Pine Cliff Energy Q2 2026 Earnings 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

Pine Cliff Energy Revenue Results

• Actual Revenue: $39.46 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Pine Cliff Energy Announcement Details

• Quarter: Q2 2026
• Date: 8/12/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 13, 2026
• Conference Call Time: 11:00AM ET

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

Pine Cliff Energy Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Natural gas prices improved year over year, with AECO pricing about CAD 1/Mcf higher than the same period last year. Management said LNG Canada appears to be ramping back toward full capacity, which could help reduce Western Canadian storage pressure and support prices.
• Positive Sentiment: The Glauconite 4-23 well averaged approximately 1,100 BOE/d from March through June, exceeded its engineering type curve, and was roughly 50% liquids. Management said its strong liquids contribution materially benefits revenue and cash flow.
• Positive Sentiment: The company approved another Glauconite well for drilling this fall and aims to develop two to four wells annually, supported by improved cash flow. Management estimates 37 net locations represent roughly CAD 300 million to CAD 350 million of potential net present value, with projected paybacks of about 12 to 15 months.
• Positive Sentiment: Pine Cliff reported that hedging and diversification produced a Q2 realized gas price of CAD 2.38/Mcf, a 47% premium to AECO 5A. Approximately 41% of expected production for the balance of 2026 is hedged at CAD 3.16/Mcf, providing cash-flow support if winter prices weaken.
• Positive Sentiment: Management sees potential medium-term demand growth from LNG exports and data centers, with LNG Canada Phase 2 and other projects potentially lifting Canadian LNG exports above 7 Bcf/d by decade-end. However, executives acknowledged that data-center demand is unlikely to materially affect Western Canadian gas prices until approximately 2028 or 2029.

Presentation

[Operator]

Good morning, and thank you for joining us on the Pine Cliff Energy second quarter webcast. We will open with remarks from President and CEO, Phil Hodge. Today, Mr. Hodge is joined by Chief Financial Officer, Kris B. Zack, Chief Operating Officer, Terry McNeill, and Vice President of Finance, Austin Nieuwdorp. 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'll turn the call over to Phil Hodge, President and CEO.

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

Thanks, Chris. Good morning, everybody. As we've done in the past, we're not going to bother to read the press release or give scripted answers. We've had lots of questions, so thank you very much. A lot of the people that might be listening get our quarterly update that I do, and that's stimulated a bunch of different questions are more around the macro on natural gas and what's happening, and we're happy to address those. I think we'll get to those pretty quick. I think just on a summary on the quarter, it was a case of natural gas prices being much better than last year, but still not at the level that we would like to see them at. I guess maybe we always want to see them higher. But I think a big reason for that is around the LNG.

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

Then we've had LNG Canada on now for a year, but it's not been a consistent draw on the system. And that was problematic in July and August, which is when storage levels started to rise again because the LNG Canada phase 1 wasn't at its full capacity. We're starting to see indications again that it's heading back to full capacity like it was in June when it set export records for Canada for LNG. So ideally, you're wanting to see a tanker leaving every couple of days out of LNG Canada phase 1, and that hasn't been the case for the last six or seven weeks. But the two things we watch pretty closely is we watch the draws coming out of the Willow Valley and the Sunset Creek.

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

I don't want to get too technical, but for those of you who are interested, just send me an email afterwards and I'll send you the link. The TC Energy has got a public website availability that you can actually see when Willow Valley is drawing. What that means is if Willow Valley has got gas flowing through it, then that means that they're drawing off the NOVA system, and therefore natural gas is going to Kitimat, which is where the site for LNG Canada is. That's not always the case. There is when it's at lower than full capacity or even lower than mid capacity, so if it's under 1 BcF a day of exports, they tend to just be using gas directly from the producers that own LNG Canada, and therefore not drawing gas off the system.

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

We really watch that closely, because as they ramp up their capacity, they then start to draw off the system, and that impacts the rest of the entire natural gas infrastructure, because you are now pulling gas off that otherwise would be going into a crowded system and a crowded storage system. You can really see that if you look at the storage for the last summer, you really saw it in June, because in June, LNG Canada was at pretty much full capacity. They were about 1.8 BcF a day was what they were exporting. You saw that storage then started to drop. As longtime followers of the natural gas landscape know, storage is kind of the scoreboard as to what is happening between supply and demand.

