What Tamarack Valley Energy (TVE) Said on Its Q3 Earnings Call

Tamarack Valley Energy TSE: TVE reported third-quarter results that management said reflected its first full quarter as a Clearwater-focused producer following the June disposition of its Charlie Lake assets. The company also highlighted its pending all-stock acquisition of Headwater Exploration, a transaction expected to create a combined company with a roughly C$10 billion market capitalization and production exceeding 80,000 barrels per day.

Chief Executive Officer and Founder Brian Schmidt said strong operations and elevated commodity prices during 2026 generated substantial free cash flow, allowing the company to accelerate drilling and waterflood development while increasing shareholder returns through dividends and share repurchases.

Third-Quarter Financial Results

Chief Financial Officer Kevin Johnston said Tamarack produced more than 55,000 barrels of oil equivalent per day from its Clearwater operations during the third quarter, representing a 16% increase from the prior year.

• Funds flow totaled C$214 million in the third quarter.
• Free funds flow was C$92 million for the quarter.
• Year-to-date free cash flow reached C$375 million, or C$0.78 per share.
• Third-quarter capital investment totaled C$120 million, with spending heavily focused on waterflood expansion.

The company’s 2026 capital program is trending toward the high end of its C$470 million guidance range, Johnston said. The increase reflects accelerated development spending in response to higher commodity prices, as well as the consolidation of Headwater’s capital investments from mid-November through year-end.

Tamarack repurchased nearly 16 million common shares for C$190 million year to date. Since beginning its normal course issuer bid in 2024, the company has reduced its common share float by more than 15% at a weighted average repurchase price of C$5.80 per share, according to Johnston.

Following the Charlie Lake divestiture, Tamarack increased its quarterly dividend by 25% to C$0.05 per share. Upon closing the Headwater acquisition, the company intends to raise the quarterly dividend by a further 20% to C$0.06 per share, equivalent to C$0.24 annually.

Waterflood Expansion Supports Production Outlook

President Steve Buytels said the company’s waterflood program has continued to outperform expectations. Tamarack estimates that incremental oil production from water injection now totals 10,000 barrels per day, or 18% of its overall production.

Buytels said the additional recovery is lowering finding and development costs, reducing sustaining capital requirements and lowering breakeven prices. The waterflood results contributed to higher standalone Tamarack production guidance for 2026, which partially offsets the effect of the Headwater transaction closing later than initially expected, in mid-November.

Tamarack exited the third quarter injecting 60,000 barrels per day of water across its assets and reaffirmed its legacy Tamarack year-end injection target of more than 70,000 barrels per day. Following the Headwater acquisition, the company expects to exit 2026 injecting more than 100,000 barrels per day.

“2026 injection becomes 2027 oil production,” Buytels said.

The company also reported encouraging results from a South Clearwater waterflood pilot, where oil uplift exceeded 100%. The pilot used an existing disposal-well facility and converted an old producing well into an injector, Buytels said in response to an analyst question.

Management said the initial pilot was not situated in what it considers the most optimal waterflood pattern. Tamarack has identified other locations that it believes are better positioned for additional development and expects to add another waterflood pilot in the area later in the fourth quarter. Further details on South Clearwater plans may be provided alongside the company’s upcoming budget.

Headwater Deal and Balance Sheet Position

Tamarack expects the Headwater acquisition to create what Schmidt described as the only publicly traded pure-play Clearwater producer. Management said the combined business would benefit from expanded drilling and waterflood inventory, operating and capital synergies, and increased scale across the Clearwater play.

The transaction is expected to close shortly after a November 18 shareholder vote. Tamarack plans to release its 2027 budget at that time, along with an update on integration activities and anticipated synergies.

Johnston said Tamarack entered the fourth quarter with C$875 million of undrawn credit capacity and C$540 million of cash. After the Headwater acquisition, the company expects to end the year with more than C$50 million of net cash and C$1.2 billion of available funding.

During the question-and-answer session, Buytels also discussed the company’s planned Trans Mountain Expansion pipeline capacity beginning early next year. He said the arrangement provides transportation to the West Coast and is intended to diversify Tamarack’s access to markets. However, he said it was difficult to quantify the expected benefit to realizations amid volatility in freight costs and other market variables.

Schmidt said Tamarack’s Clearwater asset base provides an unusual opportunity to grow production while reducing sustaining capital requirements. He said management remains focused on profitable production growth, share buybacks, base dividends and balance-sheet strength.

About Tamarack Valley Energy (TSE:TVE)

Tamarack Valley Energy Ltd. engages in the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids in the Western Canadian sedimentary basin. It primarily holds interests in Cardium light oil plays in Wilson Creek/Alder Flats/Pembina, and Garrington and Lochend areas in Alberta; Viking light oil resource plays in Redwater and Westlock in Alberta, as well as in the Consort area of southeast Alberta and Hoosier area of southwest Saskatchewan; Barons Sands light oil plays located in the Penny area of Southern Alberta; and heavy oil properties located in Hatton area of Saskatchewan.

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