CALGARY, ALBERTA--(Newsfile Corp. - November 4, 2026) - Tenaz Energy Corp. ("Tenaz", "We", "Our", "Us" or the "Company") (TSX: TNZ) is pleased to announce financial and operating results for the third quarter of 2026, production and capital guidance for 2027, and long-range plan.

The related unaudited interim condensed consolidated financial statements and management's discussion and analysis ("MD&A") are available on SEDAR+ at www.sedarplus.ca and on Tenaz's website at www.tenazenergy.com.

HIGHLIGHTS

• Production averaged 22,122 boe/d⁽¹⁾ in Q3 2026, up 29% from Q2 2026 and 42% from Q4 2025, following an active drilling and workover campaign during the first nine months of this year. Unplanned downtime on our non-operated assets during August reduced Q3 2026 production by 1,100 boe/d.

• Funds flow from operations⁽³⁾ ("FFO") for the third quarter was $131.3 million ($3.97 per basic share) as compared to $74.2 million ($2.26 per basic share) in Q2 2026, with higher production and commodity prices partially offset by realized pre-tax hedging losses of $54.4 million.

• Capital investment⁽³⁾ for the third quarter was $99.0 million, generating free cash flow⁽³⁾ of $32.3 million despite our highest level of organic investment to-date. During the quarter, we brought three wells (1.8 net) on production and participated in the drilling of four wells (1.9 net).

• In the Netherlands, we drilled the K17-FA-103 well (60% working interest ("WI")) in Q2 2026 and tested it in Q3 before temporary shut-in to allow drilling of the next well in the program. The K17-FA-103 well was brought on production late in Q3 at an initial rate of 18.0 MMcf/d (10.8 MMcf/d net).

• The K17-FA-102B sidetrack well (60% WI) was horizontally drilled in Q3 2026, encountering 800 meters of gas-saturated sandstone in a new fault block. Fracture stimulation operations are underway.

• We took delivery of the Triton 10 jackup barge at the end of July under long-term contract. The barge has since completed a workover campaign on L09-FA (50% WI) which delivered initial production of 8.1 MMcf/d (4.0 MMcf/d net), generating a projected payout period of three months at current TTF⁽²⁾ prices.

• The N05-A-02X well (33% WI) at GEMS was brought on production during Q3 2026 and is currently producing 71.0 MMcf/d (23.6 MMcf/d net). Current throughput on the N05-A platform is approximately 165 MMcf/d gross (55 MMcf/d net), continuing to perform at or above our original expectations.

• ONE-Dyas completed drilling operations on the N05-A-Noord Z1X well (32.3% WI) during Q3. The well came in deep to prognosis, encountering sandstone and gas but at saturations deemed too low to be economical. The Noord Z1X wellbore has potential for re-use as a development well in the Diamant prospect or in the N05-A pool, and has been suspended while the rig has repositioned to another platform slot to drill the Diamant exploration well (45% WI). 

• Operating netback⁽³⁾ for Q3 2026 was $104.52/boe, a 51% increase from Q2 2026. This improvement is primarily due to higher European natural gas prices and decreasing unit costs. Unit operating costs continue to improve, decreasing 14% from the prior quarter to $26.47/boe in Q3 2026 as fixed costs are spread over growing production volumes.

• FFO netback for Q3 2026 was $64.50/boe, a 35% increase from Q2 2026. FFO netback takes into account all cash costs, including realized hedging, G&A, interest, and taxes.

• We exited Q3 2026 with net debt⁽³⁾ of $366.1 million, down slightly from Q2 2026 despite an increase in forecasted contingent consideration for the acquisition of NAM Offshore B.V and proceeds used in the share buyback program. This debt level is less than one-times forecasted 2026 FFO at the current commodity strip.

• Net loss of $74.3 million was recorded in Q3 2026, compared to a net income of $89.0 million in Q2 2026. The shift was driven by unrealized losses on derivative instruments, partially offset by increased operational profits from higher natural gas production. A mark-to-market adjustment is recognized each quarter and reflects the change in the fair value of our hedge positions. Higher commodity prices from quarter-to-quarter result in a loss on derivatives.