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

You do not want to see storage at its peak in the summer months, because then there is a risk that there will be nowhere to put gas storage in the shoulder season, which is typically in that August to October period, which we are now into. Right now, it does not look like we are going to have a full storage, which is good. LNG Canada is now, as of the last couple of days, Willow Valley started to show life again of gas pulling off, and that is a good thing. It is positive, which is why gas prices are well over CAD 1 higher at MCF in Western Canada than they were this time last year. We are optimistic that things are turning the corner on that.

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

That is, as I have mentioned before in these webcasts and in interviews, is that 1.8 BcF a day, up to 2 BcF a day, that is a big, big number when our entire country only produces 19 BcF a day. We are talking about 10% of all of our production coming on or off on demand. That is going to make a material swing. That is something we are watching pretty closely. We had some questions about that. One of the things we had, another question was kind of just around our CapEx, because we just announced a CapEx increase. This is something that should not be a surprise to our shareholders or people who have been following us. The Glauconite inventory that we picked up in the December 2023 acquisition, we have been wanting to get after those well locations ever since we have owned those assets, and that has been now two years.

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

Prices were weak, and therefore prices are weak. We are very highly correlated to AECO pricing, and therefore our cash flow weakened with the lower AECO prices. We managed to drill the one well earlier this year. These wells are typically between CAD 8 million and CAD 9 million all in when you drill and you complete and you tie them in. We have got that one well, and I will turn it over to Terry to talk about how it is doing. We wanted to get another well done this fall. Luckily, our cash flow has improved this summer. As we talked about, AECO has been a little bit stronger. WTI has definitely been stronger, with the Mideast crisis and war situation. We have seen that WTI rise, and that has had a big impact on us.

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

I know we're definitely thought of as a natural gas producer, as we should be, since about 80% of our production is natural gas. But in the last quarter, more than 50% of our revenue actually came from liquids. A big part of that was the 4-23 well from the Glauconite. Maybe I'll pass over to Terry to talk a little bit about the well results to date.

[Terry McNeill, COO at Pine Cliff Energy]

Sure. Thanks, Phil. Appreciate it. The 4-23 well came on in the middle of February, was cleaning up sort of towards the end of February. It's been on pretty well continuously from March until right today, despite some third-party maintenance going on in the quarter. We've had it on almost 100% of the time. From a financial perspective, from March until June, so over that four-month period, those are the latest financials we have, it's averaged 1,100 BOE a day. It's pretty well flat month-to-month, and it's performing very well. It's in accordance with our type curve. It exceeds our engineering type curve. I guess more importantly, it's 50% gas, 50% liquid. So the liquid exposure makes a considerable difference to Pine Cliff. The volumes do too. It's pretty well 5% of our corporate production. So it's a good well. We're excited.

[Terry McNeill, COO at Pine Cliff Energy]

It's performing well. We'd like to do more.

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

Yeah. That ties up. That's a good segue, Terry. Thanks. We've got several questions here on kind of what does our increased CapEx mean going forward? That's a very legitimate question, because we've got. Our goal would be to continue to exploit the Glauconite well inventory, and frankly, our Pekisko well inventory as well. Let's not forget that we've got some really good drill locations in Pekisko. The Glauconite is about over 50% of that production that comes on is liquids. So that is why the economics go around very strongly. I would direct you to our presentation on our website at www.pinecliffenergy.com. You'll see kind of the economics of the wells, and both from an internal rate of return and also from a payback standpoint.

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

At these prices, even with a weaker AECO price, and with WTI prices being in and around that CAD 75, CAD 80 range, you've kind of got the NPV. In other words, the net present value of each one of those well locations is kind of that CAD 8 million-CAD 10 million range. We've got 37 net locations to get at. We're talking about CAD 300 million-CAD 350 million of inventory that's just sitting there. This isn't high-risk inventory. This is inventory that's been very proven by a lot of well control in the area, and it's a very active area. It's definitely something that we want to get to a pace of development where we're drilling at least kind of two to four wells a year.

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

It could be, if in the proper pricing environment, maybe that gets accelerated even further, or we throw in some Pekisko wells at the same time. At this level, we're not interested in issuing equity out at the current stock prices. We think things are going to get better on the AECO pricing for all the various reasons I set forth in the email that many of you would have got. We're looking to increase that pace of development. These wells pay out, depending on the commodity price, kind of in between that 12 and 15-month period. They have very quick paybacks, but they continue to pay. As Terry mentioned, the 4-23 well's been surprisingly resilient. It will show decline at some point, but it hasn't yet, even though it's been online for getting close to half a year.

