05:03 PM EST, 11/04/2024 (MT Newswires) -- Topaz Energy Corp. ( TPZEF ) after trade Monday reported improved third quarter earnings, despite a drop in revenue, as it updated its 2024 guidance estimates.

The Western Canadian oil and gas royalty and infrastructure company said it earned $18.04 million, or $0.12 per share in the quarter, up from $10.75 million, or $0.07, in the year-prior quarter. The result beat the Capital IQ consensus forecast of $0.05.

Revenue of $73.6 million was down from $85.77 million, generated from Topaz's income streams as follows: 28% ($20.9 million) from high-margin infrastructure assets; 54% ($39.5 million) from crude and heavy oil royalty revenue; and 18% ($13.1 million) from natural gas & natural gas liquids royalty revenue.

Among other highlights for Q3, Topaz generated cash flow of $67.0 million ($0.46 per diluted share and FCF of $64.8 million ($0.44 per diluted share), which was allocated to dividends and debt repayment. Topaz paid $47.8 million in dividends during the third quarter ($1.32 per share annualized, providing a 5.2% yield. During Q3 2024, Topaz reduced net debt by $17.4 million from June 30, 2024.

Topaz updated the company's 2024 guidance estimates, which includes average annual royalty production ranging between 19,100 and 20,000 barrels of oil equivalent per day (boe/d) and processing revenue and other income between $75.5 and $78.0 million. Also, Topaz's royalty production guidance anticipates operator-funded capital development between $2.2 billion and $2.8 billion, and also allows for deferral of certain natural gas completion or tie-in activities in response to natural gas supply and demand dynamics.

Based on current commodity pricing, Topaz expects to exit 2024 with net debt between $460-$470.0 million, which includes $79.2 million to fund the Strategic Royalty Acquisition and $26.0 million to fund Clearwater Natural Gas Gathering Infrastructure.

Through 2024 and 2025, Topaz's dividends and payout ratio remain sustainable down to very low commodity prices ($0.01 per mcf natural gas and US$50.00 per barrel of crude oil), attributable to Topaz's financial derivative contracts in place, and the high-margin, contracted revenue generated from Topaz's infrastructure portfolio.

Topaz shares closed up $0.33 or 1.2% at $27.02, at the high end of its 52 week range, on the Toronto Stock Exchange.