Birchcliff Energy Ltd. Announces Strong Q2 2026 Results, Increased 2026 Production Guidance and New Malin Natural Gas Market Diversification
CALGARY, Alberta, Aug. 12, 2026 (GLOBE NEWSWIRE) -- Birchcliff Energy Ltd. (“Birchcliff” or the “Corporation”) (TSX: BIR) is pleased to announce its Q2 2026 financial and operational results, updated 2026 guidance and the addition of the Malin hub to its natural gas marketing portfolio. Birchcliff is also pleased to announce that its board of directors (the “Board”) has declared a quarterly cash dividend of $0.03 per common share for the quarter ending September 30, 2026.
HIGHLIGHTS
- Q2 2026 average production of 77,562 boe/d (84% natural gas and 16% liquids), while completing a planned turnaround and optimization projects at its Pouce Coupe gas plant that impacted average quarterly production by approximately 6,900 boe/day. Current production is approximately 87,500 boe/day.(1)
- Q2 2026 adjusted funds flow(2) of $93.7 million ($0.34 per basic common share(3)). Cash flow from operating activities of $100.9 million.
- Q2 2026 net income to common shareholders of $12.8 million ($0.05 per basic common share).
- Updated its 2026 annual average production guidance to between 83,000 and 84,000 boe/d, with Q4 2026 average production of approximately 88,500 boe/d, and F&D capital expenditures guidance to between $350 million and $375 million.
- Further diversified its natural gas marketing portfolio with the addition of 35,000 MMBtu/d of service at the Malin hub in Oregon commencing in 2027 for a four-year term. Birchcliff’s effective average realized natural gas sales price(3) in Q2 2026 was $3.00/Mcf, which represents a 70% premium to the average AECO 5A benchmark price.(4)
- Continued with the successful execution of its 2026 capital program in Q2 2026, drilling 15 (15.0 net) wells and bringing 10 (10.0 net) wells on production, including a new well brought on production in the Corporation’s Elmworth area. F&D capital expenditures in Q2 2026 totalled $121.2 million.
- Paid its Q2 2026 dividend and opportunistically purchased an aggregate of 1,156,655 common shares under its normal course issuer bid at an average price of $5.93 per share, before fees, for an aggregate of $15.1 million in shareholder returns in the quarter.
Chris Carlsen, President and Chief Executive Officer, commented: “Birchcliff delivered another strong quarter in Q2 2026, underscoring the consistency and reliability of our asset base and our team’s disciplined execution. Our team safely executed a 35-day turnaround at our Pouce Coupe gas plant in Q2 2026 on time and on budget. Importantly, we have achieved our goal of fully utilizing the existing natural gas processing infrastructure in our Greater Pouce area ahead of schedule, with current production of approximately 87,500 boe/d. This milestone positions Birchcliff to benefit from a lower per-unit cost structure, stronger operating margins and enhanced free funds flow generation moving forward. Based on our well performance to date and achieving our objective of fully utilizing our existing natural gas processing infrastructure, we have updated our 2026 annual average production guidance to 83,000 to 84,000 boe/d, with production expected to average approximately 88,500 boe/d in Q4 2026. With more than 20 years of high-quality drilling inventory available within our Greater Pouce area, we believe that Birchcliff is well positioned to generate significant free funds flow and create long-term value for our shareholders.”
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. For further information regarding the forward-looking statements and forward-looking information contained herein, see “Advisories – Forward-Looking Statements”. With respect to the disclosure of Birchcliff’s production contained in this press release, production volumes have been disclosed on a “gross” basis, as such term is defined in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). For further information regarding the disclosure of Birchcliff’s production contained herein, see “Advisories – Production”. In addition, this press release uses various “non-GAAP financial measures”, “non-GAAP ratios” and “capital management measures” as such terms are defined in National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure (“NI 52-112”). Non-GAAP financial measures and non-GAAP ratios are not standardized financial measures under GAAP and might not be comparable to similar financial measures disclosed by other issuers. For further information regarding the non-GAAP and other financial measures used in this press release, see “Non-GAAP and Other Financial Measures”.
____________________________
(1) Represents the average daily production for the period from August 1, 2026 to August 7, 2026, based on field estimates. See “Advisories – Production”.
(2) Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures”.
(3) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures”.
(4) Adjusted for Birchcliff’s heat premium.
Q2 2026 UNAUDITED FINANCIAL AND OPERATIONAL SUMMARY
| Three months ended | Six months ended | ||||
| June 30 | June 30 | ||||
| 2026 | 2025 | 2026 | 2025 | ||
| OPERATING | |||||
| Average production | |||||
| Light oil (bbls/d) | 1,333 | 1,571 | 1,295 | 1,682 | |
| Condensate (bbls/d) | 4,633 | 5,439 | 4,993 | 4,842 | |
| NGLs (bbls/d) | 6,529 | 6,898 | 6,900 | 7,260 | |
| Natural gas (Mcf/d) | 390,398 | 393,435 | 398,511 | 387,860 | |
| Total (boe/d) | 77,562 | 79,480 | 79,607 | 78,427 | |
| Average realized sales prices (CDN$) | |||||
| Light oil (per bbl) | 132.81 | 83.23 | 114.43 | 89.62 | |
| Condensate (per bbl) | 130.44 | 86.44 | 114.50 | 91.46 | |
| NGLs (per bbl) | 26.27 | 20.76 | 28.67 | 24.52 | |
| Natural gas (per Mcf) | 2.56 | 2.82 | 3.22 | 3.22 | |
| Total (per boe) | 25.15 | 23.30 | 27.64 | 25.76 | |
| NETBACK AND COST ($/boe) | |||||
| Petroleum and natural gas revenue | 25.15 | 23.30 | 27.64 | 25.76 | |
| Royalty expense | (2.14) | (0.94) | (1.58) | (1.54) | |
| Operating expense | (2.93) | (2.87) | (2.92) | (2.95) | |
| Transportation and other expense(1) | (5.34) | (5.81) | (5.30) | (5.61) | |
| Operating netback(1) | 14.74 | 13.68 | 17.84 | 15.66 | |
| G&A expense, net | (1.30) | (1.27) | (1.35) | (1.34) | |
| Interest expense | (0.92) | (1.26) | (0.91) | (1.27) | |
| Lease interest expense | (0.29) | (0.31) | (0.29) | (0.32) | |
| Realized gain on financial instruments(2) | 1.05 | 2.23 | 1.82 | 2.69 | |
| Adjusted funds flow(1) | 13.28 | 13.07 | 17.11 | 15.42 | |
| Depletion and depreciation expense | (9.43) | (8.87) | (9.29) | (8.93) | |
| Unrealized loss on financial instruments(2) | (1.29) | (6.24) | (0.09) | (1.45) | |
| Other expenses(3) | (0.21) | (0.39) | (0.26) | (0.43) | |
| Deferred income tax (expense) recovery | (0.54) | 0.51 | (1.73) | (0.96) | |
| Net income (loss) to common shareholders | 1.81 | (1.92) | 5.74 | 3.65 | |
| FINANCIAL | |||||
| Petroleum and natural gas revenue ($000s) | 177,531 | 168,518 | 398,257 | 365,706 | |
| Cash flow from operating activities ($000s) | 100,890 | 109,617 | 253,673 | 235,714 | |
| Adjusted funds flow ($000s)(4) | 93,745 | 94,515 | 246,470 | 218,928 | |
| Per basic common share ($)(1) | 0.34 | 0.35 | 0.90 | 0.80 | |
| Free funds flow ($000s)(4) | (27,417) | 21,252 | 17,920 | 33,846 | |
| Per basic common share ($)(1) | (0.10) |
0.08 | 0.07 | 0.12 | |
| Net income (loss) to common shareholders ($000s) | 12,803 | (13,895) | 82,768 | 51,832 | |
| Per basic common share ($) | 0.05 | (0.05) | 0.30 | 0.19 | |
| End of period basic common shares (000s) | 274,430 | 272,884 | 274,430 | 272,884 | |
| Weighted average basic common shares (000s) | 274,596 | 272,347 | 274,745 | 271,982 | |
| Dividends on common shares ($000s) | 8,231 | 8,178 | 16,478 | 16,329 | |
| F&D capital expenditures ($000s)(5) | 121,162 | 73,263 | 228,550 | 185,082 | |
| Total capital expenditures ($000s)(4) | 121,280 | 73,715 | 229,510 | 186,188 | |
| Revolving term credit facilities($000s) | 459,232 | 528,660 | 459,232 | 528,660 | |
| Total debt ($000s)(6) | 469,866 | 523,129 | 469,866 | 523,129 | |
(1) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures”.
(2) Birchcliff’s financial instruments consist of its NYMEX HH/AECO 7A basis swap contracts.