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

Our 1-27 well, you may remember, was the well that we had when we first did the acquisition. We didn't drill it, but it came with the acquisition, but it just had come online. It's now in a stage of paying itself again, like it paid itself out for a second time. That's the attractiveness of these locations and why we want to get after those. We got to do that prudently. We're not going to ramp up our debt to do it. We have to do this within our cash flow. Ideally, we'd like to probably even drill the second well this fall along with this Glauconite well. If prices were to swing in our favor or if we were to do a transaction with, we've had a lot of interest from people wanting to farm in on this area.

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

We're kind of reluctant to do that because we really like the ownership position that we've established. These are all things we look at all the time. There's different ways to finance kind of an accelerated drill program, and we've considered, I think, just about every one of them. Initially, we got enough cash flow. The board of directors approved us drilling another well this fall. Our goal would be to drill several, again, that two to four range next year. If prices are stronger, then maybe we look at doing more. It is exciting because this is an area that really does deserve to have capital allocated towards it. You've heard us speak about capital allocation before.

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

We're very cognizant of the fact that our model lends itself to a free cash flow in rising commodity prices, especially on gas, but obviously also on oil. Having a low-cost OpEx, having low G&A, having the low decline rate, all of those things help you generate more free cash flow. In a rising commodity environment, we've got that cash flow we can deploy as we see fit. The dividend, we've kept the dividend going through this entire period. We will The CapEx, I think right now it makes more sense to allocate capital towards the drill program, and so that's what we've done, and for the remainder of the year.

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

One of the other questions we've got was around one of the concerns out there, I think, for natural gas producers is the impact of the El Niño effect, which is a weather pattern that is projected to have warmer temperatures for this winter. Maybe I'll pass it over to Kris to chat about our hedging program.

[Kris B. Zack, CFO at Pine Cliff Energy]

Yeah. Thanks, Phil. We continue to actively manage our hedge book with the view of reducing volatility in our price realizations. I would say, as highlighted in the press release, I think you saw continued evidence of that in our Q2 results, noting that our hedge and diversification strategy delivered a realized gas price of CAD 2.38 in MCF in Q2. That was a 47% premium to AECO 5A price of CAD 1.62. We're pretty well hedged for the balance of the year. We're about 41% for the balance of 2026 at 3.16, which is well above the market, and so provides good cash flow support to the operations. While weather's hard to predict, it's certainly something that's considered in our thought process when we look and we think about our hedge program.

[Kris B. Zack, CFO at Pine Cliff Energy]

If you look at Q4 through Q1, our average hedge is about 36% of our production at around 3.10. Again, we've got a very good start on the winter, but we'll continue to potentially look to add more hedges where it makes sense on a go-forward basis.

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

Thanks, Kris. Another question we had was around the makeup of these Glauc wells from a liquids perspective, and one of the questions I got last night was, how much wetter are these? In other words, what is the NGLs component of the wells? Maybe I'll flip that back over to Terry to discuss.

[Terry McNeill, COO at Pine Cliff Energy]

Sure. Thanks. With regards to the wetness of a location, it will vary from location to location. It gets a little bit drier as you go west from east. But our concentrated land position, we're still trying to vet it out a little bit, but I don't think it's going to change appreciably across our land base. So, I think we'll be fairly consistent on liquid production on our future wells as we are in our existing well. From a condensate versus NGL makeup, initially, the wells are about 20%-25% condensate and NGL on the total BOE, and that'll taper down over time. So the condensate value will come down over time, but initially, of the 1,100, we're about 20%-25% condensate. And it is condensate, not oil.

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

Thanks, Terry. I think those of who've been following our story for some time will recognize the fact that as these wells come on, each time they come on, it has an impact on obviously our liquids. So we've gone from, at one point, Pine Cliff was 96% natural gas weighted. With the acquisitions that we've done over the last few years, starting in 2019, we did with each of our, the AlphaBow, Apogee, Certus acquisitions, all have added more liquids exposure. Clearly this drilling inventory is definitely liquid exposure with the majority of it. Because of where AECO's at, it actually is even from a revenue and from a cash flow standpoint, it's even more than just the percentage of the volume. Punches well above its weight because of where WTI is these days.

