Strathcona Resources Ltd. Reports Fourth Quarter and Full Year 2025 Financial and Operating Results, Year End Reserves, Announces Quarterly Dividend and Board Approval to Commence Normal Course Issuer Bid

Annual Letter to Strathcona Shareholders

Strathcona has posted a letter to shareholders providing an in-depth review of the Company’s 2025 financial and operating performance and year-end reserves, which has been posted on Strathcona’s website at strathconaresources.com/investors/reports. Strathcona shareholders are encouraged to review the letter, which provides details regarding the Company’s strategy going forward.

Quarter Review and Near-Term Priorities

Strathcona’s fourth quarter production of 118 Mboe / d, up 1% quarter-over-quarter, was in-line with expectations, with full year capital expenditures of $1,186 million lower than the Company’s 2025 capital budget of $1,200 million. Fourth quarter non-energy production and operating costs of $8.30 / boe reflected a decrease of 15% versus the third quarter, reflecting savings achieved across the portfolio following successful execution of cost improvement initiatives undertaken mid-year. Free cash flow of $53 million for the fourth quarter was impacted by $75 million of realized hedging losses, following the restructuring of the Company’s WCS differential swaps at the end of 2025, as previously disclosed. Strathcona’s WTI exposure remains unhedged for 2026, with approximately 50% of its WCS Hardisty differential exposure hedged at US$12.00 / bbl, and approximately 80% of its natural gas purchase exposure hedged at C$2.00 / GJ AECO.

In Cold Lake, production increased 2% quarter-over-quarter driven by the continued ramp up of Lower Drainage Wells (“LDWs“) on the 105 and 108 pads at Orion. Subsequent to year-end, seven LDWs on the C-East pad were brought online at Tucker, which have exceeded expectations thus far with an average rate of over 750 bbls / d per well. Current activity is focused on the 8 well pair D01 West pad at Lindbergh, which began steaming in early 2026 and is expected to ramp to a peak rate of approximately 6,500 bbls / d.

In Lloydminster Thermal, in December Strathcona closed on its acquisition of the Vawn thermal project (“Vawn”) and undeveloped thermal lands at Plover Lake and Glenbogie. Vawn has since been fully incorporated into Strathcona’s existing operations at Edam (located directly adjacent to Vawn, sharing the same reservoir), with both assets now benefiting from shared services and integrated reservoir management. Strathcona expects to be able to meaningfully increase Vawn’s production above historical levels of approximately 5 Mbbls / d by year-end 2026 and will provide further details in coming quarters. Current capital activity remains focused on the Meota Central project, which is targeting first oil in the fourth quarter of 2026 and is expected to deliver a peak oil rate of approximately 13 Mbbls / d at a total installed cost of approximately $360 million. The project is currently 85% complete, on time and on budget.

In Lloydminster Conventional, production of 21 Mbbls / d reflected a 7% decrease quarter-over-quarter, driven by flood conformance challenges at Strathcona’s Cactus Lake and Bodo-Cosine polymer floods. Production has since stabilized following successful conformance work completed over the previous quarter. Current capital activity is concentrated on the Company’s annual drilling programs in Winter and Druid, which include a mixture of single and multi-lateral horizontal wells.

Selina Project Acquisition

Today Strathcona signed and closed the acquisition of a 50% operated working interest in the Selina Project (“Selina“) in Cold Lake for total consideration of $23 million in cash. Strathcona previously held a 50% non-operated working interest in Selina, increasing its working interest to 100% and taking over operatorship. Selina is located near Strathcona’s existing Lindbergh thermal project, with approvals from the Alberta Energy Regulatory (“AER“) in place for 12,500 bbls / d of production. Strathcona expects to develop Selina over time in a capital-efficient manner by leveraging its existing central processing facility at Lindbergh. Strathcona estimates approximately 160 MMbbls of recoverable oil at Selina, none of which was booked in its reserves or contingent resources at year-end 2025 due to Strathcona previously not holding operatorship.