(3) Includes non-cash items such as compensation, accretion, amortization of deferred financing fees and other gains and losses.
(4) Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures”.
(5) See “Advisories – F&D Capital Expenditures”.
(6) Capital management measure. See “Non-GAAP and Other Financial Measures”.
2026 GUIDANCE
- Birchcliff has updated its annual average production guidance to between 83,000 and 84,000 boe/d (previously 81,000 to 84,000 boe/d), with Q4 2026 average production of approximately 88,500 boe/d, as a result of the performance of the wells brought on production to date and the Corporation achieving its objective of fully utilizing its existing natural gas processing infrastructure in its Greater Pouce area.
- The Corporation has tightened its F&D capital expenditures guidance to between $350 million and $375 million (previously $325 million to $375 million) to reflect actual F&D capital spending year to date and expectations for the remainder of the year.
- In addition, Birchcliff has updated its guidance for free funds flow, total debt and royalty expense to reflect the changes to its production and F&D capital spending guidance, as well as to reflect its Q2 2026 results and updated commodity price assumptions.
- Birchcliff now expects to exit 2026 with total debt(5) of $410 million to $435 million, which equates to a total debt to adjusted funds flow ratio(6) of approximately 0.9x at the mid-point of the total debt guidance range.
- The following tables set forth Birchcliff’s updated and previous guidance and commodity price assumptions for 2026, as well as its free funds flow sensitivity:
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(5) Capital management measure. See “Non-GAAP and Other Financial Measures”.
(6) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures”.
| Updated 2026 guidance and assumptions – August 12, 2026(1) | Previous 2026 guidance and assumptions – May 13, 2026 | ||
| Production | |||
| Annual average production (boe/d) | 83,000 – 84,000 | 81,000 – 84,000 | |
| % Light oil | 1% | 1% | |
| % Condensate | 6% | 6% | |
| % NGLs | 9% | 9% | |
| % Natural gas | 84% | 84% | |
| Average Expenses ($/boe) | |||
| Royalty | $1.95 – $2.15 | $2.15 – $2.35 | |
| Operating | $2.75 – $2.95 | $2.75 – $2.95 | |
| Transportation and other(2) | $5.20 – $5.40 | $5.20 – $5.40 | |
| Adjusted Funds Flow (millions)(3) | $455 | $455 | |
| F&D Capital Expenditures (millions) | $350 – $375 | $325 – $375 | |
| Free Funds Flow (millions)(3) | $80 – $105 | $80 – $130 | |
| Total Debt at Year End (millions)(4) | $410 – $435 | $385 – $435 | |
| Natural Gas Market Exposure | |||
| AECO exposure as a % of total natural gas production | 44% | 44% | |
| Dawn exposure as a % of total natural gas production | 38% | 38% | |
| NYMEX HH exposure as a % of total natural gas production | 16% | 16% | |
| Alliance exposure as a % of total natural gas production | 2% | 2% | |
| Commodity Prices | |||
| Average WTI price (US$/bbl) | $79.00(5) | $83.00 | |
| Average WTI-MSW differential (CDN$/bbl) | $2.35(5) | $2.20 | |
| Average AECO price (CDN$/GJ) | $1.80(5) | $1.80 | |
| Average Dawn price (US$/MMBtu) | $3.20(5) | $3.35 | |
| Average NYMEX HH price (US$/MMBtu) | $3.50(5) | $3.70 | |
| Exchange rate (CDN$ to US$1) | 1.39(5) | 1.36 |
| Forward five months’ free funds flow sensitivity(5)(6) | Estimated change to 2026 free funds flow (millions) |
| Change in WTI US$1.00/bbl | $1.6 |
| Change in NYMEX HH US$0.10/MMBtu | $1.2 |
| Change in Dawn US$0.10/MMBtu | $3.4 |
| Change in AECO CDN$0.10/GJ | $3.5 |
| Change in CDN/US exchange rate CDN$0.01 | $1.8 |
(1) Birchcliff’s guidance for its production commodity mix, adjusted funds flow, free funds flow, total debt and natural gas market exposure in 2026 is based on an annual average production rate of 83,500 boe/d in 2026, which is the mid-point of Birchcliff’s updated annual average production guidance range for 2026. Changes in assumed commodity prices and variances in production forecasts can have an impact on the Corporation’s forecasts of adjusted funds flow and free funds flow and the Corporation’s other guidance, which impact could be material. In addition, any acquisitions or dispositions completed over the course of 2026 could have an impact on Birchcliff’s 2026 guidance and assumptions set forth herein, which impact could be material. For further information regarding the risks and assumptions relating to the Corporation’s guidance, see “Advisories – Forward-Looking Statements”.
(2) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures”.
(3) Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures”.
(4) Capital management measure. See “Non-GAAP and Other Financial Measures”.
(5) Birchcliff’s updated commodity price and exchange rate assumptions and free funds flow sensitivity for 2026 are based on anticipated full-year averages using the Corporation’s anticipated forward benchmark commodity prices and the CDN/US exchange rate as of August 5, 2026, which include settled benchmark commodity prices and the CDN/US exchange rate for the period from January 1, 2026 to July 31, 2026.
(6) Illustrates the expected impact of changes in commodity prices and the CDN/US exchange rate on the Corporation’s updated forecast of free funds flow for 2026, holding all other variables constant. The sensitivity is based on the updated commodity price and exchange rate assumptions set forth in the table above. The calculated impact on free funds flow is only applicable within the limited range of change indicated. Calculations are performed independently and may not be indicative of actual results. Actual results may vary materially when multiple variables change at the same time and/or when the magnitude of the change increases.
OUTLOOK
- For the remainder of 2026, with the full utilization of the Corporation’s natural gas processing infrastructure in the Greater Pouce area, production from the area is expected to generate meaningful free funds flow, which will be primarily used to reduce total debt and pay Birchcliff’s common share dividend. Looking forward, the anticipated free funds flow generated from the Greater Pouce area provides the Corporation with the optionality to direct internally generated funds towards further debt reduction, shareholder returns through dividends or opportunistic share buybacks and/or advancing development in Birchcliff’s Elmworth area, including completing and filling the first phase of its proposed 100% owned and operated natural gas processing plant in Elmworth (the “Goodfare Gas Plant”).
- Birchcliff remains optimistic about the future macro natural gas price environment. The continued ramp up of LNG Canada, together with a wave of new U.S. Gulf Coast LNG projects that have been proposed or are currently under construction, is expected to structurally improve North American natural gas export demand over the next several years. At the same time, the rapid build-out of domestic gas-fired power generation to serve data centres and artificial intelligence workloads is emerging as a new and stable source of incremental demand for natural gas. As one of the lowest-cost, inventory-rich Montney natural gas and liquids producers, Birchcliff is well positioned to benefit from this strong anticipated commodity price environment as it continues to execute on its strategy of generating profitable production growth, further strengthening its balance sheet and providing sustainable shareholder returns.
- The Corporation has initiated its formal budgeting process for 2027 and expects to release preliminary guidance for 2027 on November 12, 2026, along with its Q3 2026 results.
- As announced on August 5, 2026, Birchcliff welcomes the appointment of Rebecca Schulz to the Board. Ms. Schulz’s expertise as a public affairs and policy leader and her extensive experience across government, business, energy, environment and economic development provide valuable additional diversity of experience to Birchcliff.
Q2 2026 FINANCIAL AND OPERATIONAL RESULTS
Production
- Production averaged 77,562 boe/d in Q2 2026, a 2% decrease from Q2 2025. The decrease was primarily due to the completion of a 35-day planned turnaround and optimization projects at its Pouce Coupe gas plant in Q2 2026 that impacted average quarterly production by approximately 6,900 boe/d, along with natural production declines. Production was positively impacted by incremental production from new Montney wells brought on production since Q2 2025.
- Liquids accounted for 16% of Birchcliff’s total production in Q2 2026 as compared to 18% in Q2 2025.
Adjusted Funds Flow and Cash Flow From Operating Activities
- Adjusted funds flow was $93.7 million in Q2 2026, or $0.34 per basic common share, a 1% and 3% decrease, respectively, from Q2 2025.
- Cash flow from operating activities was $100.9 million in Q2 2026, an 8% decrease from Q2 2025.
- The decreases were primarily due to a higher royalty expense, a decrease in natural gas revenue and a lower realized gain on financial instruments, partially offset by a 28% increase in liquids revenue, which resulted from a 43% increase in the average realized sales price Birchcliff received for such production in Q2 2026 as compared to Q2 2025.
Net Income (Loss) to Common Shareholders
- Net income to common shareholders was $12.8 million in Q2 2026, or $0.05 per basic common share, as compared to a net loss to common shareholders of $13.9 million and $0.05 per basic common share in Q2 2025.
