Cavvy Energy Ltd. (“Cavvy” or the “Company”) (TSX:CVVY) is pleased to announce the release of its second quarter 2025 financial and operating results. The Company produced 26,064 boe/d and generated Net Operating Income1 (“NOI”) of $26.5 million during the second quarter of 2025. Management’s discussion and analysis (“MD&A”) and unaudited interim condensed consolidated financial statements and notes for the quarter ended June 30, 2025 are available at www.cavvyenergy.com and on SEDAR+ at www.sedarplus.ca.

Darcy Reding, President and CEO stated, “Growing shareholder value remains the top priority for our team. Compared to the second quarter of 2024, and aligned with our strategic objectives, we grew third party processing volumes and revenue by over 120% and continued to optimize our business, including by keeping certain dry gas producing areas shut-in because they are uneconomic at current natural gas prices. Our continuing focus on lowering our debt resulted in net debt reduction of $18.6 million, to $166.9 million. As we head towards the end of 2025 our team remains focused on debt reduction, continuous improvement to our cost structure, filling our gas processing facilities, preparing for the expiration of a long-term fixed price sulphur marketing agreement on December 31, 2025, and evaluating opportunities for growth.”

Q2 2025 HIGHLIGHTS

• Generated NOI of $26.5 million ($0.09 per basic and fully diluted share) and Funds Flow from Operations1 of $14.5 million ($0.05 per basic and fully diluted share).
• Reduced Net Debt1 by $18.6 million from Q1 2025 to $166.9 million.
• Reduced operating expenses by $12.6 million (24%) compared to Q2 2024 to $40.4 million, reflecting both the shut-in of uneconomic production and the continued reduction of operating cost structure.
• Increased third-party processing volumes by 66.0 MMcf/d (123%) compared to Q2 2024 to 119.8 MMcf/d. This yielded higher third-party processing and marketing revenue of $9.6 million, an increase of $5.4 million (129%) to compared to Q2 2024.
• Produced 26,064 boe/d (81% natural gas), down 16% from Q2 2024 mainly due to the voluntary shut-in of approximately 9,000 boe/d of uneconomic dry gas production from Q3 2024 through Q2 2025.
• Completed corporate rebranding to Cavvy Energy Ltd. on May 12, 2025, capping our strategic pivot to affirm our identity as a western Canadian based energy company.

OUTLOOK

Management’s near-term priority remains strengthening our balance sheet while safely and responsibly operating our assets. Delivering on this priority requires continued focus on attracting incremental third-party volumes, implementing cost reduction initiatives, optimizing infrastructure, and executing non-core asset dispositions to maintain profitability during all periods of the commodity cycle. Our long-term strategy requires continuous improvement in the business while identifying opportunities to generate growth for our shareholders.

While guidance remains unchanged at this time, management expects 2025 NOI at or above the high end of the guidance range.

Specific priorities for 2025 are:

• Sustain a safe and regulatory compliant business
• Minimize facility outages to maximize sales and processing revenue
• Capture opportunities to grow our third-party gathering and processing business
• Meaningfully reduce operating expenses to improve corporate netback
• Deliver attractive ROI on value adding optimization projects included in the 2025 capital program
• Reduce long term debt to improve financial flexibility

Our ongoing priority to grow third-party gathering and processing revenues at our operated facilities has yielded growth in processed volumes at the Caroline Gas Plant over the last four quarters, reflecting strong demand and increased utilization. As a result, third-party processing revenues are forecasted to exceed management’s expectations for the year.

The legacy fixed price sulphur contract, entered into in 2019, expires on December 31, 2025. Under this contract, the Company receives a fixed price of approximately $6/tonne for the majority of its sulphur production capability of approximately 1,400 tonnes per day. On January 1, 2026, the Company will receive market price for all sulphur production, less normal deductions for transportation, handling, and marketing. The expiration of this contract represents a significant potential revenue opportunity beginning in 2026. As of August 12, 2025, the spot west coast sulphur price was US$252.50/tonne, prior to processing, transportation and marketing costs.

Due to the current outlook for North American natural gas prices, Cavvy is not planning to resume drilling operations in 2025, although may participate in a low working interest, non-operated, liquids rich gas drilling prospect in Central AB. The Company will only develop its portfolio of high impact conventional Foothills drilling opportunities once natural gas prices sustainably recover and the Company has achieved its deleveraging target.

HEDGE POSITION

Cavvy hedges to mitigate commodity price, interest rate and foreign exchange volatility to protect the cash flow required to fund the Company’s operations, capital requirements and debt service obligations, while maintaining exposure to commodity price upside. Cavvy continues to execute its risk management program governed by its hedge policy and in compliance with the thresholds required by senior lenders.

The Company has 110,000 GJ/d of its 2025 natural gas production hedged at a weighted average fixed price of $3.32/GJ, and 1,679 bbl/d of its 2025 condensate production hedged with a weighted average floor price of CAD$84.42/bbl and a weighted average ceiling price of CAD$92.32/bbl. The Company’s aggregate hedge position for 2025 totals 19,055 boe/d, or approximately 80% of the production guidance range.

As of June 30, 2025, the Company is hedged in accordance with the requirements of its senior loan agreements. The discounted unrealized gain on the Company’s hedge portfolio at August 12, 2025 was approximately $52.5 million using the forward strip on August 11, 2025.

Source: CAVVY ENERGY