Normal Course Issuer Bid

Strathcona’s Board has approved the filing of a notice with the Toronto Stock Exchange (“TSX“) to commence a normal course issuer bid (“NCIB”). Once approved by the TSX, Strathcona may repurchase up to 5% of its issued and outstanding shares (up to a maximum of approximately 10.7 million common shares) over a twelve-month period.

Strathcona intends to act opportunistically from time to time to repurchase its shares at what it views as a discount to its intrinsic value, conservatively determined and after applying a margin of safety. For further details regarding the Company’s rationale and strategy regarding the NCIB, shareholders are encouraged to review the Company’s year-end shareholder letter posted on its website.

Outlook

Strathcona’s 2026 production guidance of 120 to 130 Mbbls/d and capital budget of $1.0 billion is unchanged. Strathcona expects production of 115 to 120 Mbbls / d in the first half of 2026, ramping to an exit rate of approximately 135 Mbbls / d by 2026 year-end.

Following the Selina acquisition, Strathcona holds an estimated 3.0 billion of recoverable resources, equating to over 65 years relative to its 2026 production. Strathcona’s long-range plan remains to grow production from 125 Mbbls / d in 2026 to 200 Mbbls / d by 2031 and 300 Mbbls / d by 2035 (in each case a 10% compound annual growth rate).

Quarterly Dividend

Strathcona’s Board of Directors has declared a quarterly dividend of $0.30 per share to be paid on March 27, 2026 to shareholders of record on March 20, 2026. Payments to shareholders who are not residents of Canada will be net of any Canadian withholding taxes that may be applicable. Dividends paid by Strathcona are considered “eligible dividends” for Canadian tax purposes.

2025 Year End Reserves Details

The tables below summarize Strathcona’s Year End 2025 reserves which were prepared by McDaniel & Associates Consultants Ltd. (“McDaniel“). A complete filing of our oil and gas reserves and other oil and gas information presented in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities is included in Strathcona’s Annual Information Form for the year ended December 31, 2025, which can be found at www.sedarplus.ca and www.strathconaresources.com.

Summary of Oil and Gas Reserves (Forecast Prices and Costs) as of December 31, 2025

 

Summary of Net Present Value of Future Net Revenue Attributable to Oil and Gas Reserves (Forecast Prices and Costs) as of December 31, 2025

Forecast Prices and Costs as of December 31, 2025

Reconciliation of Changes in Gross Reserves⁽¹⁾

Undiscounted Future Net Revenue by Reserves Categories

About Strathcona

Strathcona is one of North America’s fastest growing pure play heavy oil producers with operations focused on thermal oil and enhanced oil recovery. Strathcona is built on an innovative approach to growth achieved through the consolidation and development of long-life assets. Strathcona’s common shares (symbol SCR) are listed on the Toronto Stock Exchange (TSX).

For more information about Strathcona, visit www.strathconaresources.com.

Non-GAAP Measures and Ratios

The financial results for the three months and year ended December 31, 2025 and December 31, 2024, are presented below to reconcile continuing and discontinued operations to total results. Total results in a non-GAAP measure used by Management to assess the historical financial performance of the total business and is not intended to be indicative of future results.

 

“Oil and natural gas sales, net of blending and other income” is calculated by deducting purchased product and blending costs from oil and natural gas sales, sales of purchased product, midstream revenue and other income. Management uses this metric to isolate the revenue associated with the Company’s production after accounting for the unavoidable cost of blending. Oil and natural gas sales, net of blending, is also reflected on a per boe basis calculated using sales volumes. This ratio is useful to management when analyzing realized pricing against benchmark commodity prices.

“Effective royalty rate” is calculated by dividing royalties by oil and natural gas sales and sale of purchased product, net of blending and purchased product. This metric allows management to analyze the movement of royalty expenses in relation to realized and benchmark commodity prices.

“Operating Earnings – Discontinued” is considered a key financial metric for evaluating the profitability of Strathcona’s discontinued operations. “Operating Earnings – Continuing” is a GAAP financial measure as it is used by the Chief Operating Decision Makers to evaluate profit or loss and is presented in the consolidated financial statements for year ended December 31, 2025 and 2024. A quantitative reconciliation of Operating Earnings – Discontinued to the most directly comparable GAAP financial measure, Oil and natural gas sales, is presented below.