- The change to a net income position was primarily due to a lower unrealized loss on financial instruments of $9.1 million in Q2 2026 as compared to $45.1 million in Q2 2025.
Capital Activities and Investment
- Birchcliff drilled 15 (15.0 net) wells and brought 10 (10.0 net) wells on production in Q2 2026, with F&D capital expenditures totalling $121.2 million in the quarter.
Debt and Credit Facilities
- Total debt was $469.9 million at June 30, 2026, a 10% decrease from June 30, 2025.
- At June 30, 2026, Birchcliff had a balance outstanding under its extendible revolving credit facilities (the “Credit Facilities”) of $464.2 million (June 30, 2025: $533.7 million) from available Credit Facilities of $850.0 million (June 30, 2025: $850.0 million), leaving the Corporation with $385.8 million (45%) of unutilized credit capacity after adjusting for outstanding letters of credit and unamortized deferred financing fees.
Natural Gas Market Diversification
- In Q2 2026, Birchcliff’s physical natural gas sales exposure consisted of the AECO, Dawn and Alliance markets. In addition, the Corporation has various financial instruments outstanding that provided it with exposure to NYMEX HH pricing in the quarter.
- The following table sets forth Birchcliff’s effective sales, production and average realized sales price for its natural gas and liquids for Q2 2026, after taking into account the Corporation’s financial instruments:
| Three months ended June 30, 2026 | ||||||
|
Effective sales (CDN$000s) |
Percentage of total sales (%) |
Effective production (per day) |
Percentage of total natural gas production (%) |
Percentage of total corporate production (%) |
Effective average realized sales price (CDN$) |
|
| Market | ||||||
| AECO(1)(2) | 26,707 | 14 | 164,922 Mcf | 42 | 35 | 1.78/Mcf |
| Dawn(3) | 54,011 | 28 | 161,098 Mcf | 41 | 35 | 3.68/Mcf |
| NYMEX HH(1)(4) | 25,975 | 13 | 64,378 Mcf | 17 | 14 | 4.43/Mcf |
| Total natural gas(1) | 106,693 | 55 | 390,398 Mcf | 100 | 84 | 3.00/Mcf |
| Light oil | 16,115 | 8 | 1,333 bbls | 2 | 132.81/bbl | |
| Condensate | 55,000 | 29 | 4,633 bbls | 6 | 130.44/bbl | |
| NGLs | 15,605 | 8 | 6,529 bbls | 8 | 26.27/bbl | |
| Total liquids | 86,720 | 45 | 12,495 bbls | 16 | 76.27/bbl | |
| Total corporate(1) | 193,413 | 100 | 77,562 boe | 100 | 27.40/boe | |
(1) Effective sales and effective average realized sales price on a total natural gas and total corporate basis and for the AECO and NYMEX HH markets are non-GAAP financial measures and non-GAAP ratios, respectively. See “Non-GAAP and Other Financial Measures”.
(2) Birchcliff had short-term physical sales agreements with third-party marketers to sell and deliver into the Alliance pipeline system in Q2 2026. All of Birchcliff’s short-term physical Alliance sales and production during Q2 2026 received AECO adjusted pricing and have therefore been included as effective sales and production in the AECO market.
(3) Birchcliff has agreements for the firm service transportation of an aggregate of 175,000 GJ/d of natural gas on TransCanada PipeLines’ Canadian Mainline, whereby natural gas is transported to the Dawn trading hub in Southern Ontario.
(4) NYMEX HH effective sales and production include financial NYMEX HH/AECO 7A basis swap contracts for an aggregate of 70,000 MMBtu/d at an average contract price of NYMEX HH less US$0.96/MMBtu during Q2 2026.
Birchcliff’s effective average realized sales price for NYMEX HH of CDN$4.43/Mcf (US$2.94/MMBtu) was determined on a gross basis before giving effect to the average NYMEX HH/AECO 7A fixed contract basis differential price of CDN$1.45/Mcf (US$0.96/MMBtu) and includes any realized gains and losses on financial NYMEX HH/AECO 7A basis swap contracts during Q2 2026.
After giving effect to the NYMEX HH/AECO 7A fixed contract basis differential price and including any realized gains and losses on financial NYMEX HH/AECO 7A basis swap contracts during Q2 2026, Birchcliff’s effective average realized net sales price for NYMEX HH was CDN$2.98/Mcf (US$1.98/MMBtu) in Q2 2026.
- The following table sets forth Birchcliff’s physical sales, production, average realized sales price, transportation costs and natural gas sales netback by natural gas market for the periods indicated, before taking into account the Corporation’s financial instruments:
| Three months ended June 30, 2026 | |||||||
| Natural gas market |
Natural gas sales (CDN$000s) |
Percentage of natural gas sales (%) |
Natural gas production (Mcf/d) |
Percentage of natural gas production (%) |
Average realized natural gas sales price (CDN$/Mcf) |
Natural gas transportation costs(1) (CDN$/Mcf) |
Natural gas sales netback(2) (CDN$/Mcf) |
| AECO | 33,265 | 37 | 209,162 | 54 | 1.76 | 0.46 | 1.30 |
| Dawn | 54,011 | 59 | 161,098 | 41 | 3.68 | 1.54 | 2.14 |
| Alliance(3) | 3,525 | 4 | 20,138 | 5 | 1.92 | - | 1.92 |
| Total | 90,801 | 100 | 390,398 | 100 | 2.56 | 0.89 | 1.67 |
| Three months ended June 30, 2025 | |||||||
| Natural gas market |
Natural gas sales (CDN$000s) |
Percentage of natural gas sales (%) |
Natural gas production (Mcf/d) |
Percentage of natural gas production (%) |
Average realized natural gas sales price (CDN$/Mcf) |
Natural gas transportation costs(1) (CDN$/Mcf) |
Natural gas sales netback(2) (CDN$/Mcf) |
| AECO | 40,513 | 40 | 227,723 | 58 | 1.96 | 0.46 | 1.50 |
| Dawn | 59,972 | 59 | 161,531 | 41 | 4.08 | 1.54 | 2.54 |
| Alliance(3) | 310 | 1 | 4,181 | 1 | 0.82 | - | 0.82 |
| Total | 100,795 | 100 | 393,435 | 100 | 2.82 | 0.90 | 1.92 |
(1) Reflects costs to transport natural gas from the field receipt point to the delivery sales trading hub.
(2) Natural gas sales netback denotes the average realized natural gas sales price less natural gas transportation costs.
(3) Birchcliff had short-term physical sales agreements with third-party marketers to sell and deliver into the Alliance pipeline system in Q2 2026 and Q2 2025. Alliance sales are indexed to the AECO 5A benchmark index price and are recorded net of transportation tolls.
- In the quarter, Birchcliff continued to execute on its natural gas market diversification strategy by opportunistically increasing its revenue exposure to premium non-AECO natural gas markets. In Q2 2026, Birchcliff entered into physical natural gas delivery sales contracts to the Malin hub in Oregon for 35,000 MMBtu/d of service, with a term from January 1, 2027 to December 31, 2030. Malin sales are indexed to the NGI Malin monthly index benchmark price and will be realized net of any transportation tolls and fixed costs.
OPERATIONAL UPDATE
- Birchcliff continues to execute its 2026 capital program with a focus on operational excellence, capital discipline and maximizing the value of its infrastructure. Building on the significant capital efficiency improvements achieved over the last two years, the Corporation’s successful infrastructure optimization projects and strong operational performance during the first half of 2026 have improved facility utilization and enhanced operational flexibility, which allowed Birchcliff to achieve its goal of fully utilizing its natural gas processing infrastructure ahead of schedule.
- As a result of increased throughput and facility utilization, Birchcliff expects lower per unit operating and transportation costs in the second half of 2026. While production in Q3 2026 is expected to be slightly impacted by a planned optimization outage at the 16-31 natural gas processing plant in Gordondale, Birchcliff expects strong production performance throughout the remainder of the year as additional wells are brought on production.
- Year-to-date, 23 wells have been brought on production in the Greater Pouce area and an additional 12 condensate-rich natural gas wells are expected to be brought on production before year end. Birchcliff remains focused on increasing higher-margin liquids production and capitalizing on the continued strength in condensate pricing.
