Management’s Discussion and Analysis
Introduction The Management’s Discussion and Analysis (MD&A) highlights the primary factors that affected SaskEnergy’s consolidated financial performance for the nine months ended December 31, 2025. Using financial and operating results as its basis, the MD&A describes the Corporation’s past performance and future prospects, enabling readers to view SaskEnergy from the perspective of management. The MD&A is presented as at February 25, 2026 and should be read in conjunction with the Corporation’s condensed consolidated financial statements, which have been prepared in accordance with IAS 34 Interim Financial Reporting using accounting policies consistent with IFRS® Accounting Standards. For additional information related to the Corporation, refer to SaskEnergy’s 2024-25 Annual Report. The MD&A contains certain forward-looking statements that are subject to inherent uncertainties and risks. Many of these risks are described in the Risk Management and Disclosure section of SaskEnergy’s 2024-25 Annual Report. All forward- looking statements reflect the Corporation’s best estimates and assumptions based on information available at the time the statements were made. However, actual results and events may vary significantly from those included in, contemplated by, or implied by such statements. The volume of natural gas delivered to customers is sensitive to variations in weather, particularly through the prime heating season of November to March. Additionally, changes in market value adjustments may cause significant fluctuations in net income due to the volatility of natural gas prices. Therefore, the condensed consolidated financial results for the first nine months of 2025-26 should not be taken as indicative of the performance to be expected for the full year. The Corporation’s financial results are subject to variation, especially given the volatility of natural gas prices. To compare financial performance from period to period, the Corporation uses the following measures: income before unrealized market value adjustments; realized margin on commodity sales; and realized margin on asset optimization sales. Each measure removes the impact of fair value adjustments on financial and derivative instruments and the revaluation of natural gas in storage to the lower of cost and net realizable value. Unrealized market value adjustments vary with market prices of natural gas, drive significant changes in the Corporation’s consolidated net income and may obscure other business factors that are also important to understand the Corporation’s financial results. The measures referred to above are non-IFRS Accounting Standard measures, in that there is no standardized definition and may not be comparable to similar measures presented by other entities. The discussion of the Corporation’s results in the MD&A, set out on the following pages, is a comparison of the results for the nine months ended December 31, 2025, to the nine months ended December 31, 2024, unless otherwise noted. Consolidated Financial Results Consolidated Net Income
Three months ended December 31,
Nine months ended December 31,
(millions)
2025
2024
Change
2025
2024
Change
Net income before unrealized market value adjustments
$
54
$
45
$
9
$
40
$
24
$
16
Impact of fair value adjustments
(2)
2
(4)
(9)
(3)
(6)
Consolidated net income
$
52
$
47
$
5
$
31
$
21
$
10
The net income before unrealized market value adjustments was $40 million for the nine months ended December 31, 2025, an increase of $16 million compared to $24 million for the same period in 2024. The favourable variance primarily results from a strong asset optimization margin, which increased by $14 million, and higher customer capital contributions, up $19 million due to increased transmission customer connection activity. These favourable results were partially offset by higher operating and maintenance expenses, as system integration costs, software lease and maintenance costs, and third-party transportation costs were higher year-over-year. Other net losses also had an offsetting impact on the favourable results. Forward natural gas prices at December 31, 2025, declined below March 2025 levels, resulting in a $9 million unfavourable fair value adjustment. This adjustment reflects a widening negative price differential between the average deal price and the average market price on outstanding commodity purchase contracts. The differential increased by $0.35 per gigajoule (GJ) compared to March 31, 2025. Although the spread had narrowed in the fall as market prices strengthened, the subsequent price decline caused the differential to increase.
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