“Funds from Operations” is used by management to analyze operating performance and provides an indication of the funds generated by Strathcona’s principal business to either fund operating activities, re-invest to either maintain or grow the business or make debt repayments. Funds from Operations is derived from Operating Earnings and adjusted for DD&A, finance costs, gains and losses on risk management contracts – realized and gains and losses on foreign exchange – realized, operating.

“Free Cash Flow” indicates funds available for deleveraging, funding future growth, or shareholder returns. Free Cash Flow is derived from Operating Earnings and adjusted for DD&A, finance costs, gains and losses on risk management contracts – realized and gains and losses on foreign exchange – realized, operating, capital expenditures and decommissioning costs.

Quantitative reconciliations of Funds from Operations and Free Cash Flow for both continuing and discontinued operations to the most directly comparable GAAP financial measure, Operating Earnings, are set forth below.

 

The following table reconciles operating earnings, funds from operations and free cash flow from continuing and discontinued operations:

“Organic Capex” is defined as total property, plant and equipment expenditures, excluding capitalized overhead, expenditures on corporate assets, and capital expenditures on assets acquired during the period. Management uses Organic Capex to evaluate the underlying capital investment in Strathcona’s existing asset base, excluding the effects of acquisitions and non-operational capital. This measure provides insight into the Company’s capital efficiency.

“Organic Operating Netback” is used to assess the profitability and efficiency of Strathcona’s field operations before the impact of acquisitions.

A quantitative reconciliation of “Organic Operating Netback” to the most comparable GAAP measure, “Oil and natural gas sales”, is set forth below:

A quantitative reconciliation of “Organic Capex” to the most comparable GAAP measure, “Property, plant and equipment expenditures”, is set for below:

Supplementary Financial Measures

“PDP F&D” are calculated as Organic Capex plus changes in PDP future development costs (-$72 million in 2025), divided by PDP reserve additions for the year (39 MMbbls in 2025), excluding the impact of acquisitions and dispositions. Management uses PDP F&D costs as a measure of capital efficiency for organic reserves development.

“PDP Recycle Ratio” is calculated by dividing the Organic Operating Netback by PDP F&D. PDP Recycle Ratio is used to measure the profit per barrel of oil to the cost of finding and developing that barrel of oil.

“Organic 2P Reserves Replacement” is calculated as 2P reserves additions, excluding acquisitions and dispositions, divided by annual production volumes.

“Reserves Life Index” calculated by dividing gross reserves by annualized fourth quarter production.

“1P and 2P after-tax PV-10 net of debt per share” is comprised of before tax present value for 1P and 2P reserves, discounted at 10 per cent, as determined in accordance with NI 51-101, adjusted for debt at the end of the period.

“Organic 2P Reserves Replacement” is calculated as 2P reserves additions, excluding acquisitions and dispositions, divided by annual production volumes.

“Interest and finance costs” is an aggregation of interest and finance costs. Management uses this metric to obtain a fulsome understanding of all interest and accretion costs the Company is subject to.

“Other items” is an aggregation of risk management contracts, foreign exchange, transaction related costs, gain on marketable securities, loss (gain) on sale of assets, loss on settlement of other obligations, deferred tax (recovery) expense, change in decommissioning liabilities and impairment from both continuing and discontinued operations. They are presented in such a manner to yield prominence to key financial metrics such as income and comprehensive income, Funds from Operations and Free Cash Flow.

“Non-cash items” is an aggregation of depletion, depreciation and amortization, finance costs, realized loss on deferred premium settlements and other income – decommissioning government grant.

“Debt, net of cash and marketable securities” is comprised of debt less cash and marketable securities, as derived under the Accounting Standards.