Greater Pouce
- Birchcliff brought its 4-well 13-21 pad in Pouce Coupe onstream in March 2026. This pad includes Birchcliff’s longest horizontal wells drilled to date, with one of the laterals extending to just under three miles in the Lower Montney. The Upper Montney wells are demonstrating strong hydrocarbon liquids content. The following table summarizes the aggregate and average production rates for the wells from the pad:
4-Well 13-21 Pad IP Rates
| Wells: IP 30(1) | Wells: IP 60(1) | ||
| Aggregate production rate (boe/d) | 6,221 | 5,888 | |
| Aggregate natural gas production rate (Mcf/d) | 35,108 | 33,627 | |
| Aggregate condensate production rate (bbls/d) | 370 | 283 | |
| Average per well production rate (boe/d) | 1,555 | 1,472 | |
| Average per well natural gas production rate (Mcf/d) | 8,777 | 8,407 | |
| Average per well condensate production rate (bbls/d) | 92 | 71 | |
| Condensate-to-gas ratio (bbls/MMcf) | 11 | 8 | |
(1) Represents the cumulative volumes for each well measured at the wellhead separator for the 30 or 60 days (as applicable) of production immediately after each well was considered stabilized after producing fracture treatment fluid back to surface in an amount such that flow rates of hydrocarbons became reliable. The natural gas volumes represent raw natural gas volumes as opposed to sales gas volumes. See “Advisories – Initial Production Rates”.
- In May 2026, Birchcliff brought its 6-well 04-05 pad in Pouce Coupe onstream targeting high-rate natural gas in the Lower Montney. The following table summarizes the aggregate and average production rates for the wells from the pad:
6-Well 04-05 Pad IP Rates
| Wells: IP 30(1) | Wells: IP 60(1) | ||
| Aggregate production rate (boe/d) | 8,250 | 7,770 | |
| Aggregate natural gas production rate (Mcf/d) | 48,504 | 45,926 | |
| Aggregate condensate production rate (bbls/d) | 166 | 115 | |
| Average per well production rate (boe/d) | 1,375 | 1,295 | |
| Average per well natural gas production rate (Mcf/d) | 8,084 | 7,654 | |
| Average per well condensate production rate (bbls/d) | 28 | 19 | |
| Condensate-to-gas ratio (bbls/MMcf) | 3 | 3 | |
(1) Represents the cumulative volumes for each well measured at the wellhead separator for the 30 or 60 days (as applicable) of production immediately after each well was considered stabilized after producing fracture treatment fluid back to surface in an amount such that flow rates of hydrocarbons became reliable. The natural gas volumes represent raw natural gas volumes as opposed to sales gas volumes. See “Advisories – Initial Production Rates”.
- In June 2026, Birchcliff successfully completed its 4-well 12-10 pad in Pouce Coupe and the wells were turned over to production in July 2026. This pad targeted high-rate natural gas in the Lower Montney.
- The Corporation is currently conducting completion operations on its 6-well 07-24 pad in Pouce Coupe. This pad is targeting condensate-rich natural gas in the Lower Montney and the wells are anticipated to be brought on production at the end of Q3 2026.
- Birchcliff recently completed drilling its 5-well 09-15 pad in Pouce Coupe and expects to complete the pad in Q1 2027, positioning the Corporation for a strong start to its 2027 capital program.
- In Gordondale, the Corporation has successfully completed its 3-well 05-34 pad and 2-well 07-33 pad. Both pads targeted condensate-rich natural gas in the Lower Montney. The 05-34 pad was brought onstream in June 2026 and the 07-33 pad will be brought on production through Birchcliff’s permanent facilities in August 2026.
- In July 2026, Birchcliff spud its 4-well 02-25 pad in Gordondale targeting condensate-rich natural gas in the Lower Montney. The Corporation expects to complete the pad and bring the wells on production in Q4 2026. Together with the 07-24 pad in Pouce Coupe, these wells are expected to contribute additional higher-margin liquids production throughout the remainder of 2026 and into 2027.
Elmworth
- In Elmworth, the Corporation’s 09-32 well was tied into a third-party processing plant in June 2026. The successful tie-in of the 09-32 well represents an important milestone in the continued evaluation of Birchcliff’s Elmworth acreage. The well has performed strongly to date and is providing valuable information regarding reservoir quality and future development potential across the area. Production from the well is currently constrained by available third-party infrastructure limitations and is expected to remain relatively flat under the current operating arrangement. As a result, the production rates summarized below may not reflect the well’s full productive capability. The following table summarizes the production rates for the well:
09-32 Well IP Rates
| IP 30(1) | IP 60(1) | ||
| Production rate (boe/d) | 1,469 | 1,456 | |
| Natural gas production rate (Mcf/d) | 8,348 | 8,409 | |
| Condensate production rate (bbls/d) | 77 | 54 | |
| Condensate-to-gas ratio (bbls/MMcf) | 9 | 6 | |
(1) Represents the cumulative volume for the well measured at the wellhead separator for the 30 or 60 days (as applicable) of production immediately after the well was considered stabilized after producing fracture treatment fluid back to surface in an amount such that flow rates of hydrocarbons became reliable. The natural gas volumes represent raw natural gas volumes as opposed to sales gas volumes. See “Advisories – Initial Production Rates”.
- The formal planning continues for the construction of the first phase of the Goodfare Gas Plant. The first phase of the plant is expected to have a processing capacity of 100 MMcf/d, with optionality to expand capacity through additional phases in the future. Birchcliff is currently targeting a final investment decision on the construction of the Goodfare Gas Plant in late 2026 or early 2027.
DECLARATION OF Q3 2026 QUARTERLY DIVIDEND
- The Board has declared a quarterly cash dividend of $0.03 per common share for the quarter ending September 30, 2026.
- The dividend will be payable on September 29, 2026 to shareholders of record at the close of business on September 15, 2026. The dividend has been designated as an eligible dividend for the purposes of the Income Tax Act (Canada).
ABBREVIATIONS
| AECO | benchmark price for natural gas determined at the AECO ‘C’ hub in southeast Alberta |
| bbl | barrel |
| bbls | barrels |
| bbls/d | barrels per day |
| bbls/MMcf | barrels per million cubic feet |
| boe | barrel of oil equivalent |
| boe/d | barrel of oil equivalent per day |
| condensate | pentanes plus (C5+) |
| F&D | finding and development |
| G&A | general and administrative |
| GAAP | generally accepted accounting principles for Canadian public companies, which are currently IFRS Accounting Standards |
| GJ | gigajoule |
| GJ/d | gigajoules per day |
| HH | Henry Hub |
| IFRS | International Financial Reporting Standards as issued by the International Accounting Standards Board |
| IP | initial production |
| LNG | liquefied natural gas |
| Mcf | thousand cubic feet |
| Mcf/d | thousand cubic feet per day |
| MMBtu | million British thermal units |
| MMBtu/d | million British thermal units per day |
| MMcf/d | million cubic feet per day |
| MSW | price for mixed sweet crude oil at Edmonton, Alberta |
| NGLs | natural gas liquids consisting of ethane (C2), propane (C3) and butane (C4) and specifically excluding condensate |
| NYMEX | New York Mercantile Exchange |
| OPEC | Organization of the Petroleum Exporting Countries |
| Q | quarter |
| WTI | West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma, for crude oil of standard grade |
| 000s | thousands |
| $000s | thousands of dollars |
NON-GAAP AND OTHER FINANCIAL MEASURES
This press release uses various “non-GAAP financial measures”, “non-GAAP ratios” and “capital management measures” (as such terms are defined in NI 52-112), which are described in further detail below.
Non-GAAP Financial Measures
NI 52-112 defines a non-GAAP financial measure as a financial measure that: (i) depicts the historical or expected future financial performance, financial position or cash flow of an entity; (ii) with respect to its composition, excludes an amount that is included in, or includes an amount that is excluded from, the composition of the most directly comparable financial measure disclosed in the primary financial statements of the entity; (iii) is not disclosed in the financial statements of the entity; and (iv) is not a ratio, fraction, percentage or similar representation. The non-GAAP financial measures used in this press release are not standardized financial measures under GAAP and might not be comparable to similar measures presented by other companies. Investors are cautioned that non-GAAP financial measures should not be construed as alternatives to or more meaningful than the most directly comparable GAAP financial measures as indicators of Birchcliff’s performance. Set forth below is a description of the non-GAAP financial measures used in this press release.
Adjusted Funds Flow and Free Funds Flow
Birchcliff defines “adjusted funds flow” as cash flow from operating activities before the effects of decommissioning expenditures and changes in non-cash operating working capital. Birchcliff eliminates settlements of decommissioning expenditures from cash flow from operating activities as the amounts can be discretionary and may vary from period to period depending on its capital programs and the maturity of its operating areas. The settlement of decommissioning expenditures is managed with Birchcliff’s capital budgeting process which considers available adjusted funds flow. Changes in non-cash operating working capital are eliminated in the determination of adjusted funds flow as the timing of collection and payment are variable and by excluding them from the calculation, the Corporation believes that it is able to provide a more meaningful measure of its operations and ability to generate cash on a continuing basis. Management believes that adjusted funds flow assists management and investors in assessing Birchcliff’s financial performance after deducting all operating and corporate cash costs, as well as its ability to generate the cash necessary to fund sustaining and/or growth capital expenditures, repay debt, settle decommissioning obligations, buy back common shares and pay dividends.