• We continue to allocate a portion of our free cash flow to our NCIB program. During Q3 2026, Tenaz repurchased 128,800 shares at a weighted average price of $56.60 per share. Since the inception of the program in 2022, we have retired 2.7 million shares at an average cost of $10.33 per share.

• Our Board of Directors has approved a 2027 capital expenditure⁽³⁾ budget of $300 to $350 million. Production guidance for 2027 is 26,000 to 30,000 boe/d, representing year-over-year production growth (at mid-point of guidance) of approximately 40%.

• We have completed a preliminary long-range plan (“LRP”) for Tenaz’ existing assets through 2030. The LRP, which is subject to updates throughout the plan period, incorporates a mix of internally-evaluated and McDaniel-evaluated workover projects as well as drilling prospects identified in the McDaniel reserve and resource reports⁽⁴⁾. Our preliminary LRP indicates the capability to organically increase production up to 40,000 boe/d by the end of 2030. The LRP does not include the impact of potential M&A opportunities which may augment organic growth.

• Year-to-date, Tenaz shares have appreciated 133%. Since the recapitalization in Q3 2021, Tenaz has returned 3,333%, placing Tenaz in the top percentile of all TSX corporate issuers.   

⁽¹⁾ The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. Per boe amounts have been calculated by using the conversion ratio of six thousand cubic feet (6 Mcf) of natural gas to one barrel (1 bbl) of crude oil. Refer to "Barrels of Oil Equivalent" in the "Advisories" section.
⁽²⁾ TTF is the price for natural gas in the Netherlands.
⁽³⁾ This is a non-GAAP and other financial measure. Refer to "Non-GAAP and Other Financial Measures" in the "Advisories" section.
⁽⁴⁾ Reserves and resources evaluated by McDaniel & Associates Consultants Ltd. ("McDaniel") in reports dated March 11, 2026 and effective December 31, 2025.

⁽¹⁾ This is a non-GAAP measure. Refer to "Non-GAAP and Other Financial Measures" included in the "Advisories" section.
⁽²⁾ The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. Per boe amounts have been calculated by using the conversion ratio of six thousand cubic feet (6 Mcf) of natural gas to one barrel (1 bbl) of crude oil. Refer to "Barrels of Oil Equivalent" section included in the "Advisories" section.
⁽³⁾ WTI represents posting price of West Texas Intermediate ("WTI") crude oil.
⁽⁴⁾ WCS represents posting price of Western Canadian Select ("WCS") crude oil.
⁽⁵⁾ AECO is the natural gas price index for Alberta.
⁽⁶⁾ TTF is the price for natural gas in the Netherlands.

PRESIDENT'S MESSAGE

It has been over a year since we closed both the NAM Offshore B.V. (now Tenaz Energy Netherlands B.V. or “TEN”) and GEMS acquisitions, transitioning to an organic growth model in the Dutch North Sea (“DNS”). Since then, our operating team has successfully planned and begun executing a technically challenging investment campaign. Our new operated wells included demanding directional designs, long departures from host platforms, and sophisticated completions and well stimulations. All these wells were completed essentially on time and on-budget, and all achieved their main geologic and reservoir objectives. Similarly, our team rapidly established a barge-based workover program that takes advantage of our existing active and inactive well inventory to achieve particularly high returns on investment. It is early to say definitively, but results to-date suggest that we may be able to replace base production decline at our operated TEN assets for some time just with the workover program. Most importantly, our drilling rig and barge programs have been executed safely and with exceptionally high standards of environmental protection. We are indebted to our Netherlands staff for their creativity and dedication in this successful start to what will be a multi-decade operating era for Tenaz in the DNS.