Presentation of Oil and Gas Information

This press release contains various references to the abbreviation “boe” which means barrels of oil equivalent. All boe conversions in this press release are derived by converting gas to oil at the ratio of six thousand cubic feet (“mcf“) of natural gas to one barrel (“bbl“) of crude oil. Boe may be misleading, particularly if used in isolation. A boe conversion rate of 1 bbl : 6 mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio of oil compared to natural gas based on currently prevailing prices is significantly different than the energy equivalency ratio of 1 bbl : 6 mcf, utilizing a conversion ratio of 1 bbl : 6 mcf may be misleading as an indication of value.

References in this press release to initial production rates and other short-term production rates and test results are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long-term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating aggregate production for the Company or the assets for which such rates are provided. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, the test results should be considered to be preliminary.

Product Type Production Information

National Instruments 51-101 – Standards of Disclosure for Oil and Gas Activities includes condensate within the natural gas liquids product type. The Company has disclosed condensate as combined with light oil and separately from other natural gas liquids in this press release since the price of condensate as compared to other natural gas liquids is currently significantly higher and the Company believes that this presentation provides a more accurate description of its operations and results therefrom. References to “natural gas” in this press release refer to conventional natural gas. References to “liquids” in this press release refer to, collectively, bitumen, heavy oil, condensate and light oil (comprised of condensate and light oil) and other natural gas liquids (comprised of ethane, propane and butane only).

The Company’s quarterly and year-to-date average daily production volumes, and the references to “natural gas”, “crude oil” and “liquids”, reported in this press release consist of the following product types, as defined in NI 51-101 and using a conversion ratio of 6 mcf : 1 bbl where applicable:

The Company’s reserve volumes, and the references to “total oil” reported in this press release consist of the following product types as defined by NI 51-101:

2025

 

Forward-Looking Information

Certain statements contained in this press release constitute forward-looking information within the meaning of applicable securities laws. The forward-looking information in this press release is based on Strathcona’s current internal expectations, estimates, projections, assumptions and beliefs. Such forward-looking information is not a guarantee of future performance and involves 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. The Company believes the material factors, expectations and assumptions reflected in the forward-looking information are reasonable as of the time of such information, but no assurance can be given that these factors, expectations and assumptions will prove to be correct, and such forward-looking information included in this press release should not be unduly relied upon.

The use of any of the words “expect”, “target”, “anticipate”, “intend”, “estimate”, “objective”, “ongoing”, “may”, “will”, “project”, “believe”, “depends”, “could” and similar expressions are intended to identify forward-looking information. In particular, but without limiting the generality of the foregoing, this press release contains forward-looking information pertaining to the following: the Company’s business strategy and future plans; the expected peak rate of the 8 well pair D01 West pad at Lindbergh, including the timing thereof; the expectation that Strathcona will be able to meaningfully increase Vawn’s production above historical levels and that Strathcona will provide further details in respect of the same in coming quarters; the expected peak oil rate, total installed costs and timing for first oil in respect of the Meota Central project; Strathcona’s expectations in respect of the Selina Project, including its ability to leverage its existing central processing facility at Lindbergh to reduce capital costs and the amount of recoverable oil; Strathcona’s intention to commence a normal course issuer bid, including the number of shares to be repurchased thereunder and Strathcona’s strategy in respect of the same; Strathcona’s initial 2026 production guidance of 120 to 130 Mbbls/d and capital budget of $1.0 billion; Strathcona’s expected production of 115 to 120 Mbbls / d in the first half of 2026, and its expectation of ramping to an exit rate of approximately 135 Mbbls / d by year-end; and Strathcona’s long-range plan to grow existing production from 125 Mbbls / d in 2026 to 200 Mbbls / d by 2031 and 300 Mbbls / d by 2035.