Birchcliff defines “free funds flow” as adjusted funds flow less F&D capital expenditures. Management believes that free funds flow assists management and investors in assessing Birchcliff’s ability to generate shareholder value and returns through a number of initiatives, including, but not limited to, debt repayment, common share buybacks, the payment of common share dividends, acquisitions and other opportunities that would complement or otherwise improve the Corporation’s business and enhance long-term shareholder value.
The most directly comparable GAAP financial measure to adjusted funds flow and free funds flow is cash flow from operating activities. The following table provides a reconciliation of cash flow from operating activities to adjusted funds flow and free funds flow for the periods indicated:
| Three months ended | Six months ended | Twelve months ended | |||||
| June 30 | June 30 | December 31 | |||||
| ($000s) | 2026 | 2025 | 2026 | 2025 | 2025 | ||
| Cash flow from operating activities | 100,890 | 109,617 | 253,673 | 235,714 | 407,705 | ||
| Change in non-cash operating working capital | (7,937) | (15,558) | (8,322) | (17,752) | 11,821 | ||
| Decommissioning expenditures | 792 | 456 | 1,119 | 966 | 3,240 | ||
| Adjusted funds flow | 93,745 | 94,515 | 246,470 | 218,928 | 422,766 | ||
| F&D capital expenditures | (121,162) | (73,263) | (228,550) | (185,082) | (305,891) | ||
| Free funds flow | (27,417) | 21,252 | 17,920 | 33,846 | 116,875 | ||
Birchcliff has disclosed in this press release forecasts of adjusted funds flow and free funds flow for 2026, which are forward-looking non-GAAP financial measures (see “2026 Guidance”). The equivalent historical non-GAAP financial measures are adjusted funds flow and free funds flow for the twelve months ended December 31, 2025. Birchcliff anticipates the forward-looking non-GAAP financial measure for adjusted funds flow disclosed herein will be higher than its respective historical amount, primarily due to higher anticipated production and benchmark oil and natural gas prices, which are expected to increase the average realized sales prices the Corporation receives for its production. Birchcliff anticipates the forward-looking non-GAAP financial measure for free funds flow disclosed herein will be lower than its respective historical amount, primarily due to higher anticipated F&D capital expenditures. The commodity price assumptions on which the Corporation’s guidance is based are set forth under the heading “2026 Guidance”.
Transportation and Other Expense
Birchcliff defines “transportation and other expense” as transportation expense plus marketing purchases less marketing revenue. Birchcliff may enter into certain marketing purchase and sales arrangements with the objective of reducing any unused transportation or fractionation fees associated with its take-or-pay commitments and/or increasing the value of its production through value-added downstream initiatives. Management believes that transportation and other expense assists management and investors in assessing Birchcliff’s total cost structure related to transportation and marketing activities. The most directly comparable GAAP financial measure to transportation and other expense is transportation expense. The following table provides a reconciliation of transportation expense to transportation and other expense for the periods indicated:
| Three months ended | Six months ended | Twelve months ended | |||||
| June 30 | June 30 | December 31 | |||||
| ($000s) | 2026 | 2025 | 2026 | 2025 | 2025 | ||
| Transportation expense | 39,209 | 40,110 | 75,946 | 77,629 | 157,884 | ||
| Marketing purchases | 152 | 4,658 | 6,732 | 19,568 | 24,887 | ||
| Marketing revenue | (1,643) | (2,688) | (6,287) | (17,436) | (16,839) | ||
| Transportation and other expense | 37,718 | 42,080 | 76,391 | 79,761 | 165,932 | ||
Operating Netback
Birchcliff defines “operating netback” as petroleum and natural gas revenue less royalty expense, operating expense and transportation and other expense. Operating netback is a key industry performance indicator and one that provides investors with information that is commonly presented by other oil and natural gas producers. Management believes that operating netback assists management and investors in assessing Birchcliff’s operating profits after deducting the cash costs that are directly associated with the sale of its production, which can then be used to pay other corporate cash costs or satisfy other obligations. The following table provides a breakdown of Birchcliff’s operating netback for the periods indicated:
| Three months ended | Six months ended | ||||
| June 30 | June 30 | ||||
| ($000s) | 2026 | 2025 | 2026 | 2025 | |
| Petroleum and natural gas revenue | 177,531 | 168,518 | 398,257 | 365,706 | |
| Royalty expense | (15,118) | (6,768) | (22,725) | (21,807) | |
| Operating expense | (20,657) | (20,746) | (42,023) | (41,879) | |
| Transportation and other expense | (37,718) | (42,080) | (76,391) | (79,761) | |
| Operating netback | 104,038 | 98,924 | 257,118 | 222,259 | |
Total Capital Expenditures
Birchcliff defines “total capital expenditures” as exploration and development expenditures less dispositions plus acquisitions (if any) and plus administrative assets. Management believes that total capital expenditures assists management and investors in assessing Birchcliff’s overall capital cost structure associated with its petroleum and natural gas activities. The most directly comparable GAAP financial measure to total capital expenditures is exploration and development expenditures. The following table provides a reconciliation of exploration and development expenditures to total capital expenditures for the periods indicated:
| Three months ended | Six months ended | ||||
| June 30 | June 30 | ||||
| ($000s) | 2026 | 2025 | 2026 | 2025 | |
| Exploration and development expenditures(1) | 121,162 | 73,263 | 228,550 | 185,082 | |
| Dispositions | (50) | - | (50) | - | |
| Administrative assets | 168 | 452 | 1,010 | 1,106 | |
| Total capital expenditures | 121,280 | 73,715 | 229,510 | 186,188 | |
(1) Disclosed as F&D capital expenditures elsewhere in this press release. See “Advisories – F&D Capital Expenditures”.
Effective Sales – Total Corporate, Total Natural Gas, AECO Market and NYMEX HH Market
Birchcliff defines “effective sales” in the AECO market and NYMEX HH market as the sales amount received from the production of natural gas that is effectively attributed to the AECO and NYMEX HH market pricing, respectively, and does not consider the physical sales delivery point in each case. Effective sales in the NYMEX HH market includes realized gains and losses on financial instruments and excludes the notional fixed basis costs associated with the underlying financial contract in the period. Birchcliff defines “effective total natural gas sales” as the aggregate of the effective sales amount received in each natural gas market. Birchcliff defines “effective total corporate sales” as the aggregate of the effective total natural gas sales and the sales amount received from the production of light oil, condensate and NGLs. Management believes that disclosing the effective sales for each natural gas market assists management and investors in assessing Birchcliff’s natural gas diversification and commodity price exposure to each market. The most directly comparable GAAP financial measure to effective total natural gas sales and effective total corporate sales is natural gas sales. The following table provides a reconciliation of natural gas sales to effective total natural gas sales and effective total corporate sales for the periods indicated:
| Three months ended ($000s) | June 30, 2026 | June 30, 2025 |
| Natural gas sales | 90,801 | 100,795 |
| Realized gain on financial instruments | 7,404 | 16,048 |
| Notional fixed basis costs(1) | 8,488 | 20,079 |
| Effective total natural gas sales | 106,693 | 136,922 |
| Light oil sales | 16,115 | 11,896 |
| Condensate sales | 55,000 | 42,786 |
| NGLs sales | 15,605 | 13,032 |
| Effective total corporate sales | 193,413 | 204,636 |
(1) Reflects the aggregate notional fixed basis costs associated with Birchcliff’s financial NYMEX HH/AECO 7A basis swap contracts in the period.
Non-GAAP Ratios
NI 52-112 defines a non-GAAP ratio as a financial measure that: (i) is in the form of a ratio, fraction, percentage or similar representation; (ii) has a non-GAAP financial measure as one or more of its components; and (iii) is not disclosed in the financial statements of the entity. The non-GAAP ratios used in this press release are not standardized financial measures under GAAP and might not be comparable to similar measures presented by other companies. Set forth below is a description of the non-GAAP ratios used in this press release.
Adjusted Funds Flow Per Boe and Adjusted Funds Flow Per Basic Common Share
Birchcliff calculates “adjusted funds flow per boe” as aggregate adjusted funds flow in the period divided by the production (boe) in the period. Management believes that adjusted funds flow per boe assists management and investors in assessing Birchcliff’s financial profitability and sustainability on a cash basis by isolating the impact of production volumes to better analyze its performance against prior periods on a comparable basis.