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

As for some of you who may not be aware, WTI is very highly correlated to the condensate price that Terry mentioned. So quite often, condensate's actually even higher than WTI. When you've got the lower Canadian dollar like we do right now at CAD 1.39, that even has a greater impact on what the Canadian dollar impact onto our balance sheet is. A few more questions here. One of the questions was asking us, I'll just read it. It says that we've done 16 transactions in 14 years, and we haven't issued equity in nine years. That's accurate. With the Shell ARC deal, LNG Canada phase 2 momentum and CAD 22 billion of infrastructure announced in Q2, is the M&A environment starting to look interesting again, or does the current strip suggest sellers are holding off?

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

I think my own view is we're going to continue to see consolidation. The reference there is for those who aren't watching really closely, Shell, which is obviously one of the largest oil and gas producers in the world, just recently announced an acquisition of ARC Resources, which was Canada's, it was a CAD 22 billion company, very heavily weighted towards natural gas and to condensate. I personally took that as a positive signal that foreign investors that can put capital anywhere they want in the world were making significant investments into Western Canada and saw this environment as finally an environment that they could come back and deploy capital to. That's not been the case for 10 years. We saw a lot of U.S. and international groups leaving the country from an investment standpoint.

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

Now we're seeing a lot more interest of coming back to Canada, and I think that goes as a testament to the governments, both at the federal level and at the provincial level, welcoming back that foreign direct investment. We really, as a country, we really do need that foreign direct investment. We can't get the projects that we're talking about building, the pipelines across the country, the LNG facilities, all of these things need a tremendous amount of capital. Frankly, more capital than our country has. So it's nice to see the foreign direct investment returning, and I think that one project, bringing it back down to a level for the juniors and for the intermediates in the space. The reality is that it's changed a lot in the last I've been at Pine Cliff now for 15 years.

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

There was a lot more junior capital energy pools available. When I first started, I remember, you'd go to different cities to do marketing and you would have a tremendous amount of interest, and you would have days of meetings with different groups. The reality is that that is not the case anymore. So you've got a smaller number of pure energy investors. You have a lot more generalist investors. They, I believe, will come back to the natural gas and to the energy space when they see the return of capital being deployed and the free cash flow is being generated. That's already started. I think that everybody's balance sheets are in much better shape. There's a lot less companies in the sector, and I don't think that trend's going to stop.

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

Part of it is, as a junior company, and we're 20,000 BOE a day. 10 years ago, that would have been considered a decent sized intermediate. Now we're the junior. A smaller, compared to the rest of the market. There's companies obviously smaller than us, but there's not a lot in the public domain that are smaller. Your regulatory costs, your just cost of doing business, has gone up. That's just the reality. We continually look for assets that make sense or acquisitions or mergers that would make sense to us as shareholders. That's been the constant theme ever since we've started Pine Cliff, is it's all about how do we make the shares more valuable. If a transaction has the potential to make our shares more valuable, then we're definitely interested in it.

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

But we haven't done a material transaction now in a couple of years, but that's not from lack of looking. I think there is, when you get this volatility in commodity prices, it does make transactions more difficult. Like I said, we've done a lot of transactions and our team has been involved at different places that they've worked and a tremendous amount of transactions. You almost need a little bit of stability in commodity prices to help get transactions across the board, because it's really difficult right now. For instance, on the oil price, when we've had this huge, fairly big, significant run-up in oil prices, how do you value the assets? Do you use today's price of CAD 83, or do you use next year's price where it's under CAD 70? So there's that spread that needs to be negotiated. Natural gas is a bit more consistent.

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

I think on Western Canadian gas, it's contango. In other words, prices are higher in the future. We think that strip's probably being conservative. We think that gas prices are going to be probably stronger than what current strip is at. But that's our view. And we hope to be able to add more assets. In the meantime, we'll grow organically. When we've got the kind of inventory that we are fortunate enough to have, that's a great place to allocate capital to. So hopefully that answers that. Did get a question about data centers in a couple different capacities. One is an update on where we are, and then just generally, what's the impact that it could have on Western Canada. We watch this very closely, and we've had a lot of conversations with a lot of different groups, and it's not just data centers.

