Pine Cliff Energy Ltd.

Thanks, Chris. Thanks for those joining in and for those who will be listening on the replay that will be on our website.

As we've been doing on these webcasts in the past, our intent is not to reread the President's message or the press release that you've already got access to. Many of you already received my quarterly e-mail also that went out last night, which focuses a bit more on the macro, how we see the environment.

We received several questions last night, and so I think we'll work through those. But if you've got any other questions, please send them along as we're speaking, and we'll be happy to address them.

One of the -- probably the most questions I got last night and this morning have been just looking for a little bit more clarity on our Glauc well that we drilled, and we totally understand the curiosity around that because we haven't done any drilling for a couple of years. Everybody is well aware of how much we think of that area and that we're very positive and that we've actually increased the number of Glauc locations that we have in that area to now be in 22 net locations.

And for a company of our size, that's significant because these locations are highly valued. That being said, anyone who's been following Pine Cliff or has been a shareholder of ours for some time knows that we're not a neon light type of company, as I sometimes refer to it.

We're not going to be out there with the 24-hour type IP rates. We want to make sure we're giving the market a very clear picture of the well.

Maybe what I'll do is I'll hand this over to Terry and let him give you a bit more detail on the well. But again, we're not intending to give a lot of production information until we know that we have a more consistent production in history.

Thanks, Phil. Good morning, folks.

Yes, with regards to the well itself, execution went well, drilled ahead of schedule. Overall costs came in consistent with our expectation.

The well has been on production for almost 2 weeks now, and it's still in very, very early cleanup. So really hasn't reached a stabilized rate.

We're quite encouraged by the early results, but it's really too soon to draw any firm conclusions on any long-term productivity or performance. So we keep an eye on it regularly.

And that's probably the best update we can give at this time.

Thanks, Terry. Yes, our intent will be to -- once we do have a consistent longer-term production history to be able to update the market at that time.

But as Terry said, we're quite encouraged by it. And so -- but we just don't want to be in a case where we're giving out information that's either positive or negative on the results.

It's just too early, it's too early to say. One question we did get last night was around the infrastructure spend in Q4 around that well.

So the 4-23 well is the Glauc well that we drilled in December and brought on in mid-February. At the time, we also put in a sales pipeline and other infrastructure that not only assisted getting the production from that well on but also will be able to be utilized for other wells in the area.

So we're pretty happy with where the costs came in at. We're essentially on budget for what we expected to do in that area for both the well and the infrastructure, and are well set up for -- as we look at the back half of this year, I mean, we've got right -- our intent would be to go back to drilling in the Central Alberta area and the Glauconite wells later this year.

But we haven't -- like we say, the flexibility that we have is something that's, I think, an advantage. Pricing is -- in AECO is starting to strengthen here over the last couple of weeks.

That's a good thing. We'll see how that plays out through the summer.

Our plan would be, if we are going to drill and that's our intent, we will be looking at kind of Q3, Q4 as to when we go back to the Sundre area. One of the questions I got, we've had several questions around the data center update.

And so again, those of you that follow the Pine Cliff story know that we announced, we are, I think, the first natural gas producer to announce an arrangement with a data center in our Central Alberta. That has not -- I mean, we're -- let me back up.

We are a gas provider for all of these types of projects. And so in that situation, that group that we're dealing with seems to be very close to finishing their financing.

But it is not within our control as to -- for them to get the final financing put in place so that they can launch construction on the site. There, to date, has been no construction started on the site, but we're still encouraged that, that's going to happen here in the next couple of quarters.

And so that's still something that we're working very closely on. In the meantime, we've had a lot of interest on other sites that we've got in the Province of Alberta and even in Saskatchewan about data centers and about power generation in general for various uses.

We continue to talk to all groups about this. I mean our goal is really to try to get a premium price for the molecules that we produce.

And how that gets -- how we do that and where it gets used and how it gets used, that's all part of these discussions because it kind of varies among the parties. But it's -- our goal would be to -- for the same production that we have today to be able to get a more premium pricing on it.

And so those, we will -- as projects get put in place, we'll update the market. The fact that we've got as many groups interested in some of the sites that we have, which are, we think, are very conducive to these types of projects where they've got good natural gas, they've got fiber availability in several of the sites we own the land.

So therefore, it could be co-located with our existing industrial facilities. So there's a lot of reasons why we think that this is an area that has got potential for Pine Cliff.

But it's a slow -- everybody is figuring out the regulatory process. Everybody is -- again, a lot of these groups are getting their financing put in place.

The Province of Alberta has announced that they want to attract $100 billion of data center development to the province, which is great. And there's been a lot of announcements.

I referred to a lot of them in my e-mail that you would have received last night, if you're on the e-mail list. But there's only so many projects that actually have started construction.

And again, that's not surprising. These are, in many cases, multibillion dollar type projects.