Birchcliff calculates “adjusted funds flow per basic common share” as aggregate adjusted funds flow in the period divided by the weighted average basic common shares outstanding at the end of the period. Management believes that adjusted funds flow per basic common share assists management and investors in assessing Birchcliff’s financial strength on a per common share basis.
Free Funds Flow Per Basic Common Share
Birchcliff calculates “free funds flow per basic common share” as aggregate free funds flow in the period divided by the weighted average basic common shares outstanding at the end of the period. Management believes that free funds flow per basic common share assists management and investors in assessing Birchcliff’s financial strength and its ability to deliver shareholder returns on a per common share basis.
Transportation and Other Expense Per Boe
Birchcliff calculates “transportation and other expense per boe” as aggregate transportation and other expense in the period divided by the production (boe) in the period. Management believes that transportation and other expense per boe assists management and investors in assessing Birchcliff’s cost structure as it relates to its transportation and marketing activities by isolating the impact of production volumes to better analyze its performance against prior periods on a comparable basis.
Operating Netback Per Boe
Birchcliff calculates “operating netback per boe” as aggregate operating netback in the period divided by the production (boe) in the period. Operating netback per boe is a key industry performance indicator and one that provides investors with information that is commonly presented by other oil and natural gas producers. Management believes that operating netback per boe assists management and investors in assessing Birchcliff’s operating profitability and sustainability by isolating the impact of production volumes to better analyze its performance against prior periods on a comparable basis.
Effective Average Realized Sales Price – Total Corporate, Total Natural Gas, AECO Market and NYMEX HH Market
Birchcliff calculates “effective average realized sales price” as effective sales in each of the total corporate, total natural gas, AECO market and NYMEX HH market, as the case may be, divided by the effective production in each of the markets during the period. Management believes that disclosing the effective average realized sales price for each natural gas market assists management and investors in comparing Birchcliff’s commodity price realizations in each natural gas market on a per unit basis.
Total Debt to Adjusted Funds Flow Ratio
Birchcliff calculates “total debt to adjusted funds flow ratio” as total debt at the end of the period divided by adjusted funds flow at the end of the period (as determined on a trailing twelve-month basis). Management believes that total debt to adjusted funds flow ratio assists management and investors in assessing Birchcliff’s overall debt position in respect of cash generated in the preceding twelve-month period and the strength of the Corporation’s balance sheet. Birchcliff uses this ratio in its capital allocation decisions, including capital spending levels, returns to shareholders and other financial considerations.
Capital Management Measures
NI 52-112 defines a capital management measure as a financial measure that: (i) is intended to enable an individual to evaluate an entity’s objectives, policies and processes for managing the entity’s capital; (ii) is not a component of a line item disclosed in the primary financial statements of the entity; (iii) is disclosed in the notes to the financial statements of the entity; and (iv) is not disclosed in the primary financial statements of the entity. Set forth below is a description of the capital management measure used in this press release.
Total Debt
Birchcliff calculates “total debt” at the end of the period as the amount outstanding under the Corporation’s Credit Facilities plus working capital deficit (less working capital surplus) plus the fair value of the current asset portion of financial instruments and less the current portion of other discounted liabilities. The current portion of other discounted liabilities has been excluded from total debt as these amounts have not been incurred and reflect future commitments in the normal course of operations. Management believes that total debt assists management and investors in assessing Birchcliff’s overall liquidity and financial position at the end of the period. The following table provides a reconciliation of the amount outstanding under the Corporation’s Credit Facilities, as determined in accordance with GAAP, to total debt for the periods indicated:
| As at ($000s) | June 30, 2026 | December 31, 2025 | June 30, 2025 |
| Revolving term credit facilities | 459,232 | 508,340 | 528,660 |
| Working capital deficit (surplus)(1) | 1,848 | (60,775) | (49,502) |
| Fair value of financial instruments – asset(2) | 23,915 | 27,512 | 58,011 |
| Other liabilities(2) | (15,129) | (15,129) | (14,040) |
| Total debt | 469,866 | 459,948 | 523,129 |
(1) Current liabilities less current assets.
(2) Reflects the current portion only.
ADVISORIES
Unaudited Information
All financial and operational information contained in this press release for the three and six months ended June 30, 2026 and 2025 is unaudited. Birchcliff’s unaudited interim condensed financial statements for the three and six months ended June 30, 2026 and related management’s discussion and analysis will be available on its website at www.birchcliffenergy.com and on SEDAR+ at www.sedarplus.ca.
Currency
Unless otherwise indicated, all dollar amounts are expressed in Canadian dollars, all references to “$” and “CDN$” are to Canadian dollars and all references to “US$” are to United States dollars.
Boe Conversions
Boe amounts have been calculated by using the conversion ratio of 6 Mcf of natural gas to 1 bbl of oil. Boe amounts may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
MMBtu Pricing Conversions
$1.00 per MMBtu equals $1.00 per Mcf based on a standard heat value Mcf.
Oil and Gas Metrics
This press release contains metrics commonly used in the oil and natural gas industry, including operating netback. These oil and gas metrics do not have any standardized meanings or standard methods of calculation and therefore may not be comparable to similar measures presented by other companies. As such, they should not be used to make comparisons. Management uses these oil and gas metrics for its own performance measurements and to provide investors with measures to compare Birchcliff’s performance over time; however, such measures are not reliable indicators of Birchcliff’s future performance, which may not compare to Birchcliff’s performance in previous periods, and therefore should not be unduly relied upon. For additional information regarding operating netback and how such metric is calculated, see “Non-GAAP and Other Financial Measures”.
Production
With respect to the disclosure of Birchcliff’s production contained in this press release: (i) references to “light oil” mean “light crude oil and medium crude oil” as such term is defined in NI 51-101; (ii) references to “liquids” mean “light crude oil and medium crude oil” and “natural gas liquids” (including condensate) as such terms are defined in NI 51-101; and (iii) references to “natural gas” mean “shale gas”, which also includes an immaterial amount of “conventional natural gas”, as such terms are defined in NI 51-101. In addition, NI 51-101 includes condensate within the product type of natural gas liquids. Birchcliff has disclosed condensate separately from other natural gas liquids as the price of condensate as compared to other natural gas liquids is currently significantly higher and Birchcliff believes presenting the two commodities separately provides a more accurate description of its operations and results therefrom.
With respect to the disclosure of Birchcliff’s production contained in this press release, production volumes have been disclosed on a “gross” basis as such term is defined in NI 51-101, meaning Birchcliff’s working interest (operating or non-operating) share before the deduction of royalties and without including any royalty interests of Birchcliff. Where the Corporation references “current production”, such production is based on field estimates and has not been subjected to month-end accounting procedures. Accordingly, such estimates are considered preliminary and subject to revision.
Initial Production Rates
Any references in this press release to initial production rates or other short-term production rates are useful in confirming the presence of hydrocarbons; however, such rates are not determinative of the rates at which such wells will continue to produce and decline thereafter and are not indicative of the long-term performance or the ultimate recovery of such wells. In addition, such rates may also include recovered “load oil” or “load water” fluids used in well completion stimulation. Readers are cautioned not to place undue reliance on such rates in calculating the aggregate production for Birchcliff. Such rates are based on field estimates and may be based on limited data available at this time.
With respect to the production rates for the Corporation’s 4-well 13-21 pad, 6-well 04-05 pad and 09-32 well disclosed herein, such rates represent the cumulative volumes for each well on the pad measured at the wellhead separator for the 30 or 60 days (as applicable) of production immediately after each well was considered stabilized after producing fracture treatment fluid back to surface in an amount such that flow rates of hydrocarbons became reliable, divided by 30 or 60 (as applicable). With respect to the 13-21 pad and 04-05 pad, the wells on the pad were then added together to determine the aggregate production rates for the pad and then divided by the number of wells for the pad to determine the per well average production rates. The production rates excluded the hours and days when the wells did not produce. To date, no pressure transient or well-test interpretation has been carried out on any of the wells. The natural gas volumes represent raw natural gas volumes as opposed to sales gas volumes.
F&D Capital Expenditures
“F&D capital expenditures” denotes exploration and development expenditures as disclosed in the Corporation’s financial statements in accordance with GAAP and is primarily comprised of capital for land, seismic, workovers, drilling and completions, well equipment and facilities and capitalized G&A costs (which includes the capitalized portion of any cash incentive payments that have been approved by the Board) and excludes any acquisitions, dispositions and administrative assets. Management believes that F&D capital expenditures assists management and investors in assessing Birchcliff’s capital cost outlay associated with its exploration and development activities for the purposes of finding and developing its reserves.
