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Third Party Processing Growth and Strong Hedging Gain Bolsters Cash Flow, Drives Debt Reduction
Not For Distribution to United States News Wire Services or Dissemination in United States
CALGARY, Alberta, Aug. 12, 2025 (GLOBE NEWSWIRE) -- Cavvy Energy Ltd. ("Cavvy” or the "Company”) (TSX:CVVY) is pleased to announce the release of its second quarter 2025 financial and operating results. The Company produced 26,064 boe/d and generated Net Operating Income1 ("NOI”) of $26.5 million during the second quarter of 2025. Management’s discussion and analysis ("MD&A”) and unaudited interim condensed consolidated financial statements and notes for the quarter ended June 30, 2025 are available at www.cavvyenergy.com and on SEDAR+ at www.sedarplus.ca.
Darcy Reding, President and CEO stated, "Growing shareholder value remains the top priority for our team. Compared to the second quarter of 2024, and aligned with our strategic objectives, we grew third party processing volumes and revenue by over 120% and continued to optimize our business, including by keeping certain dry gas producing areas shut-in because they are uneconomic at current natural gas prices. Our continuing focus on lowering our debt resulted in net debt reduction of $18.6 million, to $166.9 million. As we head towards the end of 2025 our team remains focused on debt reduction, continuous improvement to our cost structure, filling our gas processing facilities, preparing for the expiration of a long-term fixed price sulphur marketing agreement on December 31, 2025, and evaluating opportunities for growth.”
Q2 2025 HIGHLIGHTS
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- Generated NOI of $26.5 million ($0.09 per basic and fully diluted share) and Funds Flow from Operations1 of $14.5 million ($0.05 per basic and fully diluted share).
- Reduced Net Debt1 by $18.6 million from Q1 2025 to $166.9 million.
- Reduced operating expenses by $12.6 million (24%) compared to Q2 2024 to $40.4 million, reflecting both the shut-in of uneconomic production and the continued reduction of operating cost structure.
- Increased third-party processing volumes by 66.0 MMcf/d (123%) compared to Q2 2024 to 119.8 MMcf/d. This yielded higher third-party processing and marketing revenue of $9.6 million, an increase of $5.4 million (129%) to compared to Q2 2024.
- Produced 26,064 boe/d (81% natural gas), down 16% from Q2 2024 mainly due to the voluntary shut-in of approximately 9,000 boe/d of uneconomic dry gas production from Q3 2024 through Q2 2025.
- Completed corporate rebranding to Cavvy Energy Ltd. on May 12, 2025, capping our strategic pivot to affirm our identity as a western Canadian based energy company.
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1 Refer to the "non-GAAP measures” section of the Company’s MD&A.
| Select Quarterly Figures | 2025 | 2024 | 2023 | |||||||||||||||||
| ($ 000s unless otherwise noted) | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | ||||||||||||
| Production | ||||||||||||||||||||
| Natural gas (mcf/d) | 126,198 | 105,338 | 111,787 | 115,196 | 157,077 | 175,356 | 174,211 | 155,763 | ||||||||||||
| Condensate (bbl/d) | 2,507 | 2,454 | 2,149 | 2,191 | 2,472 | 2,781 | 2,384 | 2,020 | ||||||||||||
| NGLs (bbl/d) | 2,524 | 2,574 | 1,788 | 1,726 | 2,210 | 2,613 | 1,921 | 2,273 | ||||||||||||
| Sulphur (tonne/d) | 1,128 | 1,076 | 968 | 1,444 | 1,376 | 1,491 | 1,284 | 1,124 | ||||||||||||
| Total production (boe/d)(1) | 26,064 | 22,584 | 22,568 | 23,116 | 30,861 | 34,620 | 33,340 | 30,253 | ||||||||||||
