Topaz Energy Corp. (TPZ.TO) | Investment Case

1. Company Snapshot

1.a. Company Description

Topaz Energy Corp.operates as a royalty and energy infrastructure company.It operates in Royalty Production and Infrastructure segments.

The company holds gross overriding royalty interests on approximately 5.3 million gross acres of developed and undeveloped lands.It is also involved in the natural gas processing and water management infrastructure activities.The company was formerly known as Exshaw Oil Corp.

and changed its name to Topaz Energy Corp.in November 2019.Topaz Energy Corp.

was incorporated in 2006 and is headquartered in Calgary, Canada.

Show Full description

1.b. Last Insights on TPZ

Topaz Energy's recent performance was driven by strong Q3 2025 earnings, marked by record production and strategic acquisitions. The company's royalty production grew 15% year-over-year, with Clearwater production reaching a new record. A $200.8 million equity raise funded expansion, including the acquisition of gross overriding royalty interests from Tourmaline Oil, expanding its Montney footprint. Analysts at Tudor, Pickering, Holt maintained a buy rating, citing a price target of C$29.00. The company's growth prospects are bolstered by a robust growth forecast, with earnings expected to climb 26.7% per year.

1.c. Company Highlights

Last Price	28.91
Change Percentage	0.31%
Open	28.75
Previous Close	28.82
Market Cap ( Millions)	4447
Volume	426291
Year High	29.17
Year Low	21
M A 50	26.15
M A 200	25.15

FCF Yield	-1.55%
Dividend Yield	4.65%
ROE	5.03%
Debt / Equity	41.85%
Net Debt / EBIDTA	162.85%
Price To Book	3.53
Price Earnings Ratio	70.44
Price To FCF	-64.63
Price To sales	13.47
EV / EBITDA	15.38

2. Topaz Energy Corp's Q3 2025 Earnings: A Strong Performance

Topaz Energy Corp reported a robust financial performance in Q3 2025, with revenue reaching $76.4 million. The company's cash flow and free cash flow stood at $74.8 million and $73 million, respectively, representing a 7% per share increase over the prior year. The free cash flow margin expanded to 95% from 88% last year, driven by lower operating costs and a 24% reduction in the effective borrowing rate. Earnings per share (EPS) came in at $0.1, slightly below estimates of $0.1012.

Publication Date: Nov -07

                                    📋 Highlights
                                    15% Royalty Production Growth:
                                                Achieved 21,600 BOE/day with record heavy oil production at 3,400 barrels per day.
Revenue Composition:
                                                Generated $76.4M, with 49% from crude/oil royalties, 20% from gas/NGLs, and 31% from infrastructure (99% utilization).
Free Cash Flow Margin Expansion:
                                                95% margin ($73M FCF) driven by 24% lower borrowing rates and reduced operating costs, up from 88% in 2024.
Drilling Activity Surge:
                                                161 gross wells drilled, 184 wells commissioned, with $500M–$600M in operator development capital.
Dividend and Hedging Strategy:
                                                Paid $52.3M ($0.34/share) dividends; hedged 30% of Q4 natural gas and oil/liquids production.

                                

Operational Highlights

The company's operational performance was equally impressive, with 15% royalty production growth to 21,600 BOE per day and record heavy oil production of 3,400 barrels per day. The infrastructure assets achieved a 99% average daily utilization, with operators investing $500 million to $600 million in development capital. Drilling activity remained strong, with 161 gross wells drilled and 184 total gross wells brought on production.

Financial Flexibility and Guidance

Topaz Energy Corp is well-positioned to exit 2025 with net debt between $500 million and $510 million and a payout ratio at the lower end of the 60% to 90% targeted range, providing financial flexibility for acquisition growth. The company has reconfirmed its 2025 guidance estimate ranges and distributed $52.3 million in quarterly dividends, or $0.34 per share. As Marty Staples, President and CEO, stated, the company continues to see a lot of opportunity in the landscape, but will be interested in participating in deals that fit their strategy.

Valuation and Growth Prospects

With a P/E Ratio of 61.84 and an EV/EBITDA of 13.7, the market appears to be pricing in a certain level of growth for Topaz Energy Corp. Analysts estimate next year's revenue growth at 23.2%, which may justify the current valuation to some extent. However, the Dividend Yield stands at 5.3%, providing a relatively attractive return for income investors. The company's ROE of 5.03% and ROIC of 11.49% indicate a decent return on equity and invested capital, respectively.

3. NewsRoom

Topaz Energy Corp (TPZEF) Q3 2025 Earnings Call Highlights: Record Production and Strategic ...