As a result of these operated efforts plus contributions from GEMS and our Canadian assets, Tenaz delivered record production and funds flow from operations ("FFO") in Q3 2026. Production for the third quarter averaged 22,122 boe/d, representing 29% growth from Q2 2026. Production is up 42% from Q4 2025, which was the first quarter in which both the TEN and GEMS assets were in our portfolio. FFO reached $131.3 million in Q3 2026, up 77% from Q2 2026 and 112% from Q4 2025, despite a realized pre-tax hedging loss of $54.4 million in Q3. FFO significantly exceeded capital investment of $99.0 million in the quarter.

Unit operating costs decreased 14% from the prior quarter to $26.47/boe in Q3 2026, as fixed costs are spread over higher production volumes as we grow. As a result of this improving cost structure and higher European natural gas prices, our Q3 2026 operating netback was $104.52/boe, representing an operating margin of 78% before accounting for realized hedging losses. FFO netback for Q3 2026 was $64.50/boe, a 35% increase from Q2 2026. FFO netback takes into account all cash costs, including realized hedging, G&A, interest, and taxes.

We recorded a net loss of $74.3 million in Q3 2026, compared to a net income of $89.0 million in Q2 2026. The shift was driven by a pre-tax unrealized loss of $285.0 million on derivative instruments, partially offset by increased operational profits from higher natural gas production. A mark-to-market adjustment on derivative contracts is recognized each quarter, reflecting the change in the fair value of our hedge positions. When commodity prices go up from quarter-to-quarter, an unrealized net loss on outstanding derivative contracts results.

Net debt declined slightly to $366.1 million despite an increase to our estimate of future earn-out payments due to a higher commodity price strip. Based on quarterly annualized FFO for Q3 2026, our ratio of net debt-to-FFO stands at 0.7x. We remain undrawn on our $250 million secured revolving reserve based lending facility.

Our growth comes during a period of rising global commodity prices and an environment in which governments are placing greater emphasis on energy security and domestic supply. The TTF Day Ahead benchmark price in Europe averaged approximately €64/MWh in Q3 2026 and reached a multi-year high of €105/MWh last week due to ongoing conflict in the Middle East and concerns over low European natural gas storage levels. Forward prices have also moved higher, which has allowed us to increase our longer-dated hedge position and provide greater cash flow certainty to support our long-term growth plans. We are committed to doing all we can to generate reliable and increasing domestic natural gas supply into the European Union, which imports approximately 60% of its annual consumption (even after counting Norway as a domestic producer). 

Netherlands Activity

Tenaz's Netherlands production averaged 19,771 boe/d in the third quarter, an increase of 36% over the prior quarter. The third quarter benefited from contributions from workovers and new wells executed during the year, including the GEMS N05-A-02X well (33.3% working interest ("WI")) tied-in early Q3 2026, partially offset by unplanned downtime at GEMS and planned maintenance on other non-operated assets.

The N05-A platform at GEMS was offline for approximately ten days in August for unplanned maintenance, impacting our quarterly production by approximately 1,100 boe/d.  In addition, base production at GEMS was impacted by an additional 100 boe/d for the quarter for downtime associated with driving the conductor for the Diamant-Z1 exploration well. Current throughput on the N05-A platform is approximately 165 MMcf/d gross (55 MMcf/d net), continuing to perform at or above our original expectations. On our operated drilling and barge-based workover programs, we had production outages required to conduct those operations that impacted base production for Q3 2026 by an additional 500 boe/d.

We had three drilling rigs running during the quarter: one on our operated DNS assets, one on the ONE-Dyas-operated GEMS asset and one on the Eni-operated K12-G platform. As noted in our Q2 2026 release, the operated K17-FA-103 well (60% WI) was tested early in the third quarter before being temporarily shut-in to facilitate drilling of the K17-FA-102B sidetrack well (60% WI). The K17-FA-103 well (60% WI) was brought on production late in the third quarter at an initial rate of 18.0 MMcf/d (10.8 MMcf/d net). 

