Highlights
• Q2 financial performance exceeded expectations, with net income approximately 10% above pre-acquisition forecast and revenue approximately 30% above forecast.
• June production 8,000 boe/d, recovering from 7,350 boe/d during April and May following lower than expected production due to facility turnarounds.
• Further 275 bbl/d near-term production recovery expected from pipeline repair and correction of third-party metering and allocation issues.
• Optimization activities are delivering strong initial results. Compressor installations have added 100 bbl/d of oil and the first three Cardium workover/stimulation targets increased from 7 boe/d to 70 boe/d at a capital efficiency of $1,190/boe/d. An additional 12 stimulation jobs have subsequently been completed and are currently being brought online.
• Initial three-well East Pembina drilling pad commenced July 23, with initial production expected late August.
• The AER required only a $1.65 million security deposit and 2026 mandatory closure expenditure was set at $1.54 million.
• Acerta has extended its oil hedging program through year-end 2027 at an average price of $US 73.61/bbl; hedged volumes represent 70% of PDP oil volume for H2 2026, 65% for H1 2027, and 30% for H2 2027.
• The current 2026 business plan targets nine Cardium wells, approximately $23 million of development capital and year-end production in the range of 9,000 - 9,250 boe/d.
Acerta Energy was formed to acquire conventional oil and gas assets from HWN Energy, creating a new Western Canadian oil and gas company focused on long-life light oil and natural gas production. The transaction closed on April 10, 2026, with an acquisition price of CAD $217.5 million and total contemplated sources and uses of CAD $232.5 million after including CAD $15.0 million for other general corporate purposes. Acerta assumed management of the assets on June 1, 2026 and has now completed its first month of accounting and operational oversight. During this initial transition period, management has focused on identifying efficiencies across the asset base, improving field-level processes, initiating workovers, and repairing legacy wells in order to maximize production while minimizing natural decline.
Net income in Q2 was approximately 10% above levels that were forecast prior to the acquisition closing. Revenues were approximately 30% above forecast due to higher oil pricing, with this being partially offset by higher sliding-scale royalties (43% above forecast; directly linked to oil pricing) and OPEX (15% above forecast; due to both deferred maintenance and probable overaccruals by HWN which are transient). Acerta is well positioned, with sufficient working capital to carry out our planned drilling campaign in Q3. Q2 financial statements are pending final information from HWN Energy, which managed accounting for the April and May periods.
Production Results
Base Production:
Acerta’s production averaged approximately 8,000 boe/d through June, having risen from April and May production averages of 7,350 boe/d.
These results were below forecast, primarily in April and May, when production was reduced by facility turnarounds and compressor upgrades that were required for regulatory compliance, upgrades, and routine maintenance work. Acerta was first notified of these turnarounds in mid-April; we chose to allow them to proceed at that time, as the work would have been required eventually and was well-timed to coincide with downstream outages at the AltaGas Harmattan plant. These turnarounds took up to 1,400 boe/d offline temporarily.
That production was fully back online by the end of May, and June production has returned to pre-turnaround levels. It remains slightly below forecast (300 boe/d, or 4%) due to required repair of a pipeline to the 102/01-20-035-22W4 Elnora well, along with the impact of large volumes coming into the gathering system from recent Orlen-drilled wells, which brought significant new volumes into a shared gathering system, resulting in both increased pressures in the system and challenges with metering and allocation of production volumes.
The Elnora pipeline repairs are expected to be completed before the end of July, bringing 75 bbl/d back online. The Orlen wells may continue to hold back minor amounts of Acerta production, but the majority of their impact is believed to be due to metering and allocation errors that will ultimately be resolved and should result in allocation of approximately 200 boe/d to Acerta’s net production (including retroactive allocations in June, although we are not carrying these numbers in our current June production estimates).
In spite of their initial negative impact on Acerta’s production, the new Orlen-operated wells are, overall, a good news story for Acerta. These were 2 of the 3 top Cardium wells drilled in Alberta in May, and they are located in the Cardium Lochend field, which is where much of Acerta’s 2027 and 2028 drilling potential is situated.
Total corporate production for Q2, 2026. The decreased production from April 24th to May 24th is due to facility turnarounds that required temporary shut-in of up to 1,400 boe/d.
Optimization and Development:
Acerta’s optimization and development program is showing good initial results.
