Disseminated on behalf of Pine Cliff Energy Ltd.

A global appetite for cleaner-burning energy is reshaping the natural gas landscape, with Canada poised to make its long-awaited debut on the world stage as a liquefied natural gas exporter.

The launch of LNG Canada Phase 1, expected to ship its first cargo this summer from Kitimat, British Columbia, marks what energy analysts are calling a structural turning point for Western Canadian producers, who have been long limited by landlocked pricing.

Few junior companies are better positioned to capitalize on this paradigm shift than Pine Cliff Energy Ltd. (TSX: PNE), a dividend-paying oil and gas company with a resilient asset base, strong insider alignment, and one of the lowest production decline rates in the sector at less than 10%.   Average production decline rates of natural gas companies in Canada are greater than 30%.

“We’ve been talking about LNG exports to new markets for a decade. And now, it’s happening,” said Phil Hodge, Pine Cliff’s President, Chief Executive Officer and director.

“This is not a debate anymore. There are several sites under construction. The first one, LNG Canada, is about to start shipping gas out of Canada this summer.”

In addition to LNG Canada Phase 1, which is expected to produce and ship 1.8 BCF/Day, or approximately 10% of all of Canada’s natural gas production — mainly to Japan, South Korea and China — Canada’s West Coast is rapidly emerging as a multi-project LNG corridor.

Projects under construction include Woodfibre LNG, an export facility near Squamish, and Cedar LNG, an Indigenous-led development near Kitimat. Meanwhile, Ksi Lisims LNG is targeting final investment approval in 2025, further underscoring the long-term potential for Canadian natural gas on the global stage.

With multiple export projects advancing on the West Coast, the sector is entering a new era where Western Canadian natural gas finally has global reach. Until now, the U.S. was the only outlet for Canadian gas.

Pine Cliff expects to see a meaningful upside from the launch of LNG Canada, as growing westbound demand for export tightens supply in Alberta and supports stronger AECO pricing — the key benchmark for Western Canadian natural gas.

“Even modest increases in AECO have a big impact on our business,” said Hodge. “Every $0.10/Mcf (thousand cubic feet) increase adds about $3.3 million to our cash flow.”

With 79% of Pine Cliff’s production weighted to natural gas, the company has some of the highest exposure to AECO pricing on the TSX. That leverage is already showing results.

The company’s Q1 2025 financials, released last week, show Pine Cliff generated $11.5 million in adjusted funds flow — its strongest quarter since 3Q23 — while reducing debt by 6% and maintaining a monthly dividend.

“We’re highly sensitive to changes in AECO,” Hodge said. “LNG Canada and the other projects should bring more price support and stability and help eliminate the deep discounts we’ve historically faced selling into U.S. markets. That’s a win for Pine Cliff and for all Western Canadian producers.”

After 18 months of drilling inactivity by design, Pine Cliff is now shifting into offensive mode with a $23.5 million capital program this year, including $12.5 million in strategic development spending in the back half of 2025.

“Our drilling inventory is the best it’s ever been,” said Hodge. “We’ve never had this depth of opportunity in our 14-year history.”

Thanks to acquisitions, Pine Cliff has added premium drilling targets across Alberta. And these aren’t speculative frontier wells.

“Type curves on our inventory are predicting 100%+ internal rates of return, and one-year paybacks based on strip pricing,” Hodge said. “As a shareholder, I can’t find returns like that anywhere else.”

This push toward drilling is also behind Pine Cliff’s recent decision to reduce its dividend, a move Hodge described as a strategic reallocation to maximize long-term value. Since launching its dividend program in July 2022, the company has returned more than $100 million to shareholders, including $5.4 million in Q1 2025 alone.

“We treat the dividend as a flexible return tool,” Hodge said. “We’ve raised it twice and lowered it twice. It’s not about yield-chasing, it’s about capital discipline. Right now, we believe that drilling offers better risk-adjusted upside for our shareholders.”