The K17-FA-102B sidetrack well (60% WI) was drilled in Q3 2026, targeting a new fault block with a horizontal multi-stage stimulated completion. The well successfully reached a total measured depth of 6,210 meters with a 1,160-meter lateral section in the Upper Slochteren formation, in which we horizontally encountered 800 meters of gas-saturated sandstone. Pressure measurements indicate we penetrated a new fault block. The well has been cased and fracture stimulation operations are underway. This well is anticipated to be on production by the end of the year.

In addition to drilling rig activity, we took delivery of the Triton 10 jack-up barge in the third quarter. Our first workover campaign with the vessel was executed on the L09-FA platform (50% WI) where we completed various production optimization activities. The workover campaign on L09-FA, conducted at a gross cost of €21.4 million, was concluded early in Q4. Initial incremental production rates are 8.1 MMcf/d (4.0 MMcf/d net), with an estimated payout period of approximately three months at current TTF prices. The Triton 10 jack-up barge is secured under a multi-year contract, with an extensive list of workover projects planned over the coming years.

ONE-Dyas completed drilling operations on the N05-A-Noord Z1X well (32.3% WI) prospect to extend the N05-A pool. Following mechanical issues in the original wellbore, the well was sidetracked to the originally-planned target location at a measured depth of 5,160 meters. The targeted Basal Rotliegend sandstone in this well was encountered deeper than predicted. As a result, despite the presence of natural gas in several intervals, gas saturations were not sufficient to warrant completion of the well. The well was drilled at a location with lower seismic quality than typical in the area because of the presence of a Mesozoic graben above the Basal Rotliegend target. Our geologic interpretation is that, due to the lower structural position than predicted by seismic, gas leaked across a fault where the reservoir is juxtaposed against permeable Carboniferous sandstones. The Noord Z1X well has been suspended and is being evaluated for other potential uses, which include sidetracking to a development location either in the N05-A pool or a follow-up development well in the Diamant prospect, contingent on future discovery. We had no reserves booked to the Noord prospect but did carry 3.3 MMboe of net risked Prospective Resource in our year-end 2025 report.

The drilling rig has shifted positions on the N05-A platform and is now drilling the Diamant Z1 well (45% WI). The Diamant exploration prospect is targeting an up-thrown fault block with a lateral seal against the Silverpit shale, dissimilar to the down-thrown Noord block which required lateral seal against the Carboniferous sandstone. The Diamant Z1 well will test a fault seal configuration similar to the N05-A pool and has a seismic bright spot amplitude. Our risk assessment of the Diamant prospect remains at a 72% chance of discovery. Diamant Z1 is a relatively long directional departure from the N05-A platform, with drilling continuing into 2027. 

Eni completed drilling operations on the K12-G5ST2 horizontal development well (12.3% WI) during the third quarter. Completion and first production are expected in Q4 2026. Our non-operated investment program will further increase with commencement of an additional sidetrack well at G14 (22.61% WI) during Q4 2026 following the K12-G5ST2.

Canadian Activity

Production from our Canadian assets averaged 2,352 boe/d in the third quarter. We added one well to our originally-planned Canadian program, drilling and completing an additional multi-lateral horizontal Ellerslie well (0.9 net) during Q3. This well has four open-hole laterals with total reservoir exposure of 6,025 meters. It was brought on late in Q3 and is currently producing at restricted rates as compression is optimized to handle associated gas from this well. 

Commodity Environment

TTF averaged €63.94/MWh ($29.90/Mcf) during Q3 2026, representing a 40% increase over Q2 2026. Prices rose steadily through the third quarter due to the Middle East war and low European natural gas storage levels heading into winter. European Union natural gas storage levels are currently at 74% of storage capacity, compared to a five-year average of 90% for this time of year.  

At present, the TTF benchmark price is approximately €85/MWh ($39.11/Mcf) and remains above €80/MWh ($36.81/Mcf) through the upcoming winter months. We have hedged expected TTF natural gas production for Q4 2026 (72% at an average price of €35.70/MWh ($16.43/Mcf)), 2027 (48% at an average price of €39.50/MWh ($18.18/Mcf)), 2028 (24% at an average price of €38.02/MWh ($17.50/Mcf)) and 2029 (1% at an average price of €35.75/MWh ($16.45/Mcf)). 

