Tortoise Power & Energy Infrastructure Fund, Inc. Q4 FY2025 earnings call

• 2025 was a year of impressive growth with royalty production up 17%, infrastructure revenue up 20%.
• Fourth quarter royalty production averaged 23.4 thousand BOE per day, 15% higher than prior year, driven by record oil and liquids production of 6.9 thousand barrels per day. Full year 2025 royalty production was 22.4 thousand BOE per day, up 17% from 2024, with liquids production up 11% and natural gas production up 19%.
• In 2025, $2.8 billion of operated capital was invested, resulting in 694 gross wells drilled (25.3 net), 10% more than 2024, and 22% more wells brought on stream than 2024.
• Year-end 2025 total proved plus probable reserves were 65.7 million BOE, a 10% increase from 2024, with operator-funded drilling extensions and improved recovery adding 11.9 million BOE.
• Q4 2025 cash flow was $80.6 million, or $0.52 per share, 6% higher than Q4 2024, and free cash flow was $79.7 million, or $0.52 per share, 11% higher than Q4 2024.
• Dividends distributed in Q4 2025 were $52.4 million at $0.34 per share, with a 65% payout ratio, and full year 2025 dividends were $207.7 million at a 66% payout ratio.

In Q4 2025, Topaz generated royalty production revenue of $62.5 million, representing 72% of total revenue, with infrastructure assets contributing $24.2 million, or 28%. For 2025, royalty production was 22.4 thousand BOE per day, an increase of 17% over 2024, driven by 11% higher liquids production and 19% higher natural gas production. Fourth quarter royalty production averaged 23.4 thousand BOE per day, a 15% increase from the prior year. In 2025, $2.8 billion of operated capital was invested, resulting in 694 gross wells drilled (25.3 net), 10% higher than 2024. Total wells brought on stream in 2025 were 22% higher than 2024. Year-end 2025 total proved plus probable reserves were 65.7 million BOE, a 10% increase from 2024. Cash flow in Q4 2025 was $80.6 million, or $0.52 per share, 6% higher than Q4 2024, and free cash flow was $79.7 million, or $0.52 per share, 11% higher than Q4 2024. Dividends distributed in 2025 totaled $207.7 million at a 66% payout ratio.

• 2026 guidance estimates average royalty production of 23,500 to 23,900 BOE per day and processing revenue and other income of 92 to 94 million.
• Topaz expects to exit 2026 with net debt to EBITDA of 1.2 times and a 68% payout ratio, sustainable through 2026 at $0 ACO and $55 US WTI, attributed to fixed revenue from infrastructure portfolio and hedging contracts.

Q: Hi, Marty. Quick question here on M&A. Can you describe what the market looks like now versus where it has been in the last couple of years? part of your growth has been through M&A and what makes you confident that you could see a lot of deals potentially this year? And just kind of a bit of a follow-up here, where do you think those deals may occur actually?

A: Yeah, good morning, Jeremy, and thank you for the question. You know, I think like most years, it seems like it starts out fairly soft until the quarters get done. People understand what maybe their budgets might look like. We did complete a deal in the latter part of December in 2025. Smaller deal, $7 million on a fee royalty acquisition. Have seen some leasing on that acquisition already, so we're pretty confident that there's probably more to do there. It was about 30,000 acres of land, kind of right in the heart of the Duvernay play. Overall, we're very proactive on deals. Right now, I think we're kind of, we see in the Q1, Q2 is probably some reactive ideas where maybe some bank-led processes start to kind of appear. And so overall, I think we're gonna continue to be active this year. Like on most years, we look at about $2 billion in opportunities. We've been very active already in this, in 2026, looking at some different opportunities. And we're fairly agnostic to whether it's infrastructure or royalty opportunities. combination of both of them. So we'll continue to look where we can be useful. And, you know, if we see some capital cuts start to happen in the Q1, we think that there's probably some opportunity on the infrastructure side. But like I said, we're open to either side of those M&A opportunities. Okay, perfect. Thanks, Marty. Thanks. Have a good day. Thank you.

Q: Yeah, good morning, and thanks for taking my question. Can you just talk a little bit about the reserves and the changes that you saw this year? How much more is there left to be booked on the water flood improvements in the Clearwater, and how much was, I guess, derived from just delineation in that play? Can you just talk about some of the shifts on that side, Marty?

A: Oh, hey, Jamie. It's Cherie. I'll take this one. Marty can chime in. But we definitely saw some significant bookings. We do think that, you know, within the Clearwater specifically, there was some catch-up from prior as the reserve evaluators really now have enough years of data in order to sort of acknowledge and back up the water flood results. I wouldn't say they've booked, you know, what they're seeing in full effect. There's still some room for further ads and reflection of the results to date. But we were definitely pleased with the recognition and the performance of the assets. Obviously, our reserve report is a bit limited as it does not include undeveloped future locations. So we don't get the full effect of what's going on with the water flood. But we do believe there's incremental value attributed to what's been done to date for future years. And we do see the operators continuing to expand more and more of their budgets into the water flood because it's working as we expect to see. You know, maybe not quite this type of effect, that 50% increase within our clear water reserves next year, but definitely something that's, you know, in excess and positive. As a takeaway, you know, when we think of our reserve book and the reserve placement we were able to achieve this year, it was about 1.5 times on the entire portfolio. Within Clearwater specifically, it was a three times reserve replacement. And over the last two years, we've seen a doubling of the reserve life index. So three years went to six years. And remember, again, that's just the developed wedge of the reserves. You think about our two main operators, Headwater and Tamarack, coming out with some very positive revisions to, I would say, the 2P numbers, you know, in excess of 50% on both of them. It really paid a nice roadmap for us for the future. And so I think you saw headwater around 52% on a 2P reserve uptick. And then this morning, Tamarack came out with 56%, replacing 534% of production. That looks really positive for Topaz. And so we're excited to see those results and get an indication of what the future brings for our future bookings. Okay, perfect. That's all for me. Thank you, Jamie. And again, if you would like to ask a question, see if you press star 1 on your telephone keypad. And we currently have no further questions at this time. I would like to turn it back to Mr. Staples for closing remarks. Thanks, everyone. Great 2025 and look forward to chatting with you on the Q1 call in May. Take care. Thank you, presenters. And ladies and gentlemen, this now concludes today's conference call. Thank you all for joining. You may now disconnect.