Forward-Looking Statements
Certain statements contained in this press release constitute forward‐looking statements and forward-looking information (collectively referred to as “forward‐looking statements”) within the meaning of applicable Canadian securities laws. The forward-looking statements contained in this press release relate to future events or Birchcliff’s future plans, strategy, operations, performance or financial position and are based on Birchcliff’s current expectations, estimates, projections, beliefs and assumptions. Such forward-looking statements have been made by Birchcliff in light of the information available to it at the time the statements were made and reflect its experience and perception of historical trends. All statements and information other than historical fact may be forward‐looking statements. Such forward‐looking statements are often, but not always, identified by the use of words such as “seek”, “plan”, “focus”, “future”, “outlook”, “position”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “forecast”, “guidance”, “potential”, “proposed”, “predict”, “budget”, “continue”, “targeting”, “may”, “will”, “could”, “might”, “should”, “would”, “on track”, “maintain”, “deliver” and other similar words and expressions.
By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward‐looking statements. Accordingly, readers are cautioned not to place undue reliance on such forward-looking statements. Although Birchcliff believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct and Birchcliff makes no representation that actual results achieved will be the same in whole or in part as those set out in the forward-looking statements.
In particular, this press release contains forward‐looking statements relating to:
- Birchcliff’s plans and other aspects of its anticipated future financial performance, results, operations, focus, objectives, strategies, opportunities, priorities and goals, including: that fully utilizing the existing natural gas processing infrastructure in its Greater Pouce area positions Birchcliff to benefit from a lower per-unit cost structure, stronger operating margins and enhanced free funds flow generation moving forward; that Birchcliff has more than 20 years of high-quality drilling inventory available within its Greater Pouce area; and Birchcliff’s belief that it is well positioned to generate significant free funds flow and create long-term value for its shareholders;
- the information set forth under the heading “2026 Guidance” and elsewhere in this press release regarding Birchcliff’s guidance for 2026, including: that production is expected to average approximately 88,500 boe/d in Q4 2026; and forecasts of annual average production, production commodity mix, average expenses, adjusted funds flow, F&D capital expenditures, free funds flow, total debt and total debt to adjusted funds flow ratio at year end, natural gas market exposure and the expected impact of changes in commodity prices and the CDN/US exchange rate on Birchcliff’s forecast of free funds flow;
- the information set forth under the heading “Outlook” and elsewhere in this press release regarding Birchcliff’s outlook for 2026 and beyond, including: that, for the remainder of 2026, with the full utilization of the Corporation’s natural gas processing infrastructure in the Greater Pouce area, production from the area is expected to generate meaningful free funds flow, which will be primarily used to reduce total debt and pay its common share dividend; that looking forward, the anticipated free funds flow generated from the Greater Pouce area provides the Corporation with the optionality to direct internally generated funds towards further debt reduction, shareholder returns through dividends or opportunistic share buybacks and/or advancing development in Birchcliff’s Elmworth area, including completing and filling the first phase of the Goodfare Gas Plant; that the continued ramp up of LNG Canada, together with a wave of new U.S. Gulf Coast LNG projects that have been proposed or are currently under construction, is expected to structurally improve North American natural gas export demand over the next several years; that the rapid build-out of domestic gas-fired power generation to serve data centres and artificial intelligence workloads is emerging as a new and stable source of incremental demand for natural gas; that Birchcliff is well positioned to benefit from this strong anticipated commodity price environment as the Corporation continues to execute on its strategy of generating profitable production growth, further strengthening its balance sheet and providing sustainable shareholder returns; and that the Corporation has initiated its formal budgeting process for 2027 and expects to release preliminary guidance for 2027 on November 12, 2026, along with its Q3 2026 results;
- the information set forth under the heading “Operational Update” and elsewhere in this press release regarding Birchcliff’s 2026 capital program and its exploration, production and development activities and plans and the timing thereof, including: that Birchcliff continues to execute its 2026 capital program with a focus on operational excellence, capital discipline and maximizing the value of its infrastructure; that as a result of increased throughput and facility utilization, Birchcliff expects lower per unit operating and transportation costs in the second half of 2026; that while production in Q3 2026 is expected to be slightly impacted by a planned optimization outage at the 16-31 natural gas processing plant in Gordondale, Birchcliff expects strong production performance throughout the remainder of the year as additional wells are brought on production; that an additional 12 condensate-rich natural gas wells are expected to be brought on production before year end; that Birchcliff remains focused on increasing higher-margin liquids production and capitalizing on the continued strength in condensate pricing; that the wells on the 02-25 and 07-24 pads are expected to contribute additional higher-margin liquids production throughout the remainder of 2026 and into 2027; that the production from the 09-32 well in Elmworth is expected to remain relatively flat under the current operating arrangement; that the formal planning continues for the construction of the first phase of the Goodfare Gas Plant; that the first phase of the Goodfare Gas Plant is expected to have a processing capacity of 100 MMcf/d, with optionality to expand capacity through additional phases in the future; that Birchcliff is currently targeting a final investment decision on the construction of the Goodfare Gas Plant in late 2026 or early 2027; that the Corporation will be positioned for a strong start to its 2027 capital program; and targeted product types and the timing for wells to be completed or brought on production; and
- that Birchcliff anticipates the forward-looking non-GAAP financial measure for adjusted funds flow disclosed herein will be higher than its respective historical amount, primarily due to higher anticipated production and benchmark oil and natural gas prices, which are expected to increase the average realized sales prices the Corporation receives for its production; and that Birchcliff anticipates the forward-looking non-GAAP financial measure for free funds flow disclosed herein will be lower than its respective historical amount, primarily due to higher anticipated F&D capital expenditures.
With respect to the forward-looking statements contained in this press release, assumptions have been made regarding, among other things: prevailing and future commodity prices and differentials, exchange rates, interest rates, inflation rates, royalty rates and tax rates; the state of the economy, financial markets and the exploration, development and production business; the political environment in which Birchcliff operates; tariffs and trade policies; the regulatory framework regarding royalties, taxes, environmental, climate change and other laws; the Corporation’s ability to comply with existing and future laws; future cash flow, debt and dividend levels; future operating, transportation, G&A and other expenses; Birchcliff’s ability to access capital and obtain financing on acceptable terms; the timing and amount of capital expenditures and the sources of funding for capital expenditures and other activities; the sufficiency of budgeted capital expenditures to carry out planned operations; the successful and timely implementation of capital projects and the timing, location and extent of future drilling and other operations; results of operations; Birchcliff’s ability to continue to develop its assets and obtain the anticipated benefits therefrom; the performance of existing and future wells; reserves volumes and Birchcliff’s ability to replace and expand reserves through acquisition, development or exploration; the impact of competition on Birchcliff; the availability of, demand for and cost of labour, services and materials; the approval of the Board of future dividends; the ability to obtain any necessary regulatory or other approvals in a timely manner; the satisfaction by third parties of their obligations to Birchcliff; the ability of Birchcliff to secure adequate processing and transportation for its products; Birchcliff’s ability to successfully market natural gas and liquids; the results of the Corporation’s risk management and market diversification activities; and Birchcliff’s natural gas market exposure. In addition to the foregoing assumptions, Birchcliff has made the following assumptions with respect to certain forward-looking statements contained in this press release:
- With respect to Birchcliff’s 2026 guidance (as updated on August 12, 2026), such guidance is based on the commodity price, exchange rate and other assumptions set forth under the heading “2026 Guidance”. In addition:
- Birchcliff’s production guidance assumes that: the 2026 capital program will be carried out as currently contemplated; no unexpected outages occur in the infrastructure that Birchcliff relies on to produce its wells and that any transportation service curtailments or unplanned outages that occur will be short in duration or otherwise insignificant; the construction of new infrastructure meets timing and operational expectations; existing wells continue to meet production expectations; and future wells scheduled to come on production meet timing, production and capital expenditure expectations.
- Birchcliff’s forecast of F&D capital expenditures assumes that the 2026 capital program will be carried out as currently contemplated and excludes any potential acquisitions, dispositions and the capitalized portion of cash incentive payments that have not been approved by the Board. The amount and allocation of capital expenditures for exploration and development activities by area and the number and types of wells to be drilled and brought on production is dependent upon results achieved and is subject to review and modification by management on an ongoing basis throughout the year. Actual spending may vary due to a variety of factors, including commodity prices, economic conditions, results of operations and costs of labour, services and materials.
- Birchcliff’s forecasts of adjusted funds flow and free funds flow assume that: the 2026 capital program will be carried out as currently contemplated and the level of capital spending for 2026 set forth herein is met; and the forecasts of production, production commodity mix, expenses and natural gas market exposure and the commodity price and exchange rate assumptions set forth herein are met. Birchcliff’s forecast of adjusted funds flow takes into account its financial basis swap contracts outstanding as at August 5, 2026 and excludes cash incentive payments that have not been approved by the Board.