WTI crude oil prices averaged US$85.79/bbl for Q3 2026, down 8% from the prior quarter. Like European natural gas, WTI prices rallied towards the end of the third quarter on renewed military action in the Strait of Hormuz and growing concern about continued drawdown of oil inventories. The current WTI price at the time of this report is approximately US$88.50/bbl and remains exposed to geopolitical events. Our WTI price exposure is 43% hedged in Q4 2026 at a level of US$67.64/bbl and 6% for 2027 swapped at US$65.00/bbl.  

AECO natural gas prices averaged $1.57/Mcf for Q3 2026, reflecting seasonal weakness and restrictions related to infrastructure maintenance. For Q4 2026 and 2027, we have hedged 45% and 40% of our AECO exposure at $3.17/Mcf.

2026 Outlook

Despite the outcome of the Noord prospect and unplanned maintenance at GEMS, we expect full year 2026 production to be within our guidance range of 19,500 to 22,500 boe/d, albeit toward the lower end of the range. Production growth rates remain strong, with annual growth for 2026 as compared to 2025 of over 100%. Stripping out acquisition impacts, production for Q3 2026 represents an organic increase of 42% over Q4 2025 in a nine-month time frame. We expect production to continue to grow in Q4 2026.

Given strong commodity pricing and decreasing unit costs, both our drilling and workover programs are highly economic, encouraging us to accelerate capital plans where possible. With our additional Canadian well, higher non-operated capital activity and sidetrack costs at GEMS, our current estimate of 2026 capital investment is $300 to $325 million.

2027 Budget and Guidance

Tenaz's Board of Directors has approved a capital expenditure⁽²⁾ ("CAPEX") budget for 2027 of $300 to $350 million. Production guidance for 2027 is 26,000 to 30,000 boe/d, reflecting year-over-year production growth of approximately 40%.

Our 2027 capital plan includes the drilling of 13 wells (7.2 net), comprised of nine wells (3.7 net) in the DNS and four wells (3.5 net) in Canada, along with multiple workover projects in our DNS assets. Our capital plan allocates approximately 85% of CAPEX to drilling operations and workovers, and approximately 15% to long-lead purchases and facilities projects (primarily offshore compression).  The majority of our planned capital investment in 2027 is on our operated assets. For our non-operated assets, we have budgeted on the basis of discussions to date with our partners, but the program that is ultimately executed may vary from our current expectations.  

In the TEN operated Joint Development Area (“JDA”) and L block areas in the DNS, we plan to drill four (2.0 net) wells using the Shelf Drilling Winner rig, which is secured under contract until 2028. We plan to drill and bring on production development wells at L09-FA-105 (50% WI) and L13-FD-104 (45.6% WI), and one exploration well at L13-Puffin (45.6% WI). In addition, we plan to commence drilling on the L02-FB (60% WI) development well, with first gas in 2028. The budget includes five workover campaigns planned in the L and K block areas within the JDA (45.6% WI). 

Following the Diamant-Z1 exploration well, our budget includes three more wells (1.2 net) at GEMS. The Tanzaniet Oost exploration well (26.1% WI) will be drilled to the west of the N05-A pool. If Diamant-Z1 is a discovery, we expect two additional development wells (0.9 net) to be drilled to develop the Diamant pool. If Diamant is not a discovery, we expect other development or exploration wells to be substituted into the program. In addition, ONE-Dyas will continue to advance GEMS Phase 2, which targets existing discoveries and exploration potential at N04, with FID anticipated in mid-2027 and first gas in 2029. ONE-Dyas continues to pursue opportunities to increase production throughput at the N05-A facility including debottlenecking the existing processing system and adding compression. Our budget includes two new wells (0.5 net) operated by Eni, including finishing the G14-A2ST1 well (22.6% WI) and an additional well at a similar working interest. 

