Pine Cliff Energy Q3 2026 Earnings Results & Report

Pine Cliff Energy EPS Results

• Actual EPS: -C$0.01
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A
• EPS Beat Rate: 4 of last 6 quarters

Pine Cliff Energy Revenue Results

• Actual Revenue: C$41.54 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Pine Cliff is a natural gas and crude oil company with a long-term view of creating shareholder value.

Pine Cliff Energy Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Management said the quarter improved from the previous quarter and was materially better than Q3 2025, primarily because oil and natural gas prices were higher. It also reported stronger free cash flow.
• Positive Sentiment: Pine Cliff plans to drill two Glauconite wells in Q4 and a Pekisko oil well early next year, with the new wells expected to increase production entering 2027. Management says it may favor more Pekisko drilling if oil prices remain elevated.
• Positive Sentiment: The company has hedged about 37% of its 2027 gas production at CAD 2.82/Mcf and 41% of its gross crude oil production at nearly CAD 80, aiming to protect cash flow and returns on drilling investment.
• Negative Sentiment: Management’s positive natural-gas outlook depends partly on demand growth from LNG exports, but it flagged warm winter weather and technical complications at LNG Canada as uncertainties that could affect storage and prices. The company has not yet set its 2027 budget and says commodity prices and drilling results will guide capital allocation.

Presentation

[Operator]

Good morning, and thank you for joining us on the Pine Cliff Energy third quarter webcast. We will open with remarks from President and CEO Phil Hodge. Today, Mr. Hodge is joined by Kristopher Zack, Chief Financial Officer, Austin Nieuwdorp, Vice President Finance, and Dan Keenan, Vice President Exploitation. Questions for the management team can be registered online during the webcast. Prior to starting, we would like to remind participants that the call may contain comments on or discussion of forward-looking information. As such, we refer participants to the cautionary statements on forward-looking information included in the presentation on our website, www.pinecliffenergy.com. With that, we will turn the call over to President and CEO Phil Hodge.

[Phil Hodge, President and CEO at Pine Cliff Energy]

Thanks, Chris. Good morning, everybody. Thanks for joining us, or if you are listening on recording, thanks for taking the time to do that. I do not think there is, I mean, compared to some of the quarters in the past, this one would be a fairly straightforward quarter. We are going into a very busy quarter, with the fourth quarter being one of our busiest quarters ever from a drilling perspective. For those of you who have been following Pine Cliff for some time, you know that we went a period of time where we were not active on the drilling front, but we are quite excited about taking advantage of some of the opportunities that we have seen.

[Phil Hodge, President and CEO at Pine Cliff Energy]

For those of you, again, who have been following our story for a while, it might be a little while since you have heard us talk about Pekisko wells, and that is very much in the front along with our Glauc wells. You are actually going to see an updated presentation later today on our website. You go to that, you will see updated type curves. The type curve has not changed on the Glaucs that you have seen before, but the Pekisko, it has been a while since we have talked about why we would be drilling Pekiskos. When you look at the, compared to the, some especially on the liquid pricing, the Pekiskos are oil wells versus the NGLs and gas that we get from the Glauc.

[Phil Hodge, President and CEO at Pine Cliff Energy]

Turn it over to Dan here in a second to give you a little bit update on where we are with the drilling that is happening this quarter. Generally, it was definitely a better quarter. It was a better quarter than last quarter, and it was a materially better quarter than third quarter of 2025. Primarily driven by the fact that both natural gas and oil prices are higher than they were in Q3 of last year. Natural gas is significantly higher. I mean, we were looking at that time, we experienced less than CAD 1 AECO prices. Although we still do not think AECO is at the level it is going to need to be to meet this demand surge that is going to be coming towards Western Canada in the next couple years, it is definitely better than it was before.

[Phil Hodge, President and CEO at Pine Cliff Energy]

I think from the way we kind of look at it, we think that by doing the drilling in the Q4, we are going to enter into 2027 with increased production. That, we think, sets us up very well from a cash flow standpoint. It is all about allocating capital, as we often talk about. I mentioned a lot of you people who are listening to this call or to the webcast will already have been subscribers to my quarterly email that went out last night. In it, I was talking a fair amount just kind of about what I see as kind of the catalyst going forward for our sector, and especially on the natural gas side. We are still very positive on where natural gas is going.

[Phil Hodge, President and CEO at Pine Cliff Energy]

I base that view just on when you look at the demand that is coming on in both Canada and in the United States. The demand is undeniable. There is no doubt that having LNG facilities, and these are facilities that are under construction, that are going to be brought online, are going to have a significant impact on the supply-demand kind of balance in the market. What you can argue about is what is the supply response going to be? I talk about that in my email, is that I do not deny that we have got a lot of natural gas under the ground in both countries, especially in Canada. What I do challenge a little bit is that at what price will you be able to justify bringing that gas out?

