CALGARY - Topaz Energy Corp. (TSX: TPZ) ('Topaz' or the 'Company') is pleased to provide fourth quarter and annual 2021 financial results, announce an 8% increase to its quarterly dividend and affirm the Company's 2022 guidance estimates.
Select financial information is outlined below and should be read in conjunction with Topaz's consolidated financial statements and related management's discussion and analysis ('MD&A') as at and for the year ended December 31, 2021, which are available on SEDAR at www.sedar.com and on Topaz's website at www.topazenergy.ca.
Fourth Quarter 2021 Highlights
In Q4 2021, Topaz's assets generated record cash flow and free cash flow (FCF)(1) of $68 million and $67 million, respectively. Cash flow and FCF(1) were 34% and 35%, respectively, higher than the prior quarter and each 153% higher than the prior year. On a per share basis, Q4 2021 FCF(1) of $0.49 per share(1)(2) increased 96% from Q4 2020 ($0.25 per share).
Topaz's Board has approved an 8% increase to the Company's quarterly dividend which increases the annual dividend from $0.96 to $1.04 per share, and represents the third dividend increase since the inaugural quarterly dividend was set at $0.20 per share in Q1 2020; representing a 30% cumulative increase to date.
Record Q4 2021 average royalty production of 17,213 boe/d(4) was 14% higher than the prior quarter and 67% higher than Q4 2020. Topaz's oil-focused royalty acquisition strategy has generated Q4 2021 total liquids royalty production of 3,143 bbl/d(4), a 48% increase relative to the prior quarter and a 329% increase relative to Q4 2020.
Topaz closed the acquisition of a newly-created 5% gross overriding royalty interest on Whitecap Resources' working interest in the Weyburn Unit for $188 million in cash, which Topaz estimates will provide a return on invested capital(1) of 14% in 2022, based on estimated 2022 FCF(1) of $26 million(11).
Topaz was added to the S&P/TSX Composite Index, the headline index for Canada represented by the largest companies on the Toronto Stock Exchange, in December 2021.
Expanded the Company's credit facility from $400 million to $700 million(5) and extended the term to December 2025. At December 31, 2021 Topaz had net debt(1) of $234 million, or 0.8x net debt to Q4 2021 annualized cash flow(1).
2021 Annual Highlights
2021 cash flow and FCF(1) of $191 million and $188 million, respectively, were each 114% higher than 2020 ($89 million and $88 million, respectively). On a per share basis(1)(2), 2021 FCF(1) of $1.52 per share was 57% higher than 2020 ($0.97 per share).
Topaz's 2021 total annual average royalty production of 14,103 boe/d(4) increased 39% relative to 2020, which includes a 157% increase, to 1,892 bbl/d(4) of total liquids annual average royalty production.
Topaz invested $945 million in royalty and infrastructure acquisitions, excluding decommissioning obligations(1) during 2021 which increased Topaz's gross royalty acreage 77% and natural gas processing capacity 23%; diversified the Company's infrastructure portfolio through the acquisition of water conservation facilities under a 15 year 100% fixed take or pay, and doubled its corporate tax pools to $1.8 billion which extends the Company's long-term cash tax coverage(3). On current strip pricing(3), the cumulative 2021 acquisitions, excluding decommissioning obligations(1) are estimated to generate a return on invested capital(1) of 16% in 2022 based on the acquired assets' estimated FCF(1) of $149 million(12).
At December 31, 2021, the before-tax net present value of total proved plus probable reserves, discounted at 10 per cent(6), increased 92% to $1.1 billion (2020 - $592 million).
Through strategic partnerships, Topaz has enhanced or established material royalty positions and reliable infrastructure revenue streams in the most economic plays across the WCSB. Topaz's asset portfolio provides embedded organic growth which requires no additional capital by Topaz, as well as significant Excess FCF(1) for self-funded M&A growth after distributions of $1.04 per share (2022 estimated payout ratio(1) 55%).
ABOUT THE COMPANY
Topaz is a unique royalty and infrastructure energy company focused on generating FCF(1) growth and paying reliable and sustainable dividends to its shareholders, through its strategic relationship with Canada's largest and most active natural gas producer, Tourmaline, an investment grade senior Canadian E&P company, and leveraging industry relationships to execute complementary acquisitions from other high-quality energy companies, while maintaining its commitment to environmental, social and governance best practices. Topaz focuses on top quartile energy resources and assets best positioned to attract capital in order to generate sustainable long-term growth and profitability.
The Topaz royalty and energy infrastructure revenue streams are generated primarily from assets operated by natural gas producers with some of the lowest greenhouse gas emissions intensity in the Canadian senior upstream sector, including Tourmaline, which has received awards for environmental sustainability and conservation efforts. Certain of these producers have set long-term emissions reduction targets and continue to invest in technology to improve environmental sustainability.
Topaz's common shares are listed and posted for trading on the TSX under the trading symbol 'TPZ' and it is included in the S&P/TSX Composite Index. This is the headline index for Canada and is the principal benchmark measure for the Canadian equity markets, represented by the largest companies on the TSX.
Contact:
Tel: (587) 747-4830
TOPAZ ENERGY CORP. 
