2026-27 F irst Quarter Report
Community Aspiration Environmental sustainability and economic prosperity for future generations of Saskatchewan. Vision Providing critical energy to support a prosperous Saskatchewan. Mission SaskEnergy delivers natural gas and energy solutions responsibly to the residents, businesses, and industries of Saskatchewan.
Values
Safety We commit to our personal safety, the safety of our team, and the public.
Integrity We are accountable for our decisions, our actions, and the results.
Teamwork We collaborate, respect, and trust one another. We are a representative workforce.
Stewardship We align resources towards the greatest and most responsible impact.
Table of Contents 3
Financial and Operating Highlights
10 11 13
Capital Additions
Outlook
4 4 9
Introduction
Consolidated Financial Statements
Consolidated Financial Results Liquidity and Capital Resources
Financial and Operating Highlights
Three months ended June 30,
CONSOLIDATED FINANCIAL INFORMATION ($ millions)
2026
2025
Delivery
64 67
61 65
Transportation and storage Realized commodity margin
5 6 7
5 6
Realized asset optimization margin Customer capital contributions
25
Total revenue and margins
149
162
Employee benefits
32 55 37
33 57 35
Operating and maintenance Depreciation and amortization
Saskatchewan taxes Net finance expense
4
5
19
20
Other net losses Total expenses
-
1
147
151
Net income before unrealized market value adjustments
2 1 3
11
Market value adjustments CONSOLIDATED NET INCOME
(6)
5
Cash provided by operating activities Cash used in investing activities
94
51
(44) (42)
(67)
Cash (used in) provided by financing activities
16
Dividends declared
1
4
Total assets Total net debt
4,088 2,066 60.1%
3,772 1,926 59.4%
Debt/Equity ratio
OPERATING STATISTICS Distribution energy (petajoules) Residential/Farm
5 6
4 5
Commercial
Industrial
47 58
45 54
Total
Weather (compared to last 30 years) Transmission energy (petajoules) Domestic
10% colder
11% warmer
86
85
Export
1
4
Total
87
89
Cash used in Investing Activities $ millions
Income (Loss) before MVA $ millions
Cash from Operations $ millions
$94
$11
$79
$67
$44
$2
$51
$36
-$6 2024
2026
2025
2026
2025
2024
2026
2025
2024
3
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 three months ended June 30, 2026. 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 August 26, 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 2025-26 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 2025-26 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 three months of 2026-27 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 three months ended June 30, 2026, to the three months ended June 30, 2025, unless otherwise noted. Consolidated Financial Results Consolidated Net Income
Three months ended June 30,
(millions)
2026
2025 Change
Net income before unrealized market value adjustments
$
2 1 3
$
11
$
(9)
Impact of fair value adjustments
(6)
7
Consolidated net income
$
$
5
$
(2)
The net income before unrealized market value adjustments was $2 million for the three months ended June 30, 2026, a decrease of $9 million compared to $11 million for the same period in 2025. The unfavourable variance primarily results from lower customer capital contributions, as the first quarter last year saw some large customer projects go into service. These unfavourable results were partially offset by higher delivery revenue, higher transportation and storage revenue, and lower expenses across several categories. The impact of fair value adjustments for the three months ended June 30, 2026, was $7 million favourable compared to the same period in 2025. Lower volumes of outstanding natural gas purchase contracts relative to March 31, 2026, combined with relatively stable forward prices, resulted in a favourable fair value adjustment of $1 million at June 30, 2026. This contrasts with an unfavourable fair value adjustment of $6 million at June 30, 2025, driven by a decline in forward natural gas market prices from March 2025 levels.
4
Management’s Discussion and Analysis
Natural Gas Sales and Purchases Included within natural gas sales and purchases are rate-regulated commodity sales to distribution customers and non- regulated asset optimization activities. IFRS Accounting Standards requires these activities to be presented together within the consolidated financial statements; however, the Corporation manages these activities as distinct and separate businesses and, as such, the MD&A addresses these natural gas sales and purchases separately. With the exception of those contracts entered into for an entity’s normal usage, IFRS Accounting Standards requires derivative instruments such as natural gas purchase and sales contracts to be recorded at fair value until their settlement date. Changes in the fair value of derivative instruments, driven by movements in future natural gas prices, are recorded in net income through natural gas sales or natural gas purchases, depending on the specific contract. Upon settlement, the amounts paid or received become realized and are recognized in natural gas sales or purchases. The majority of SaskEnergy’s natural gas contracts are normal usage and are not recorded at fair value but at the contract price upon settlement. Net Commodity Sales Subject to Section 16 of The SaskEnergy Act , SaskEnergy’s charges, rates, terms and conditions are described in a Terms & Conditions of Service Schedule. This schedule sets natural gas commodity rates, as approved by Provincial cabinet, based on the recommendations of the Saskatchewan Rate Review Panel (SRRP). The commodity rate is determined based on rate- setting principles and is designed to recover the realized costs associated with the sale of natural gas to distribution customers. Regulatory principles require that utilities neither earn a profit nor incur losses on the sale of gas to customers over the long term. Consequently, SaskEnergy accumulates differences between commodity revenue earned and the cost of natural gas sold in a Gas Cost Variance Account (GCVA). The balance in the GCVA, which is not included in SaskEnergy’s financial statements, is either recovered from, or refunded to, customers as part of future commodity rates. SaskEnergy prepares its financial statements on a consolidated basis while applying IFRS Accounting Standards. Consequently, the amounts determined for rate-setting purposes are different than those reported within its consolidated financial statements, most notably related to intercompany charges for natural gas transportation services. A gain or loss reported in the Corporation’s consolidated financial statements may not be reflected in the GCVA. SaskEnergy’s natural gas price risk management program has two objectives: to reduce the impact of natural gas price volatility on the cost of gas; and to support rates that are competitive with other utilities. Reducing the impact of price volatility requires establishing certainty in the cost of gas, while supporting competitive rates often means allowing purchase prices to follow market prices. As a result, SaskEnergy's approach to balancing these objectives may shift depending on prevailing market conditions. In order to ensure a secure supply of natural gas, SaskEnergy contracts for the physical delivery of natural gas using non- financial derivatives, referred to as forward or physical natural gas contracts. The purchase price contained in these forward contracts may be fixed, or it may be based on a variable index price. While fixed price contracts reduce the impact of natural gas price volatility, variable or market prices can assist in offering competitive rates depending on the pricing environment. SaskEnergy may also use financial derivatives and physical swaps to manage the future purchase price of natural gas.