In Canada, we plan to drill four wells (3.5 net), including two Ellerslie wells (1.8 net) and two Rex wells (1.8 net).

We expect our capital program to be more than fully funded by forecasted 2027 FFO based on the current forward strip, with continued allocation of free cash flow to debt reduction and share repurchases. We maintain flexibility in the 2027 capital plan to take advantage of both organic and M&A opportunities that may develop.

Our 2027 budget reflects our growing familiarity with, and confidence in the asset bases we added in 2025 with the TEN and GEMS acquisitions. Our operated drilling program is diversified between development drilling and high-potential but relatively low-risk exploration. In addition, we will execute a diverse workover campaign at TEN. GEMS CAPEX emphasizes high-potential exploration, at similarly high confidence levels to our operated exploration, plus facility work to maintain and potentially increase platform throughput. The legacy non-operated program by Eni is expected to be low-risk development drilling from existing infrastructure. This plan is projected to generate growth in all three components of our Netherlands asset base. We expect modest growth in Canada as well. On a consolidated basis, our forecast is that quarterly production will increase throughout the year, subject to actual results for both planned maintenance and unplanned downtime, with accelerating growth in late 2027.

Long Range Plan

Our 2027 budget allows us to segue to a longer-term look at our company’s potential from organic investment. We have had a number of enquiries from investors and financial intermediaries about our long-range development plans. Construction and description of our long-range plan (“LRP”) is a complex task, involving detailed technical evaluation and multi-year work schedules for the undeveloped wells and contingent and prospective fields in our portfolio. Wherever possible, we employ the assessments of project capabilities as evaluated by our independent engineering reserve and resource evaluator McDaniel & Associates Consultants Ltd. (“McDaniel”). As with other forward-looking statements, please note our investment advisories regarding forward-looking information in this document and risk factors in our annual disclosure when considering our preliminary assessments of our production potential and capital requirements. 
  
The depth and diversity of capital projects in the LRP give us confidence that we have the opportunity to deliver significant organic growth in the coming years. Our preliminary LRP anticipates annual capital spending in the $325 to $450 million range through 2030, with the drilling of 12 to 18 gross wells per year in the Netherlands and Canada. We also plan to execute workover campaigns each year using the Triton 10 jack-up barge which we have secured under contract through the LRP period. These plans also include the development of Phase 2 at GEMS. The preliminary LRP projects production of up to 40,000 boe/d by the end of 2030 from our existing asset base. Additional detail on the preliminary LRP is provided in our Corporate Presentation on our website at tenazenergy.com.

The LRP will be adjusted over time, but we have now established a preliminary work plan which takes us through 2030, guiding our team’s planning and execution strategy for the coming years. We will endeavor to provide greater detail and updating of our LRP as we continue its development and improvement. We run a largely conventional E&P business, and our results will vary considerably with success or failure of individual exploration and development prospects and programs. Moreover, timing of well and facility projects, operational efficiency, industry and macro-economic conditions, and regulatory events, among other factors, will affect our results in any given time period and over the long-term.

We are indebted to an extensive list of stakeholders as we endeavor to realize our potential. We mentioned it earlier, but it is worth repeating that we rely on the hard work and commitment of our employees and consultants in our Netherlands and Canadian businesses. In addition, none of this organic progress would be possible without our suppliers and industry partners. We are also very fortunate to have intelligent government policy, effective regulation, and community support in both countries. Finally, we recognize and value the support that we have always received from our debt providers and shareholders. Thank you to all of these stakeholders as we pursue our primary mission of providing a growing source of domestic energy to the European market.

/s/ Anthony Marino

President and Chief Executive Officer
November 4, 2026

⁽¹⁾ The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. Per boe amounts have been calculated by using the conversion ratio of six thousand cubic feet (6 Mcf) of natural gas to one barrel (1 bbl) of crude oil. Refer to "Barrels of Oil Equivalent" in the "Advisories" section.
⁽²⁾ This is a non-GAAP measure. Refer to "Non-GAAP and Other Financial Measures" in the "Advisories" section.
⁽³⁾ TTF is the price for natural gas in the Netherlands.
⁽⁴⁾ WTI represents posting price of West Texas Intermediate ("WTI") crude oil.
⁽⁵⁾ AECO is the natural gas price index for Alberta.