And so there's a lot of steps that need to be done before they're actually going to break ground. That said, it's quite encouraging on how much activity there is in this area.

Another question received, got a couple of people ask me about kind of what's the impact of the European situation and with the Iran war. Right now, all of the natural gas that can come out of North America really is already allocated.

In other words, the LNG capacity, that's what prohibits us from sending more gas over to Europe when there's clearly a strong demand right now for gas in Europe. Pricing has gone back over $12 an Mcf, whereas here in Canada, it's at $2 an Mcf.

That arbitrage really can't get closed without more LNG export capacity. And there's lots of -- as many of you know, Canada, the LNG Canada is now well on its way to getting its Phase 1, reaching its capacity of 2 Bcf a day.

That's great. Hopefully, we'll see a positive investment decision on Phase 2 sometime in '26.

That will take it to, hopefully, at 4 Bcf a day. There's other projects underway.

But in the really short term, there's really nothing that the North American producers or the North American LNG can do to send this -- to send more gas to Europe. So I think the issue that the Europeans are having is right now with the Strait of Hormuz shut in, a lot of LNG that's coming out of Qatar, a lot of other -- the supply chain for LNG has been disrupted.

And therefore, there's a concern that they're not going to be able to put gas into storage, not so much for this winter because we're already kind of through this winter. It's about getting ready for next winter because they had a fairly cold winter.

And so their storage was depleted. And now if they don't -- aren't able to fill it, there's going to be a real panic on -- for natural gas in Europe for next year.

And you can see that already. There were some headlines this morning about Putin threatening that he could cut off natural gas to Europe if they don't allow oil and natural gas exports, if there's any kind of embargo put on Russia.

That's a significant threat because the European nations still use a lot of Russian gas. They don't use as much as they did before, but they still use a lot of Russian gas.

So there's a lot of dynamics. What it does do is that -- and there was a piece that came out this morning, just looked at the chart about how many new LNG projects have been announced.

You'll see in our presentation, all the LNG projects that are under -- that are currently in operation and those ones under construction. Well, there's another wedge on top of that, which is new announced production and future capacity builds on LNG.

That would take it to well beyond 40 Bcf a day coming out of North America, which is a massive number. Today, that number is around 20 Bcf a day.

And that's been a huge increase from where it's at. So I think all of this global dynamic pricing really does have an impact on the future viability of more LNG projects coming on because you're getting -- this is why our Prime Minister is traveling around the globe right now.

It's also why we're seeing more and more requests for Canadian energy around the LNG. So the one thing I would say about the impact of the war, I mean when we saw oil prices, the spot price is $78, $79 this morning.

You'll see in our financial statements that about every dollar increase in WTI equates to about a $1.4 million increase in annual cash flow to us. So we are Pine Cliff even though we are 80% gas.

That move in WTI moving oil prices does have an impact on our cash flow statements of a pretty material nature. I think the only other question that I kind of got from last night was just on our hedging.

I think our hedging is pretty well set out. Kris has done a good job of -- and it's in our press release.

You can see that we're fairly well hedged going into '26, protecting the summer prices. But also, like I say, locking in some pretty -- some prices that we're pretty comfortable going forward.

I don't know, Kris, if you want to comment just generally on how we kind of look at hedging going forward?

I would just only add that we'll continue to hedge where possible to continue to protect our cash against near-term volatility. So again, just to reiterate what's in the press release, 37% of our gross natural gas production is hedged at an average price of around $3.19 for 2026 and around 31% of our crude oil production at around USD 63.45.

Thanks, Kris. So I think that covered all the major questions that we've received either this morning or last night.

I mean, you've always got access to us if anybody wants to talk further. It's been a challenging quarter because it's Q4.

As you saw in the numbers, it was actually pretty good. AECO was moving up nicely.

That has a big impact. We're obviously highly correlated to AECO price moves.

Q1, AECO was -- it came down, and the reasons for that was primarily because of the warm weather in Western Canada, but also the LNG Canada delays because there were some technical issues. But as that ramps back up, as we head into the back half of this year, where we're going to hopefully see LNG Canada back to kind of get to their capacity around 2 Bcf a day.

There's a lot of reasons for us to be positive. And our goal will be to continue to kind of allocate capital to the best we can, to both continue to lower our debt, which is something that we think that just makes us more flexible going forward for potential opportunities, but also to continue to finance the drilling program because we think having that such strong locations that can deliver such positive returns, that's something we should be allocating capital towards.

And all in the backdrop of all of that, we continue to keep the dividend rolling. I mean very proud of the fact that a company of Pine Cliff's size has been able to pay over $100 million of dividends, which is almost $0.30 a share since we started the program in summer of -- sorry, summer of '22.

So okay. Well, if there's no further questions, we won't take any other time away from you.

Thank you very much for your attention and for your ongoing interest in Pine Cliff. Have a good day.