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

It also includes the cryptocurrency mining space, because that's still very active. We kind of think of it simply as turning gas into power. And how they use that power, it can be used for different applications. What trend we are seeing, there's definitely, and I mentioned this in my quarterly email, is we're seeing a real push to go to distributed generation. And what I mean by that is where these power generation sites are not connected to the grid, and they're going to be set up very close to where their energy source is. In the case of Alberta, that's going to be natural gas. There's the odd case where these data centers are being set up near nuclear or around the globe where they're quite often attached to coal.

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

In North America, the reality is that every time that we add more demand for electricity, we're increasing the demand for natural gas. The statistic that I often use when I talk to people in the U.S., and they don't realize that 43% of all of their electricity in the United States comes from natural gas. And second place is nuclear and coal, each in around that 16%-18% level. So it's pretty significant. And this goes to the same argument around electric vehicles. Is if you're going to be a shift towards electric vehicles, which with this rise in WTI and oil pricing, that's become a topic again, is what's going to happen with all the electric vehicles. Again, that's great, but you're going to need more electricity. And so the power grid's going to come under pressure.

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

What we have seen in just about every jurisdiction is that almost nobody has got extra power. The grids have been kind of maintained at a level for decades, and now you are seeing this power surge and electricity demand surge, and the grids are having to deal with it. That is where you are getting a lot of pushback from a lot of areas and jurisdictions around data centers because they are worried about their power bills going up. That is a legitimate concern, which is, again, why there is a real trend towards people defining distributed power generation. There was a big announcement up in the Edmonton area. The biggest data center that will be built in Canada, so close to a gigawatt size. But they are building right beside it a huge natural gas power facility.

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

You see different projections as to how much natural gas demand might be impacted by the data centers. I have seen numbers, like kind of that 3 Bcf-8 Bcf a day. That is a North American number. Just to give everybody context, I mentioned the 19 Bcf a day is what the natural gas supply is in Western Canada, essentially. It is about 107 Bcf a day right now in the U.S. But there are the two big demand sources besides the power grid that is really the LNG, and then how many data centers are actually going to get built. These projections take on an immense amount of power demand, and therefore, if they are going to try to stay away from the grid, they are going to need a lot more natural gas. It has the potential to be pretty significant.

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

Here in Alberta, I think it could be probably more like a 1 Bcf-2 Bcf a day, maybe as high as 3 Bcf a day, depending on Alberta's government has come out and said that they want to attract CAD 100 billion of data center investment into the province. That is a big number. But it is very real. We have multiple sites that we think would be very attractive to data center groups. We announced the one data center transaction. They continue to tell us that they are very close to getting financing. We are very hopeful that they will get the financing and that we can move forward with the permitting of that site. But we also are talking to multiple groups about other sites and what we might be able to do. So it is not a tomorrow impact on natural gas prices in Western Canada.

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

I think we will start to see the impact of it probably starting next year. Some of these projects have already started to break ground and get built. But I think you are really going to see it more in kind of 2028, 2029, which is interesting because that timeframe is the exact same time that you are going to start to see more LNG demand. One of the questions that we got here was, is the phase 2 of LNG Canada built into the AECO price? I would say, no, I do not think it is because. So phase 2, for those of you who are not familiar with the project, LNG Canada is in Kitimat, B.C. They have four trains today in phase 1, and their plan is to do another four trains in phase 2. Each phase is about 2 Bcf a day of exports.

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

They've got phase 1 started exporting in July 1st of last year, and it's been ramping up. It's been quite sporadic, but in June was at the highest we've ever seen it before. Then, like I said, July and August, it fell off again. It looks like it's ramping back up for this fall, which is fantastic. The second phase, they've already started work on it, construction on the pipelines. Oh, sorry, on adding compression to that pipeline facility. It's important to know that they don't need to build a new pipeline for phase 2. The pipeline that's been built, the Gateway project, already has the capacity of about 5 BcF a day. They can add another LNG facility or another phase to that without having to do anything but add compression.

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

Even though they haven't announced that their phase 2 is gone positive FID, which is final investment decision, the work has already started. That's very positive. We expect to hear a positive final investment decision on that project this year. That's what the indication has been as we head into the back half of the year here. Also, the [Ksi Lisims] project is another project that is expected to go positive final investment decision. That's another 2 BcF a day. You'll see in my email, the projects that are now being talked about would take Canada to over 7 BcF a day of exports in LNG by the end of the decade. 7 BcF a day, again, keep coming back to that same number. On 19 BcF a day is a tremendous amount, incredible high percentage of our total production.

