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This second quarter was characterized by the most material energy infrastructure announcements in Canadian history. It also had substantial swings in commodity prices, particularly for oil. Thankfully, Canadian natural gas prices were stronger than in Q2 last year and forward AECO gas prices are projected higher later this year and into 2027. Our team continues to maintain a disciplined approach to business and capital allocation through this volatility to pay down debt, preserve our monthly dividend and prepare for our next Glauconite well to be drilled this quarter.
Read Full MessageSecond Quarter 2026 Highlights
Key accomplishments for Pine Cliff in the second quarter of 2026 included:
· Generated $5.9 million ($0.02 per basic and fully diluted share) of adjusted funds flow1;
· Production averaged 19,747 Boe/d2, which included continued strong production from the 4-23 Glauconite well which averaged over 1,100 Boe/d3 over the first 150 days of being online;
· Net debt1 decreased 14% to $50.8 million as of June 30, 2026, from $58.9 million at the same point last year; and
· Paid dividends of $1.3 million ($0.004 per basic and fully diluted share).
Capex Budget Update
Following the success of our first Glauconite well, our Board of Directors has approved an increase in our capital budget to drill and complete a second 100% working interest Glauconite well in our Central Alberta Caroline area. We expect to drill this quarter and bring it on production in the fourth quarter of 2026.
Pine Cliff has identified 59 gross (37.0 net) Glauconite locations in the Caroline area, with 29 gross (22.0 net) locations booked in our total proved plus probable reserves as of December 31, 2025. The range of values of these locations at various commodity prices is highlighted in our corporate presentation available at www.pinecliffenergy.com.
Dividend
Since the implementation of our dividend program in June 2022, our priority has been to maintain a sustainable dividend supported by free cash flow, prudent hedging and a strong balance sheet. At current commodity prices, we are maintaining our monthly dividend at $0.00125 per share. As of June 30, 2026, Pine Cliff has paid $107.4 million, or approximately $0.30 per share, in cumulative dividends.
Our dividend has been deemed non-eligible for tax purposes since May 2024. Based on similar prices to where the strip is today, we expect to return the dividend to eligible status before the end of 2026.
Hedging and Diversification Update
Our hedging and internal marketing strategies continue to mitigate the impact of commodity price volatility. In the second quarter, Pine Cliff realized an average natural gas price of C$2.38/Mcf, representing a 47% premium to the AECO Daily 5A price of C$1.62/Mcf.
For the remaining two quarters of 2026, we have approximately 41% of gross natural gas production4 hedged at an average price of C$3.16/Mcf and approximately 48% of gross crude oil production5 hedged at US$68.51/Bbl.
Webcast
Pine Cliff will host a webcast at 9:00 AM MDT (11:00 AM EDT) on Thursday, August 13, 2026. Participants can access the live webcast via Pine Cliff Q2 Conference Call or through the link provided on our website at www.pinecliffenergy.com. A recorded archive of the webcast willalso be available on the website.
Outlook
We believe that the stronger AECO prices this summer compared to last year reflect the positive impact that LNG Canada Phase 1 has had on natural gas storage balances in Western Canada. LNG Canada Phase 1 exports were sporadic in July but appear to be regaining the consistency that they showed in June when it set Canadian monthly export records. At capacity, that project’s 2 Bcf/d of demand has a significant impact on Canadian storage as Canada’s natural gas production still is only at 19 Bcf/d today.
Q2 2026 saw the largest number and size of energy infrastructure announcements in Canadian history. Governments across Canada have expressed their support for more pipelines and export facilities to help deliver our energy to a world in desperate need of oil and gas from safe and reliable suppliers. I think this quarter might have been the catalyst to another prosperous era for our energy sector and country.
We are optimistic that the attractiveness of our business model will become more obvious to investors in the back half of this year and in 2027. We believe that continuing to strategically exploit our extensive drilling inventory will position us favorably as we enter winter 2026-27. Pine Cliff’s approach to capital allocation has never wavered since we started the company almost 15 years ago. By focusing on low-cost operations, we have shown that our business model is resilient in the face of volatile commodity prices. We will continue to protect the balance sheet while pursuing attractive assets and drilling opportunities in our core areas. We believe that prudent capital allocation through uncertain times creates long-term shareholder value and we, as Pine Cliff shareholders, make every decision with the goal of making our shares more valuable. This alignment with our shareholders continues to be our driving motivation to get better.
Thank you for your continued support.
Yours truly,
Phil Hodge
President and Chief Executive Officer
August 12, 2026
1 Disclosure Note: Please refer to Pine Cliff’s website for reader advisories regarding forward-looking information, non-GAAP measures, oil and gas measurements and definitions, as this President’s message is subject to the same cautionary statements as set out therein.
2Comprised of 94,969 Mcf/d natural gas, 2,763 Bbl/d NGLs and 1,156 Bbl/d light and medium oil.
3 Comprised of approximately 3,300 Mcf/d natural gas and 555 Bbl/d NGLs.
4 Based on Q2 2026 sales volumes of 94,969 Mcf/d natural gas.
5 Based on Q2 2026 sales volumes of 1,156 Bbl/d of light and medium oil.