About Tenaz Energy Corp.

Tenaz is an energy company focused on the acquisition and sustainable development of international oil and gas assets. Tenaz is the largest natural gas producer in the Netherlands and develops crude oil and natural gas at Leduc-Woodbend in Alberta. Additional information regarding Tenaz is available on SEDAR+ and at www.tenazenergy.com. Tenaz's common shares are listed for trading on the Toronto Stock Exchange under the symbol "TNZ".

ADVISORIES

Non‐GAAP and Other Financial Measures

This press release contains the terms funds flow from operations (“FFO”) and capital expenditures which are considered “non-GAAP financial measures”, and operating netback and FFO netback which are considered “non-GAAP financial ratios”. These terms do not have a standardized meaning prescribed by GAAP. In addition, this press release contains the term net debt, which is considered a “capital management measure”, and net debt to FFO which is considered a “non-GAAP financial ratio”. Accordingly, the Company’s use of these terms may not be comparable to similarly defined measures presented by other companies. Investors are cautioned that these measures should not be construed as an alternative to net income (loss) determined in accordance with GAAP and these measures should not be considered to be more meaningful than GAAP measures in evaluating the Company’s performance.

Funds flow from operations ("FFO")

Tenaz considers funds flow from operations to be a key measure of performance as it demonstrates the Company's ability to generate the necessary funds for sustaining capital, future growth through capital investment, and settling liabilities. Funds flow from operations is calculated as cash flow from operating activities plus midstream income and before changes in non-cash operating working capital, decommissioning liabilities settled, and the amortization of deferred financing. Funds flow from operations is not intended to represent cash flow from operating activities. A summary of the reconciliation of cash flow from operating activities to funds flow from operations is set forth below:

⁽¹⁾ FFO per share (basic) is calculated as FFO divided by the weighted average common shares outstanding. FFO per share (diluted) adjusts for the impact of potentially dilutive securities using the treasury stock method.

Capital Expenditures

Tenaz considers capital expenditures to be a useful measure of the Company's investment in its existing asset base calculated as the sum of exploration and evaluation asset expenditures and property and equipment expenditures from the consolidated statements of cash flows that is most directly comparable to cash flow used in investing activities. The reconciliation to primary financial statement measures is set forth below:

Free Cash Flow ("FCF")

Tenaz considers free cash flow to be a key measure of performance as it demonstrates the Company's excess funds generated after capital expenditures for potential shareholder returns, acquisitions, or growth in available liquidity. FCF is a non-GAAP financial measure and is comprised of funds flow from operations less capital expenditures. A summary of the reconciliation of the measure, is set forth below:

Midstream Income

Tenaz considers midstream income an integral part of determining operating netbacks. Operating netbacks assist management and investors with evaluating operating performance. Tenaz's midstream income consists of the income from its associate, Noordgastransport B.V. ("NGT"), and excludes the amortization of fair value increment of NGT that is included in the equity investment on the balance sheet. Under IFRS Accounting Standards, investments in associates are accounted for using the equity method of accounting. Income from associate is Tenaz's share of the investee's net income and comprehensive income:

Net debt

Management views net debt as a key industry benchmark and measure to assess the Company's financial position and liquidity. Net debt comprises long-term debt and non-current contingent consideration, plus current liabilities in excess of current assets, excluding the fair value of derivative instruments and the current portion of lease liabilities included in working capital. In Q3 2026, the Company revised its calculation of net debt to exclude the current portion of lease liabilities, as these obligations primarily relate to future capital activities. Comparative periods have been adjusted to conform to the current period presentation. If negative, the amount is referred to as adjusted working capital.

