcast or conference call, you are asked to register using one of the links provided below.

To register to participate via webcast please follow this link:

https://edge.media-server.com/mmc/p/dyppy63o

Alternatively, to register to participate by telephone please follow this link:

https://register-conf.media-server.com/register/BI1d1b24cabc2148cd96c698b0e637fa76

A replay of the webcast will be available two hours after the conclusion of the event and may be accessed using the webcast link above.

About Cavvy Energy

Cavvy Energy is an integrated Canadian upstream and midstream energy company headquartered in Calgary, Alberta. Cavvy’s objective is to create long term shareholder value through development, production, processing, and marketing of natural gas, natural gas liquids, and sulphur while providing superior service to the Company’s third-party customers through our strategic, company-owned gathering and processing infrastructure located in western Canada.

For further information, visit www.cavvyenergy.com, or please contact:

Darcy Reding, President & Chief Executive Officer

Telephone: (403) 261-5900

Adam Gray, Chief Financial Officer

Telephone: (403) 261-5900

Investor Relations
investors@cavvyenergy.com

IBF4