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

As you add more and more demand, you're going to need that supply. It's not that we don't have the gas in the ground, the question is at what price do we bring the gas out of the ground? Our view is that it's setting up quite positively for natural gas in the next few years as all these major projects come on, in addition to the data center demand that's going to be coming on during that same timeframe. Hopefully that's a good update on that. Another question we had is, what percentage of U.S. LNG export is relative to their production? The U.S. LNG growth is really one of the greatest industrial stories of our time. In 2016, the United States exported zero LNG. Today, they're the world's largest LNG exporter. It's been an incredible growth.

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

That number is around. They've been as high as 20 BcF a day. They've got some maintenance projects going on right now, and I think Freeport LNG has had some operational issues. I think they're around today about 18 BcF a day of exports. Then, as I mentioned before, they're about 107 BcF a day of production. Keep in mind, though, not only do they have the LNG exports, which is in that 18 BcF-20 BcF a day, and that number is going to over 35 BcF a day. So almost double in the next five years. By the time we exit into 2030, they're talking about that LNG being over 35 BcF a day. In addition, they export about 6 BcF-8 BcF a day to Mexico every day by pipeline, which is about the same number that they bring in from Canada.

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

In Canada, at times, half of our production goes to the U.S. by pipeline. It's an incredible amount of investment that's gone into that Gulf area, which is where the exports come out of. The big advantage for Western Canada is that our shipping time to Asia, and Asia is the biggest importer of LNG in the world, and that includes Japan and China and Taiwan and South Korea. We're about a 10-day shipping as opposed to 24 days out of the Gulf. Canada's got a really advantage for sending gas off the West Coast. So much so that even Mexico, which is an importer of natural gas, is building LNG facilities to take advantage of that same shipping advantage or timing being off the West Coast. It's an exciting area. It's been incredible growth.

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

One of the biggest growth areas, from an industrial standpoint, in any industry, in North America, and it's not slowing down. It is picking up speed. You can see right now, there's no reason why that's going to slow down given the shortage of LNG and the high prices elsewhere in the world. We've talked about the North American prices. Today, AECO is CAD 1.60, roughly. I'd say the NYMEX, which is the U.S. natural gas price, is a little under $3. In Asia and in Europe, over $20 in MCF for the exact same molecules. That arbitrage, the only way that arbitrage gets closed is by more LNG facilities being built in North America to export gas.

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

Again, we think that's a positive because we believe that what will happen is that the international prices will come down to a more sustainable level for them, which is good, because you don't want them going to alternatives. You want them to continue to use a clean source natural gas, especially in Asian communities, where if they're going to go to coal, the carbon emissions are substantially 30% higher. If that price comes down, so it makes their economies go around better. It also, at the same time, it should be pulling up our pricing. Therefore, there's the arbitrage price. You see difference usually between $6 and $8 is the expected price of what it costs for liquefaction and transportation. We did have a question about carbon tax. Maybe I'll pass that over to Terry.

[Terry McNeill, COO at Pine Cliff Energy]

Sure. The question was the impact of carbon tax on Pine Cliff going forward. The short answer is we don't expect any impact on carbon taxes. We are classified as a small emitter, and under the current regulations, we are not subject to carbon tax going forward. As long as the feds don't reinstate federal fuel tax. At that time, we potentially would be impacted, but that's not anticipated at this point in time. Going forward, we've made no allowances for carbon tax, as we are not taxable under that program right now.

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

Thanks, Terry. Thank you to everybody for all the great questions. We really appreciate that. It makes these webcasts a lot more interesting for us and hopefully also for you, as opposed to just reading our press release. You know you can reach us at any time, so if there's any further questions that you want answered, you want to talk to any one of us, just reach out. We're happy to chat with you. We continue to believe that we're positioned ourselves well going into this winter and into 2027. We're looking forward to drilling another Glauconite well. Until next quarter, thank you very much. Thanks for those of you that are shareholders. Thank you very much for your support. We very much appreciate it. Have a good day.

Participants

Executives

• Phil Hodge, CEO and President
• Terry McNeill, COO
• Kris B. Zack, CFO