They bought a royalty. They did not spud a well
Topaz (TSX: TPZ) reported second-quarter 2026 results on July 27. Royalty volumes averaged 24,233 boe/d, up 9 percent from a year earlier, including record liquids of 7,178 barrels a day. Year-to-date was 24,420 boe/d. Royalty revenue was $88.9 million, up 52 percent. Processing revenue was $20.7 million. Total revenue and other income was $111.2 million: 66 percent liquids royalties, 13 percent gas royalties, 21 percent infrastructure. Cash flow was $88.4 million, or $0.57 a share, after $10.2 million of current tax. Free cash flow was $86.6 million. The dividend was $0.35, a 61 percent payout. Excess free cash flow was $32.4 million. Net debt was $497.4 million, 1.2 times annualized EBITDA.
On June 30 it closed a tuck-in across 0.3 million gross acres in NEBC Montney and Deep Basin for $38.7 million cash, funded on the credit line. The company says those lands carry more than 500 gross future drilling locations. That is inventory talk. It is not 2026 volumes. Operators drilled 160 gross wells (6.6 net) on Topaz acreage in the quarter, 22 percent of WCSB activity on the company's count: 78 Clearwater, 40 Montney, 22 Deep Basin. About 126 gross wells came on. Third-quarter talk is 26 to 31 rigs on the royalty lands.
Guidance went up a sliver. Debt went up with the cheque
Annual royalty guidance is now 23,900 to 24,300 boe/d, from a 23,900 point estimate. Infrastructure processing revenue is still $93 million. The dividend is still about $215 million, $0.35 payable September 29. Exit net debt before more deals is $435 million to $440 million, up from a $407 million estimate, because they spent the $38.7 million. About $0.5 billion of credit was still available on July 27.
Neutral read
TPZ is on the listed royalty list. Banks were skipped. 24,233 boe/d and $38.7 million are the facts. Write the 500 locations as undeveloped royalty, not as Topaz production. Watch whether the new acres actually get drilled, whether 24,300 boe/d is a high-end print or a miss, and when 1.2 times starts to roll off after the tuck-in.