Nov -11

Source:

Topaz Energy Corp. Beat Analyst Estimates: See What The Consensus Is Forecasting For Next Year

Nov -07

Source:

Topaz Energy (TSX:TPZ) Margin Decline Challenges Bullish Outlook Despite High Growth Forecasts

Nov -05

Source:

Topaz Energy Kept at Buy at TPH Following Q3 Results; Price Target at C$29.00

Nov -04

Source:

Topaz Energy Posts Higher Third-Quarter Profit, Revenue; Full-year Outlook Reaffirmed

Nov -03

Source:

TOPAZ ANNOUNCES THIRD QUARTER 2025 FINANCIAL RESULTS INCLUDING 15% ROYALTY PRODUCTION GROWTH AND NEW RECORD CLEARWATER PRODUCTION

Nov -03

Source:

How Topaz Energy’s CA$200 Million Equity Raise (TSX:TPZ) Is Shaping Its Growth and Income Outlook

Oct -10

Source:

Tourmaline Oil Cuts Topaz Stake in a $200-Million Bought-Deal Secondary Offering

Oct -08

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.44%)

6. Segments

Royalties

Expected Growth: 6%

Topaz Energy Corp.'s 6% royalty growth is driven by increasing oil and gas production, rising commodity prices, and strategic acquisitions. Additionally, the company's focus on optimizing operations, reducing costs, and expanding its asset base have contributed to the growth. Furthermore, favorable regulatory environments and growing demand for energy resources have also supported the royalty income growth.

Infrastructure

Expected Growth: 8%

Topaz Energy Corp.'s 8% growth in Infrastructure is driven by increasing demand for midstream services, strategic acquisitions, and expansion into new markets. Additionally, investments in digitalization and technology enhancements improve operational efficiency, reduce costs, and increase capacity utilization, further supporting growth.

7. Detailed Products

Fuel and Lubricants

Topaz Energy Corp. offers a range of fuel and lubricant products, including gasoline, diesel, jet fuel, and lubricants for industrial and commercial use.

Commercial Fuels

Topaz Energy Corp. provides commercial fuels, including diesel, gasoline, and alternative fuels, to businesses and organizations.

Home Heating Oil

Topaz Energy Corp. offers home heating oil for residential customers, providing a reliable and efficient source of heat during the winter months.

Agricultural Fuels

Topaz Energy Corp. supplies specialized fuels and lubricants to the agricultural industry, supporting farmers and agricultural businesses.

Marine Fuels

Topaz Energy Corp. provides marine fuels and lubricants to the marine industry, supporting commercial and recreational vessels.

Aviation Fuels

Topaz Energy Corp. supplies aviation fuels and lubricants to airports, airlines, and general aviation customers.

8. Topaz Energy Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Topaz Energy Corp. operates in a industry where substitutes are available, but they are not a significant threat to the company's operations.

Bargaining Power Of Customers

Topaz Energy Corp. has a diverse customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

Topaz Energy Corp. relies on a few key suppliers for its operations, which gives them some bargaining power.

Threat Of New Entrants

The energy industry is highly regulated, and new entrants would face significant barriers to entry, but the threat is still present.

Intensity Of Rivalry

The energy industry is highly competitive, and Topaz Energy Corp. faces intense rivalry from established players.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	23.95%
Debt Cost	6.45%
Equity Weight	76.05%
Equity Cost	6.45%
WACC	6.45%
Leverage	31.49%

11. Quality Control: Topaz Energy Corp. passed 5 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Western Midstream Partners

A-Score: 7.1/10

Value: 5.1

Growth: 6.6

Quality: 7.2

Yield: 10.0

Momentum: 5.0

Volatility: 9.0

1-Year Total Return ->

Topaz Energy

A-Score: 6.7/10

Value: 3.4

Growth: 8.1

Quality: 6.5

Yield: 9.0

Momentum: 3.5

Volatility: 9.7

1-Year Total Return ->

DT Midstream

A-Score: 6.6/10

Value: 3.2

Growth: 6.0

Quality: 6.5

Yield: 7.0

Momentum: 8.5

Volatility: 8.3

1-Year Total Return ->

Plains GP Holdings

A-Score: 6.6/10

Value: 8.1

Growth: 3.6

Quality: 3.9

Yield: 10.0

Momentum: 4.5

Volatility: 9.3

1-Year Total Return ->

Plains All American Pipeline

A-Score: 6.5/10

Value: 7.8

Growth: 3.6

Quality: 4.5

Yield: 10.0

Momentum: 4.0

Volatility: 9.0

1-Year Total Return ->

Frontline

A-Score: 5.6/10

Value: 4.9

Growth: 8.8

Quality: 5.3

Yield: 9.0

Momentum: 1.5

Volatility: 4.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

32.39%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.45%

Topaz Energy Corp. - CA89055A2039

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on TPZ

1.c. Company Highlights

Higher Growth

Expensive

Less Volatile

Earnings Miss

Earnings Beats

Revenues Miss

Strong Momentum

Revenues Beats

2. Topaz Energy Corp's Q3 2025 Earnings: A Strong Performance

Operational Highlights

Financial Flexibility and Guidance

Valuation and Growth Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.44%)

6. Segments

Royalties

Expected Growth: 6%

Infrastructure

Expected Growth: 8%

7. Detailed Products

Fuel and Lubricants

Commercial Fuels

Home Heating Oil

Agricultural Fuels

Marine Fuels

Aviation Fuels

8. Topaz Energy Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Topaz Energy Corp. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

28.91$

Current Price

28.91$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA