Management’s Discussion and Analysis
The Corporation’s realized margin on commodity sales for the nine months ended December 31, 2025, was $27 million, $6 million higher than the $21 million reported in 2024. Sales volumes to utility customers were only slightly below prior year levels; however, the Corporation executed fewer excess gas sales in 2025, resulting in lower overall purchases and sales compared to 2024. Excess gas sold in the prior year was transacted at low prices, as is typical, which reduced the average revenue by approximately $0.10 per GJ. In the current year, the absence of these low-priced excess gas sales contributed to a more favourable revenue mix and supported the year-over-year improvement to the realized margin. The GCVA balance was $13 million owing to customers at December 31, 2025, an increase of $3 million over the balance at March 31, 2025. Declining natural gas market prices have caused a lower cost of gas than anticipated, increasing the balance owed to customers in the short term. Commodity Fair Value Adjustments For the nine months ending December 31, 2025, the fair value adjustment on commodity derivative instruments decreased the margin on commodity sales by $9 million. The unfavourable price differential of $0.17 per GJ between contract prices and market prices on future commodity purchase contracts at March 31, 2025, further declined $0.35 per GJ, to an unfavourable price differential of $0.52 per GJ at December 31, 2025. SaskEnergy segregates a portion of its natural gas purchase contracts for gas that will ultimately be sold to commodity customers. Under IFRS Accounting Standards, such own-use contracts are not required to be reported at market value. Asset Optimization Margin SaskEnergy uses its access to natural gas markets to execute purchases and sales of natural gas to generate margins. By utilizing off-peak transportation and storage capacity, SaskEnergy is able to find opportunities in the market to take advantage of pricing differentials between transportation hubs, delivery points and time periods. In most cases, the Corporation executes purchase and sales contracts at the same time, thereby mitigating much of the price risk that would normally be associated with such transactions. SaskEnergy also uses purchases and sales of natural gas to mitigate transportation constraints, which are executed at a cost.
The asset optimization margin, as reported in the condensed consolidated financial statements, was as follows:
Three months ended December 31,
Nine months ended December 31,
(millions)
2025
2024
Change
2025
2024
Change
Asset optimization sales
$
47 32 15
$
27 21
$
20 11
$
96 74 22
$
54 45
$
42 29 13
Asset optimization purchases
Realized margin on asset optimization sales
6
9
9
Unrealized fair value adjustments Margin on asset optimization sales
(2)
(1)
(1)
-
(1)
1
$
13
$
5
$
8
$
22
$
8
$
14
The realized margin on asset optimization sales for the nine months ended December 31, 2025, which removes fair value adjustments on derivative instruments, totaled $22 million for the period, which was $13 million greater than the same period ended December 31, 2024. During 2025, the average margin on realized asset optimization sales was $0.28 per GJ, which was greater than the same nine-month period in 2024 which saw a margin of $0.18 per GJ. Opportunities in the market saw volumes increase by 9 petajoules year over year, in addition to the improved margins realized year to date. SaskEnergy was also able to leverage unutilized transportation capacity to capitalize on favourable natural gas market spreads between Western Canada and other downstream markets. During the nine months ended December 31, 2025, the Corporation was able to recover $8 million in third-party transportation costs by utilizing spare transportation capacity in off-peak periods to move gas to other markets. Asset Optimization Fair Value Adjustments Through asset optimization strategies, the Corporation enters into various natural gas contracts which are subject to volatility of natural gas market prices until the natural gas contracts are realized. At December 31, 2025, no significant fair value adjustments were required on outstanding asset optimization derivative instruments. The price differentials between the average contracted prices and prevailing market prices for both purchase
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