[Phil Hodge, President and CEO at Pine Cliff Energy]

Yes, it does depend on liquid pricing and oil pricing, because in the Permian Basin, you are going to do oil-based oil drilling, and that is going to bring associated gas. In Canada, you are looking for condensate as much as you can. A lot of people do not realize that we import condensate into Canada, even though despite our active drilling programs. There are other factors at play, but a lot of our areas do not have the liquids that people will be seeking to take advantage of. The dry gas areas are going to require higher gas prices than what we are at today. That is kind of how we based our thesis on why we believe going forward that natural gas prices are going to be better. Now, here we are, and it is November, and they are reopening up golf courses in Calgary.

[Phil Hodge, President and CEO at Pine Cliff Energy]

That is not a good thing in the short term for natural gas. I mean, weather is very much still a major factor on natural gas use. When we look at if it is going to be an abnormally warm winter, we can look back. Pine Cliff has been around for 15 years. We can look back on the warm winter periods and see what the impact has on natural gas storage. All these factors we talk about, that is really the bottom line, is where is storage at? Because if storage is if we come out of winter and storage is higher than it traditionally has been, that is going to have a depressing impact on natural gas.

[Phil Hodge, President and CEO at Pine Cliff Energy]

If storage has been drawn down more than people expect it to be, then that's a positive impact on natural gas, on the pricing, because you're going to have to justify people putting gas into storage, and that's what drives up the gas prices. So, it's kind of an interesting dynamic. What the big unknown here, because we've never had it happen before, is what happens if LNG Canada is operational all through the winter? If they're operational at using, and then you saw some graphs in the email I sent out where when they're fully operational, they're actually using more than 2 BCF a day for feed gas going into that facility. That's a big, big number when we only have 19 BCF a day of natural gas. They have not been at full operation.

[Phil Hodge, President and CEO at Pine Cliff Energy]

The closest they got to was in June when they were kind of exporting about 1.8 BCF a day, and they were using close to actually over 2.5 BCF a day for the facility. We saw a huge impact on storage. Storage really, there was a meaningful drop in storage at those levels. However, since then, there's been a lot of technical complications. We don't know all the details of it. Because they're not a public company, they haven't had to share all the information on that. But it looks like they're sorting it out. I would expect that there's every motivation for the owners of LNG Canada to get that facility up and running as soon as possible.

[Phil Hodge, President and CEO at Pine Cliff Energy]

The reason I say that is because there's several Asian owners in that group, and right now, they're paying over CAD 30 an MCF in Asia for gas. Here we are with gas at CAD 2. So, there's a huge arbitrage that they desperately will be wanting to close. They do not want to keep buying gas from whatever sources they're buying gas from today at those prices when they could be getting it directly from their own reserves here in Canada. So, it's going to get sorted out. We'll see what happens. It'll be the kind of the weather versus the LNG through the winter.

[Phil Hodge, President and CEO at Pine Cliff Energy]

The one comment I would make is when we look at some of the warmer winters that have happened, we look at it kind of being maybe 50 BCF-60 BCF less natural gas gets used in a really warm winter in Western Canada. If that's up to full capacity, it's going to be on what impact do we think? Huh? Just, okay. Just keep going. So, I think what we'll continue to do is, from our perspective, keep an eye on. We'll dictate our drilling program based on where commodity prices are. We haven't set our budget for 2027 yet, but we definitely will be very cognizant of a couple things. We'll be cognizant of what's the pricing of commodities, both natural gas and oil, and that may dictate on which. Do we do more Pekiskos or we do more Glauc gas wells?

[Phil Hodge, President and CEO at Pine Cliff Energy]

The other thing that we'll be very cognizant of is kind of how the results of our current well drill program have gone, because that may dictate it. Maybe I'll pass that over to Dan then to give us a bit of an update on where we are with forward drilling.

[Dan Keenan, VP of Exploitation at Pine Cliff Energy]

Thank you, Phil. As Phil mentioned, we would drill two Glauconite wells. We're drilling the second one right now. They're on the same pad, so we're drilling them back to back. We expect to have the well TD'd, the second well, by next week, early next week, and then we'll be moving on to the completion sort of the middle of November and hope to have both wells tested and on stream just before the end of the year. Following the Glauconite drilling, we'll move to our other area where Pekisko is, and we have a single well there that we're planning to spud, hopefully to finish drilling and complete and bring on early in the new year.

[Phil Hodge, President and CEO at Pine Cliff Energy]

One of the questions we've had, Dan, was if we could please discuss the anticipated average depletion rate of our new Glauconite inventory. I guess we could talk a little bit about that.

