In the following discussion, the three months ended March 31, 2026 may be referred to as "Q1 2026" and the three months ended March 31, 2025 may be referred to as "Q1 2025".
Q1 2026 SUMMARY
During Q1 2026, the Company:
Reported net cash and funds flow provided by operating activities of $6.5 million and $11.7 million, respectively, as compared to Q1 2025 when the Company reported net cash provided by operating activities and funds flow used in operating activities of $3.1 million and $0.3 million, respectively;
Earned $44.5 million of oil and natural gas sales revenue on total average daily sales volumes of 7,875 BOE per day, higher than $23.5 million of oil and natural gas sales revenue on total average daily sales volumes of 4,280 BOE per day in Q1 2025 due to oil sales from the Chubut concessions acquired in the fourth quarter of 2025;
Received an average of $3.20 per mcf for natural gas and $70.87 per bbl for crude oil compared to $2.46 per mcf for natural gas and $69.73 per bbl for oil received in Q1 2025;
Reported an operating netback of $11.96 per BOE 1 up from $2.50 per BOE in Q1 2025;
Issued $30.0 million of notes payable, obtained a $2.5 million working capital loan and repaid $7.2 million of notes payable and $14.3 million of working capital loans and discounted promissory notes;
Reported income before taxes of $0.1 million, deferred tax recovery of $5.3 million and net income of $5.4 million, as compared to Q1 2025 when the Company reported income before taxes of $8.3 million, deferred tax recovery $3.2 million and net income of $11.5 million;
Reported a working capital deficit2 of $57.2 million at March 31, 2026, as compared to a working capital deficit of $71.8 million at December 31, 2025.
___________________________1 Non-IFRS financial ratio. See "Non-IFRS and Other Financial Measures".2 Capital management measure. See "Non-IFRS and Other Financial Measures".
SUBSEQUENT EVENTS
Subsequent to March 31, 2026, the Company repaid $0.03 million of working capital loans and $3.6 million of discounted promissory notes.
OPERATIONAL UPDATE
Chubut Concessions
During Q1 2026, El Tordillo concession oil production averaged 4,163 (net 3,955) bbls of oil per day, La Tapera concession oil production averaged 38 (net 36) bbls of oil per day and Puesto Quiroga concession oil production averaged 182 (net 173) bbls of oil per day. Natural gas production from the El Tordillo and Puesto Quiroga concessions averaged 3,633 (net 3,451) mcf per day. During Q1 2026, the Company performed workovers on eight oil producing wells in the Tordillo concession and one workover on an oil producing well in the Puesto Quiroga concession.
Santa Cruz Concessions
During Q1 2026, Piedra Clavada concession oil production averaged 1,733 bbls of oil per day and Koluel Kaike concession oil production averaged 835 bbls of oil per day. During Q1 2026, the Company completed a workover on an oil well in the Koluel Kaike concession and performed several interventions on oil wells in both the Koluel Kaike and Piedra Clavada concessions.
Mendoza Concessions
Oil production for Q1 2026 averaged 830 (net 415) bbls of oil per day from the CH Concession and 134 (net 67) bbls of oil per day from the PPCO Concession.
Tierra del Fuego Concessions ("TDF" or "TDF Concessions")
During Q1 2026, San Martin oil production averaged 499 (net 241) bbls of oil per day; Las Violetas concession natural gas production averaged 7,831 (net 3,785) mcf per day and associated oil production averaged 181 (net 88) bbls of oil per day.
OUTLOOK
The Company's capital spending for fiscal 2026 is budgeted at approximately $77 million, of which: $44.7 million is allocated to the Chubut Concessions for well workovers, facilities improvements and a drilling campaign comprised of 8 wells; $29 million is allocated to the Santa Cruz Concessions for well workovers, facilities improvements and a drilling campaign comprised of 5 wells; $1.3 million is allocated to the Mendoza Concessions for well workovers and facilities improvements; $1.2 million is allocated to the TDF Concessions for the concessions extension fee; and $0.8 million is allocated to the Cerro de Los Leones Concession for testing of the gas bearing sandstone layers of the Neuquén Group. During Q1 2026, the Company incurred $3.6 million of capital expenditures in the Chubut and Santa Cruz Concessions.
SUMMARY OF FINANCIAL INFORMATION
(expressed in $, except shares outstanding)
March 312026
December 312025
Current assets
58,599,893
50,655,402
Current liabilities
(115,804,501
)
(122,470,728
)
Working capital deficiency (1)
(57,204,608
)
(71,815,326
)
Exploration and evaluation assets
14,018,547
14,018,547
Property and equipment
223,765,175
226,293,865
Total assets
298,763,667
293,165,032
Non-current financial liabilities (1)
84,971,203
73,009,452
Share capital
56,456,328
56,456,328
Total common shares outstanding
72,903,038
72,903,038
(1)
We adhere to International Financial Reporting Standards ("IFRS"), however the ...