All forward-looking information reflects Strathcona’s beliefs and assumptions based on information available at the time the applicable forward-looking information is disclosed and in light of the Company’s current expectations with respect to such things as: Strathcona’s ability to generate sufficient cash flow to fund debt repayment and dividend payments; Strathcona’s ability to declare and pay dividends; the success of Strathcona’s operations and growth and expansion projects; expectations regarding production growth, future well production rates and reserve volumes; expectations regarding Strathcona’s capital program, including the outlook for general economic trends, industry trends, prevailing and future commodity prices, foreign exchange rates and interest rates; the availability of third party services; prevailing and future royalty regimes and tax laws; future well production rates and reserve volumes; fluctuations in energy prices based on worldwide demand and geopolitical events; the impact of inflation; the integrity and reliability of Strathcona’s assets; decommissioning obligations; Strathcona’s ability to comply with its financial covenants; and the governmental, regulatory and legal environment. In addition, certain forward-looking information with respect to the Company’s 2025 guidance assumes commodity prices and exchange rates of: US$70 / bbl WTI, US$12 / bbl WCS-WTI differential, 1.36 USD-CAD and C$2.75 / GJ AECO. Management believes that its assumptions and expectations reflected in the forward-looking information contained herein are reasonable based on the information available on the date such information is provided and the process used to prepare the information. However, it cannot assure readers that these expectations will prove to be correct.

The forward-looking information included in this press release is not a guarantee of future performance and involves 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, including, without limitation: changes in commodity prices; changes in the demand for or supply of Strathcona’s products; the continued impact, or further deterioration, in global economic and market conditions, including from inflation, tariffs and/or certain geopolitical conflicts, such as the ongoing Russia/Ukraine conflict and the conflict in the Middle East, and other heightened geopolitical risks and the ability of the Company to carry on operations as contemplated in light of the foregoing; determinations by the Organization of the Petroleum Exporting Countries and other countries as to production levels; unanticipated operating results or production declines; changes in tax or environmental laws, climate change, royalty rates or other regulatory matters; changes in Strathcona’s development plans or by third party operators of Strathcona’s properties; competition from other producers; inability to retain drilling rigs and other services; failure to realize the anticipated benefits of the Company’s acquisitions; incorrect assessment of the value of acquisitions; delays resulting from or inability to obtain required regulatory approvals, including TSX approval of our normal course issuer bid; increased debt levels or debt service requirements; changes in foreign exchange rates; inaccurate estimation of Strathcona’s oil and gas reserve and contingent resource volumes; limited, unfavourable or a lack of access to capital markets or other sources of capital; increased costs; a lack of adequate insurance coverage; the impact of competitors; and the other factors discussed under the “Risk Factors” section in Strathcona’s Management’s Discussion & Analysis and Annual Information Form, each for the year ended December 31, 2025, and from time to time in Strathcona’s public disclosure documents, which are available at www.sedarplus.ca.

Declaration of dividends is at the sole discretion of the board of directors of Strathcona and will continue to be evaluated on an ongoing basis. There are risks that may result in Strathcona changing, suspending or discontinuing its quarterly dividends, including changes to its free cash flow, operating results, capital requirements, financial position, debt levels, market conditions or corporate strategy and the need to comply with requirements under its credit agreement and applicable laws respecting the declaration and payment of dividends. There are no assurances as to the continuing declaration and payment of future dividends or the amount or timing of any such dividends.

Management approved the capital budget and production guidance contained herein as of the date of this press release. The purpose of the capital budget and production guidance is to assist readers in understanding Strathcona’s expected and targeted financial position and performance, and this information may not be appropriate for other purposes.

This earnings release contains information that may constitute future-oriented financial information or financial outlook information (collectively, “FOFI”) about Strathcona’s prospective financial performance, financial position or cash flows, all of which is subject to the same assumptions, risk factors, limitations and qualifications as set forth above. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise or inaccurate and, as such, undue reliance should not be placed on FOFI. Strathcona’s actual results, performance and achievements could differ materially from those expressed in, or implied by, FOFI. Strathcona has included FOFI in order to provide readers with a more complete perspective on Strathcona’s future operations and management’s current expectations relating to Strathcona’s future performance. Readers are cautioned that such information may not be appropriate for other purposes.

The foregoing risks should not be construed as exhaustive. The forward-looking information contained in this press release speaks only as of the date of this press release and Strathcona does not assume any obligation to publicly update or revise such forward-looking information to reflect new events or circumstances, except as may be required pursuant to applicable laws. Any forward-looking information contained herein is expressly qualified by this cautionary statement.

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