Pine Cliff isn’t just focused on traditional gas markets. In January 2024, the company announced a landmark 25-year agreement to supply natural gas to a private Alberta-based data centre — one of the first such deals in Canada.

What makes this partnership transformative is its economics: the gas will be delivered directly off Pine Cliff’s field with no pipelines, no transportation fees, and at a price linked to the NYMEX (New York Mercantile Exchange) benchmark, not AECO. That’s a 184% premium today in CDN$ on 2026 gas prices.

“The first phase could use about 5% of our production but at today’s prices and currency exchange rate, could deliver around 15% of our revenue … It’s a model we hope to replicate on other sites we own.”

The Alberta government is actively courting such projects, and Pine Cliff already has multiple locations with off-grid capability.

In an era where natural gas demand is accelerating globally, this low-profile junior is poised to deliver high-impact results, concluded recent analyst reports on Pine Cliff.

“In our view, Pine Cliff has built a straightforward business model that is unique to what we see elsewhere in the sector. We expect this to serve shareholders well in the future and across commodity price cycles,” reported Haywood Capital Markets last week.

Canaccord Genuity said Pine Cliff “offers investors the most torque to Western Canadian natural gas prices” in its coverage universe and “now has further optionality to benefit from a stronger natural gas price environment going forward.”

For Hodge, who was Pine Cliff’s first employee 14 years ago, the company’s evolution has been anything but ordinary.

“I started with the company 14 years ago with 100 BOE/day (barrels of oil equivalent per day). Now we’re approximately 22,000 BOE/day. I’ve never sold a share … today we’re in the best position we’ve ever been … financially, operationally, and strategically,” he said.

Stock Information TSX: PNE

💰

$208M

Market Cap

🔷

$0.59

Price¹

🎉

$0.62

Picked²

Named a Top Pick at the Scottsdale Capital Event, Pine Cliff Energy is gaining investor traction for its cash-yielding model and strategic exposure to Western Canada’s LNG momentum — an edge CEO Phil Hodge says is built to deliver stronger, sustained returns for shareholders.

We believe LNG Canada is a game-changer, not just for B.C., but for all Western Canadian gas producers. The impact on pricing is indirect but significant. More exports mean tighter supply, and we’re already seeing storage levels in Canada 20% below last year. That typically leads to stronger AECO prices. Pine Cliff has over 79% of production in natural gas and is one of the highest per-share leverage plays to AECO. So, every $0.10/Mcf move makes a meaningful difference to our cash flow. As LNG Canada ramps up and more gas flows west, we expect to benefit from a more constructive pricing environment across Alberta and beyond.

We’ve always treated our dividend as a flexible method to return capital to shareholders — we raise it when the market is strong and scale it back when it makes sense to reinvest. Right now, we’re entering the most exciting drilling phase we’ve had in 14 years. The inventory we’ve built through acquisitions is the strongest we’ve ever had. Through an active hedging program, we have been able to lock in prices for Q4 2025 and Q1 2026 above $3.00/Mcf, and we’ve even started to layer in hedges out to winter 2026–27 at over $3.50/Mcf. So, we’re redirecting capital toward drilling to grow cash flow per share, not just production. Our goal is to exit 2025 with fresh, high-return wells online and to enter 2026 with a stronger balance sheet and more upside optionality.

We were one of the first gas producers in Canada to announce a gas-supply agreement directly tied to powering data centres. While it’s early stage, it’s a strategic move. The partner will build on our field site and take gas directly — no pipeline transport costs, no middleman. They’ll pay a premium NYMEX price in U.S. dollars. That first phase alone would represent approximately 5% of our current gas volumes but could generate 15% of our revenue. With the rise of AI, we’re seeing strong interest from other groups looking for long-life, low-decline gas, and Pine Cliff is uniquely positioned for that. We view this as a scalable model for off-grid power partnerships and are actively pursuing similar opportunities.

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Warm Regards and Happy Investing,Fabian Dawson