[Dan Keenan, VP of Exploitation at Pine Cliff Energy]

Yeah. So we have some location details in our investor presentation. I understand we're going to have an updated one here soon. As you see in those numbers, we have quite a high number of net locations for a company our size. So, if we anticipate drilling, say, three Glauconite wells per year net, that's 10 years to a little over 10 years of drilling inventory. So that gives us a little bit of room to accelerate. Plus, we also could add some in time with mapping and additional drilling.

[Phil Hodge, President and CEO at Pine Cliff Energy]

Yeah. In addition to that, clearly, it's the Pekisko will be if oil prices stay elevated as they are currently, or if even anywhere close to this neighborhood, then we'll definitely be looking to do more Pekiskos going forward. We're doing a lot of work right now on our broader area, where a lot of people don't appreciate the land base that Pine Cliff has at close to 2 million acres, many of which areas that have never had horizontal drilling ever brought in to exploit those areas. We have a lot of hydrocarbons that are unrecovered. That's been a frequent point of conversation here among the management team. This goes back to what we talked about earlier, the allocation of capital. Where's the best place for us to put our increasing free cash flow?

[Phil Hodge, President and CEO at Pine Cliff Energy]

Free cash flow's been better this quarter than last quarter. Free cash flow is starting. As we look into 2027, we're seeing more free cash flow, and so the debate and discussion last night was among our board and our management team, is where's the best place to put that going forward? One of the things we do to really protect that cash flow is we've been very successful and very active on the hedge program, and there is a question that we received about hedging. Maybe, Chris, if you want to deal with that one?

[Kristopher Zack, CFO at Pine Cliff Energy]

Yeah. Thanks, Phil. Yeah. So we've been fairly diligent with our hedge program to help protect the cash flow that's needed to fund dividend and our capital drilling program. In the third quarter, particularly on the gas side, we posted an average realized gas price of CAD 2.44 in MCF, and that represented a 56% premium to the AECO 5A daily average price of CAD 1.56 in MCF. We expect that that approach to the hedge program will continue. We're already around 37% hedged for 2027 on our gas at CAD 2.82 in MCF, which is above the current strip of right around CAD 2 today. We're also 41% hedged on our gross crude oil production at an average price of almost CAD 80 for 2027.

[Kristopher Zack, CFO at Pine Cliff Energy]

Given that we are drilling, we're looking to protect that upfront capital investment, but also the returns that we're going to get from the cash flow in the first year from those wells. I expect that we're going to continue to look for opportunities to layer in additional hedge contracts where it makes sense.

[Phil Hodge, President and CEO at Pine Cliff Energy]

Thank you. One of the other questions I received, this was received yesterday, was wanted to know why I personally have been buying more stock at these levels. I by no means can claim to have a crystal ball as to what's going to happen with stock prices, and we know that there's a lot of volatility going in the market for a lot of different reasons. What I can tell you is the rationale or my thinking into it, is that as an investor, I always feel that there's many reasons why insiders sell stock, many reasons that have to do with their personal circumstances or their family or their need for capital at various times. It's always a tougher thing to read when you see selling.

[Phil Hodge, President and CEO at Pine Cliff Energy]

The one thing that I always thought was a positive when you see is insider buying, is because they've got options to spend with that cash, and they've chosen to put it into their own capital, into their own company. The reason I did it is because when I look back at our, over the 15 years that I've been at Pine Cliff, the stock price has been as high as CAD 2, it's been as low as down into CAD 0.10 over that time. At the level it's at right now, I'm very comfortable that there's not as much I just don't see as much potential downside as I see the potential upside.

[Phil Hodge, President and CEO at Pine Cliff Energy]

I think that when I look at what the AECO price that we've got for our If AECO goes from CAD 2 to CAD 3, which I do not think is an unreasonable prediction, that's over CAD 30 million of extra cash flow on a realized price basis to Pine Cliff. That's almost CAD 0.10 a share. If we're trading at 5x, 6x cash flow or whatever multiple we may be trading that time, that's CAD 0.50, CAD 0.60 on the stock price. Our stock's at CAD 0.50 some cents. In the meantime, we're paying a dividend, which is close to a 3% yield right now. To answer that question, that's why I felt quite comfortable buying more stock personally. It does not look like we have any other questions, so I won't take up any more of your Friday.

[Phil Hodge, President and CEO at Pine Cliff Energy]

Thank you very much for those attending. If you have any follow-up questions, please send them along to us. We will get back to you for sure. Really appreciate the time, though. Have a good day.

Participants

Executives

• Phil Hodge, President and CEO
• Dan Keenan, VP of Exploitation
• Kristopher Zack, CFO