Net debt to funds flow from operations is a ratio calculated as net debt divided by funds flow from operations. Net debt to annualized funds flow from operations ratio is calculated as net debt divided by funds flow from operations, annualized by multiplying the respective quarter by four or annualizing the nine-month period to a full year, as applicable. Management views these ratios as measures to assess the Company's financial leverage. Funds flow from operations is a non-GAAP measure. Refer to "Funds flow from operations" included in this "Advisories" section.

(1) Funds flow represents the nine months ended September 30, 2026 and the year ended December 31, 2025, respectively.

Operating Netback

Tenaz calculates operating netback on a dollar or per boe basis, as petroleum and natural gas sales less royalties, operating costs and transportation costs, plus midstream income. Operating netback does not include the impact of financial derivatives. Operating netback is a key industry benchmark and a measure of performance for Tenaz that provides investors with information that is commonly used by other crude oil and natural gas producers. The measurement on a per boe basis assists management and investors with evaluating operating performance on a comparable basis.

FFO Netback

FFO netback is FFO on a per boe basis. The measurement on a per boe basis assists management and investors with evaluating operating performance on a comparable basis. 

Per Share Ratios

FFO per share (basic) is calculated as FFO divided by the weighted average number of common shares outstanding. Diluted FFO per share adjusts for the impact of potentially dilutive securities using the treasury stock method.

Barrels of Oil Equivalent

The term barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. Per boe amounts have been calculated by using the conversion ratio of six thousand cubic feet (6 Mcf) of natural gas to one barrel (1 bbl) of crude oil. The boe conversion ratio of 6 Mcf to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. 

Forward‐looking Information

This press release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "budget", "forecast", “guidance”, "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", “potential”, "intends", "strategy" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this press release contains forward-looking information and statements pertaining to: free cash flow and uses thereof; net debt; liquidity; providing reliable domestic natural gas supply to Europe; Tenaz’s inventory of opportunities and projects; capital plans, activities and budget including workover and drilling opportunities and activities; our anticipated operational and financial performance including well performance, estimated production and production growth (including sources thereof); estimated contingent consideration; our 2027 production and capital guidance; share buybacks; commodity prices; hedging; our long-range plan including anticipated CAPEX, drilling and workover activities, future development opportunities and production (and timing thereof); and the Company’s strategy including our organic growth and potential to expand our asset portfolio.

The forward-looking information and statements contained in this press release reflect several material factors and expectations and assumptions of Tenaz including, without limitation: the continued performance of Tenaz's oil and gas properties in a manner consistent with its past experiences; that Tenaz will continue to conduct its operations in a manner consistent with past operations; expectations regarding future development; the general continuance of current industry conditions; the continuance of existing (and in certain circumstances, the implementation of proposed) tax, royalty, tariff and regulatory regimes; expectations regarding future acquisition opportunities; the accuracy of the estimates of the Company's reserves, resources and future net revenue; certain commodity price, interest rate, tariffs, inflation and other cost assumptions; the continued availability of oilfield services; and the continued availability of adequate debt and equity financing and cash flow from operations to fund its planned expenditures.

Tenaz believes the material factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable, but no assurance can be given that these factors, expectations, and assumptions will prove to be correct.

The forward-looking information and statements included in this press release are not guarantees of future performance and should not be unduly relied upon. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements including, without limitation: changes in commodity prices; changes in the demand for or supply of Tenaz's products; unanticipated operating results or production declines; changes in tax or environmental laws, tariffs, royalty rates or other regulatory matters; changes in development plans of Tenaz or by third party operators of Tenaz's interests; increased debt levels or debt service requirements; inaccurate estimation of Tenaz's oil and gas reserve volumes or resources; limited, unfavorable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; a failure to obtain necessary approvals as proposed or at all and certain other risks detailed from time to time in Tenaz's public documents.

The forward-looking information and statements contained in this press release speak only as of the date of this press release and, except as may be required pursuant to applicable laws, Tenaz does not assume any obligation to publicly update or revise them to reflect new events or circumstances.

/NOT FOR DISSEMINATION IN THE UNITED STATES. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW/

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