- Birchcliff’s forecasts of year-end total debt and total debt to adjusted funds flow ratio assume that: (i) the forecasts of adjusted funds flow and free funds flow are achieved, with the level of capital spending for 2026 met and the payment of an annual base dividend of approximately $33 million; (ii) any free funds flow remaining after the payment of dividends, asset retirement obligations and other amounts for administrative assets, financing fees and capital lease obligations is allocated towards debt reduction; and (iii) there are no buybacks of common shares, no significant acquisitions or dispositions completed by the Corporation, no equity issuances and no further proceeds received from the exercise of stock options during 2026. The forecast of total debt excludes cash incentive payments that have not been approved by the Board.
- Birchcliff’s forecast of its natural gas market exposure assumes: (i) 175,000 GJ/d being sold on a physical basis at the Dawn price; and (ii) 70,000 MMBtu/d being contracted on a financial basis at an average fixed basis differential price between AECO 7A and NYMEX HH of US$0.96/MMBtu. Birchcliff’s natural gas market exposure takes into account its financial basis swap contracts outstanding as at August 5, 2026.
- With respect to the statement that Birchcliff has more than 20 years of high-quality drilling inventory available within its Greater Pouce area, such statement assumes the drilling of 30 wells per year and is based on 657 potential net future horizontal drilling locations in the Greater Pouce area, as contained in the independent evaluation of the Corporation’s reserves effective December 31, 2025 prepared by Deloitte LLP, the Corporation’s independent qualified reserves evaluator.
- With respect to statements regarding future wells to be drilled, completed or brought on production and the construction of the proposed Goodfare Gas Plant, such statements assume: the continuing validity of the geological and other technical interpretations performed by Birchcliff’s technical staff, which indicate that commercially economic volumes can be recovered from Birchcliff’s lands as a result of drilling future wells; and that commodity prices and general economic conditions will warrant proceeding with the drilling of such wells and the construction of the plant.
Birchcliff’s actual results, performance or achievements could differ materially from those anticipated in the forward-looking statements as a result of both known and unknown risks and uncertainties including, but not limited to: general economic, market and business conditions which will, among other things, impact the demand for and market prices of Birchcliff’s products and Birchcliff’s access to capital; volatility of crude oil and natural gas prices; fluctuations in commodity prices and exchange, interest and inflation rates; risks associated with increasing costs; an inability of Birchcliff to generate sufficient cash flow from operations to meet its current and future obligations; an inability to access sufficient capital from internal and external sources on terms acceptable to the Corporation; risks associated with Birchcliff’s Credit Facilities, including a failure to comply with covenants under the agreement governing the Credit Facilities and the risk that the borrowing base limit may be redetermined; fluctuations in the costs of borrowing; operational risks and liabilities inherent in oil and natural gas operations; the risk that weather events such as wildfires, flooding, droughts or extreme hot or cold temperatures forces the Corporation to shut-in production or otherwise adversely affects the Corporation’s operations; the occurrence of unexpected events such as fires, explosions, blow-outs, equipment failures, transportation incidents and other similar events; an inability to access sufficient water or other fluids needed for operations; the risks associated with supply chain disruptions; uncertainty that development activities in connection with Birchcliff’s assets will be economic; an inability to access or implement some or all of the technology necessary to operate its assets and achieve expected future results; geological, technical, drilling, construction and processing problems; uncertainty of geological and technical data; horizontal drilling and completions techniques and the failure of drilling results to meet expectations for reserves or production; delays or changes in plans with respect to exploration or development projects or capital expenditures; risks that the Goodfare Gas Plant may not be constructed, commissioned or utilized as currently contemplated or at all; the uncertainty of estimates and projections relating to production, revenue, costs and reserves; the accuracy of cost estimates and variances in Birchcliff’s actual costs and economic returns from those anticipated; incorrect assessments of the value of acquisitions and exploration and development programs; the risks posed by pandemics, epidemics, geopolitical events and global conflict and their impacts on supply and demand and commodity prices; actions taken by OPEC and other major oil producers and the impact such actions may have on supply and demand and commodity prices; stock market volatility; loss of market demand; changes to the regulatory framework in the locations where the Corporation operates, including changes to tax laws, Crown royalty rates, environmental and climate change laws (including emissions and “greenwashing”), carbon tax regimes, incentive programs and other regulations that affect the oil and natural gas industry; political uncertainty and uncertainty associated with government policy changes; actions by government authorities; risks associated with tariffs, export taxes, trade policies, export restrictions and trade barriers and trade disputes or wars (including new tariffs or changes to existing international trade arrangements); an inability of the Corporation to comply with existing and future laws and the cost of compliance with such laws; dependence on facilities, gathering lines and pipelines; uncertainties and risks associated with pipeline restrictions and outages to third-party infrastructure that could cause disruptions to production; the lack of available pipeline capacity and an inability to secure adequate and cost-effective processing and transportation for Birchcliff’s products; an inability to satisfy obligations under Birchcliff’s firm marketing and transportation arrangements; shortages in equipment and skilled personnel; the absence or loss of key employees; competition for, among other things, capital, acquisitions of reserves, undeveloped lands, equipment and skilled personnel; management of Birchcliff’s growth; environmental and climate change risks, claims and liabilities; potential litigation; default under or breach of agreements by counterparties and potential enforceability issues in contracts; claims by Indigenous peoples; the reassessment by taxing or regulatory authorities of the Corporation’s prior transactions and filings; unforeseen title defects; third-party claims regarding the Corporation’s right to use technology and equipment; uncertainties associated with the outcome of disputes, litigation or other proceedings involving Birchcliff; uncertainties associated with counterparty credit risk; risks associated with Birchcliff’s risk management and market diversification activities; risks associated with the declaration and payment of future dividends, including the discretion of the Board to declare dividends and change the Corporation’s dividend policy and the risk that the amount of dividends may be less than currently forecast; the failure to obtain any required approvals in a timely manner or at all; the failure to complete or realize the anticipated benefits of acquisitions and dispositions and the risk of unforeseen difficulties in integrating acquired assets into Birchcliff’s operations; negative public perception of the oil and natural gas industry; the Corporation’s reliance on hydraulic fracturing; market competition, including from alternative energy sources; changing demand for petroleum products; the availability of insurance and the risk that certain losses may not be insured; breaches or failure of information systems and security (including cyber-attacks); risks associated with artificial intelligence; the accuracy of the Corporation’s accounting estimates and judgments; and the risk that any of the Corporation’s material assumptions prove to be materially inaccurate (including the Corporation’s commodity price and exchange rate assumptions for 2026).
Readers are cautioned that the foregoing lists of factors are not exhaustive. Additional information on these and other risk factors that could affect Birchcliff’s results of operations, financial performance or financial results are included in the Corporation’s annual information form and annual management’s discussion and analysis for the financial year ended December 31, 2025 under the heading “Risk Factors” and in other reports filed with Canadian securities regulatory authorities.
This press release contains information that may constitute future-oriented financial information or financial outlook information (collectively, “FOFI”) about Birchcliff’s prospective financial performance, financial position or cash flows, all of which is subject to the same assumptions, risk factors, limitations and qualifications as set forth above. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise or inaccurate and, as such, undue reliance should not be placed on FOFI. Birchcliff’s actual results, performance and achievements could differ materially from those expressed in, or implied by, FOFI. Birchcliff has included FOFI in order to provide readers with a more complete perspective on Birchcliff’s future operations and management’s current expectations relating to Birchcliff’s future performance. Readers are cautioned that such information may not be appropriate for other purposes.
Management has included the above summary of assumptions and risks related to forward-looking statements provided in this press release in order to provide readers with a more complete perspective on Birchcliff’s future operations and management’s current expectations relating to Birchcliff’s future performance. Readers are cautioned that this information may not be appropriate for other purposes.
The forward-looking statements and FOFI contained in this press release are expressly qualified by the foregoing cautionary statements. The forward-looking statements and FOFI contained herein are made as of the date of this press release. Unless required by applicable laws, Birchcliff does not undertake any obligation to publicly update or revise any forward-looking statements or FOFI, whether as a result of new information, future events or otherwise.
ABOUT BIRCHCLIFF:
Birchcliff is an intermediate oil and natural gas company based in Calgary, Alberta with operations focused on the exploration and development of the Montney Resource Play in Alberta. Birchcliff’s common shares are listed for trading on the Toronto Stock Exchange under the symbol “BIR”.
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Birchcliff Energy Ltd. Suite 1000, 600 – 3rd Avenue S.W. Calgary, Alberta T2P 0G5 Telephone: (403) 261-6401 Email: birinfo@birchcliffenergy.com www.birchcliffenergy.com |
Chris Carlsen – President and Chief Executive Officer Bruno Geremia – Executive Vice President and Chief Financial Officer |
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