At Lochend, the installation and optimization of the 4-3 and 1-20 compressors, has resulted in a production uplift of over 100 bbl/d of oil.
In parallel, Acerta has pumped 9 Cardium well stimulation jobs, with three of these being brought online at the start of June and performing well above expectation. The 3 initial wells show an approximately 20x oil gain, from producing approximately 0.6 bbl/d to 13 bbl/d per well These stimulation jobs cost an average of $25,000 per well; note that these are being treated as Opex because they are fundamentally deferred maintenance that restores well performance, rather than accessing new reservoir.
Aggregate production plot for first three Cardium stimulation jobs, showing an increase from 7 boe/d to 70 boe/d (oil increased from 2 bbl/d to 40 bbl/d). This is an exceptional capital efficiency of $1,190/boe/d.
A further 12 stimulation jobs have been completed in the Rosevear and Carrot Creek areas and are just coming online at the end of July, with positive initial indications of increased fluid flowback, but no stabilized test results available yet. Management has identified hundreds of additional Cardium candidates for further technical review.
Acerta’s development drilling program commenced on July 23rd, and the first well of a three well pad at the 04-16-048-4W5 East Pembina location is currently being drilled (expected to reach total depth on July 30th). Three Cardium horizontal wells will be drilled from this site, with production expected to start coming online in late August. Acerta’s planned development drilling program was delayed by June being the wettest month ever recorded in central Alberta (263 mm of rain; 3X the long term average), resulting in a choice between spending significant incremental funds on road and site construction, or delaying commencement of surveying and construction work. To preserve project economic returns, Acerta chose to delay the work through June.
Acerta has engaged N.L. Fisher to assist with planning, regulatory support, and field supervision of the first three wells; their involvement should de-risk the initial wells as they bring significant area and play-specific experience, having drilled over 900 horizontal wells in the Cardium.
Abandonment and Reclamation
In connection with the transaction, Acerta placed CAD $15.0 million into escrow to cover any potential Alberta Energy Regulator (AER) security deposit that may have been required. As expected by management, the final security requirement was substantially lower than the escrowed amount. On June 26, 2026, the AER issued its decision requiring a deposit of CAD $1.65 million, which Acerta paid immediately. The remaining escrow balance was subsequently released back to Acerta.
Acerta’s undiscounted, uninflated Asset Retirement Obligations are estimated by the AER to be CAD $151 million, with $46 million of this being associated with inactive liabilities. Based on the AER’s mandated annual expenditure requirement of 6.2% of inactive liabilities, and taking into account uncertainty on how the AER would account for expenditures to-date by HWN and its affiliated companies, Acerta had budgeted for a requirement to spend approximately CAD $3 million by year end. On July 10th, the AER informed Acerta that it’s 2026 minimum required expenditure is just $1.54 million. Acerta has spent CAD $0.17 million on ongoing reclamation activities and expects to spend the balance of the required amount on well and pipeline abandonments between July and October, avoiding or minimizing work in the winter months. Acerta expects to easily meet its regulatory obligations and prudently manage its asset retirement liabilities.
Hedge Summary
Acerta had to unwind all pre-existing hedges on the closing date of the acquisition from HWN, at a cost of CAD $9.6 million; CAD $3 million of that amount has been recovered in Q2 alone due to increased realized pricing.
Acerta has put in place a new series of oil hedges to protect future cash flow. Shortly after acquiring its producing assets, Acerta put in place fixed price contracts for oil (WTI swaps) for the period from June 2026 through the end of November 2026, for 30,000 bbls per month at a fixed WTI price of US$85.20/bbl. The company has subsequently extended its hedging program through WTI swaps to year-end 2027 at a volume-weighted average price of US$73.61.
Business Plan Summary
Acerta is planning to drill 9 wells by the end of 2026, with the 2026 program entirely comprising Cardium horizontal wells. These initial wells will target the East Pembina area, where the play is well understood and infrastructure is largely in place. Total capital expenditure of this program is budgeted at CAD $23 million, with an anticipated net production addition of 1,000 boe/d at year-end. This results in a forecast year-end production rate in the range of 9,000-9,300 boe/d, with oil and natural gas liquids increasing, from current levels at 51% of production, to 58% of production.
Acerta will also focus on controlling operating expenses, although it is expected that opex costs may remain somewhat elevated though Q3 due to the requirement to catch up on activities that were deferred during the sales process.