| Third-party volumes processed (mcf/d)(2) | 119,761 | 81,777 | 71,497 | 66,518 | 53,763 | 58,423 | 67,350 | 57,363 | ||||||||||||
| Financial | ||||||||||||||||||||
| Natural gas price ($/mcf) | ||||||||||||||||||||
| Realized before Risk Management Contracts(3) | 1.73 | 2.24 | 1.55 | 0.77 | 1.14 | 2.53 | 2.32 | 2.65 | ||||||||||||
| Realized after Risk Management Contracts(3) | 3.23 | 3.58 | 3.36 | 3.43 | 2.71 | 3.21 | 3.12 | 3.25 | ||||||||||||
| Benchmark natural gas price | 1.72 | 2.14 | 1.46 | 0.68 | 1.17 | 2.48 | 2.29 | 2.59 | ||||||||||||
| Condensate price ($/bbl) | ||||||||||||||||||||
| Realized before Risk Management Contracts(3) | 84.60 | 95.15 | 94.87 | 92.13 | 99.96 | 91.18 | 97.15 | 97.47 | ||||||||||||
| Realized after Risk Management Contracts(3) | 85.88 | 88.29 | 90.61 | 84.61 | 87.75 | 84.49 | 86.34 | 80.49 | ||||||||||||
| Benchmark condensate price ($/bbl) | 87.71 | 100.24 | 98.85 | 97.10 | 105.62 | 98.43 | 104.30 | 106.30 | ||||||||||||
| Sulphur price ($/tonne) | ||||||||||||||||||||
| Realized sulphur price(4) | 32.40 | 17.00 | 12.09 | 8.86 | 18.43 | 14.49 | 22.54 | 13.34 | ||||||||||||
| Benchmark sulphur price | 373.11 | 246.36 | 180.54 | 128.47 | 103.19 | 94.84 | 118.29 | 107.09 | ||||||||||||
| Net income (loss) | 4,147 | 2,666 | (20,921 | ) | 7,496 | (19,196 | ) | (6,284 | ) | 7,414 | (16,254 | ) | ||||||||
| Net income (loss) $ per share, basic | 0.01 | 0.01 | (0.08 | ) | 0.04 | (0.12 | ) | (0.04 | ) | 0.06 | (0.10 | ) | ||||||||
| Net income (loss) $ per share, diluted | 0.01 | 0.01 | (0.08 | ) | 0.04 | (0.12 | ) | (0.04 | ) | 0.04 | (0.10 | ) | ||||||||
| Net operating income(5) | 26,491 | 32,550 | 13,720 | 19,818 | 7,652 | 23,418 | 25,441 | 11,650 | ||||||||||||
| Cashflow provided by (used in) operating activities | 1,599 | 22,612 | (592 | ) | 2,260 | (1,555 | ) | 7,049 | 31,983 | 7,577 | ||||||||||
| Funds flow from operations(5) | 14,502 | 21,707 | 2,824 | 8,234 | (4,874 | ) | 12,044 | 14,269 | (1,422 | ) | ||||||||||
| Total assets | 553,216 | 571,470 | 612,423 | 615,040 | 585,940 | 590,531 | 638,541 | 564,921 | ||||||||||||
| Adjusted working capital deficit(5) | (20,144 | ) | (30,540 | ) | (29,777 | ) | (42,658 | ) | (37,986 | ) | (31,671 | ) | (31,830 | ) | (21,454 | ) | ||||
| Net debt(5) | (166,878 | ) | (185,438 | ) | (197,564 | ) | (206,779 | ) | (219,204 | ) | (209,964 | ) | (204,046 | ) | (205,536 | ) | ||||
| Capital expenditures(6) | 2,391 | 6,538 | 5,800 | 10,002 | 5,003 | 4,897 | 9,306 | 16,363 | ||||||||||||
(1) Total production excludes sulphur.
(2) Third-party volumes processed are raw natural gas volumes reported by activity month, which do not include accounting accruals.
(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 measures.
(6) Excludes reclamation and abandonment activities.
OUTLOOK
Management’s near-term priority remains strengthening our balance sheet while safely and responsibly operating our assets. Delivering on this priority requires continued focus on attracting incremental third-party volumes, implementing cost reduction initiatives, optimizing infrastructure, and executing non-core asset dispositions to maintain profitability during all periods of the commodity cycle. Our long-term strategy requires continuous improvement in the business while identifying opportunities to generate growth for our shareholders.
While guidance remains unchanged at this time, management expects 2025 NOI at or above the high end of the guidance range.
2025 guidance remains unchanged as follows:
| 2025 Guidance | |||
| ($ 000s unless otherwise noted) | |||