The commodity sales to customers, as reported in the condensed consolidated financial statements, were as follows:
Three months ended June 30,
(millions)
2026
2025 Change
Commodity sales
$
31 26
$
25 20
$
6 6
Commodity purchases
Realized margin on commodity sales Unrealized fair value adjustments
5 1 6
5
-
(7) (2)
8 8
Margin on commodity sales
$
$
$
The realized margin on commodity sales excludes the impact of unrealized fair value adjustments on derivative instruments. These adjustments can fluctuate significantly from one period to the next and do not necessarily represent the amount that will be paid upon settlement of the related natural gas contract.
The Corporation's realized margin on commodity sales for the three months ended June 30, 2026, was $5 million, unchanged
5
Management’s Discussion and Analysis
from the same period in 2025. Sales volumes to utility customers increased by 2 petajoules compared to the prior year, driven by consumption levels associated with weather that was 10 per cent colder than normal. However, the benefit of higher volumes was more than offset by a higher cost of gas, as natural gas market prices have increased year over year. The GCVA balance was $15 million owing to customers at June 30, 2026, unchanged from March 31, 2026. Gas prices experienced only minor fluctuations during the first quarter and ended the period at levels comparable to March 31, 2026, resulting in little change to the GCVA balance. Commodity Fair Value Adjustments For the three months ended June 30, 2026, the fair value adjustment on commodity derivative instruments increased the margin on commodity sales by $1 million due to an improvement in the position of commodity purchase contracts. While the overall position remains unfavourable, the improvement was primarily attributable to a lower volume of outstanding contracts compared to March 31, 2026. The volume of outstanding purchase contracts was 21 petajoules at March 31, 2026, compared to 18 petajoules at June 30, 2026. 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 June 30,
(millions)
2026
2025 Change
Asset optimization sales
$
24 18
$
33 27
$
(9) (9)
Asset optimization purchases
Realized margin on asset optimization sales
6
6 1 7
-
Unrealized fair value adjustments Margin on asset optimization sales
-
(1) (1)
$
6
$
$
The realized margin on asset optimization sales for the three months ended June 30, 2026, which removes fair value adjustments on derivative instruments, totaled $6 million for the period, which was unchanged from the same period in 2025. The average margin on realized asset optimization sales was $0.26 per GJ, compared to $0.25 per GJ in the prior year. Realized volumes were 4 petajoules lower than the same period in 2025, as market conditions did not provide the same level of optimization opportunities available in the prior year. This reduction was largely offset by higher recoveries of third-party transportation costs, with the Corporation realizing $3 million from unutilized transportation capacity compared to $2 million in the same period of 2025. These recoveries are generated from the assignment of utilized spare transportation capacity during off-peak periods to third parties for use in natural gas marketing activity, thereby offsetting a portion of the Corporation's transportation costs. 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 June 30, 2026, the net fair value adjustment on outstanding asset optimization contracts remained unchanged from March 31, 2026. Purchase contracts recorded a favourable adjustment of $1 million, primarily due to a lower volume of outstanding contracts at June 30, 2026. This benefit was fully offset by an unfavourable $1 million adjustment on sales contracts, reflecting both a reduction in outstanding contract volumes and a slight deterioration in the average contracted sale prices and current
6
Management’s Discussion and Analysis
market price differential. As a result, there was no overall change in the fair value adjustment recorded on the Corporation's outstanding asset optimization contracts during the quarter. Revenue Delivery revenue, transportation and storage revenue, and customer capital contributions, as reported in the condensed consolidated financial statements, were as follows:
Three months ended June 30,
(millions)
2026
2025 Change
Delivery revenue
$
64 67
$
61 65 25
$
3 2
Transportation and storage revenue Customer capital contributions
7
(18) (13)
Revenue
$
138 $
151
$
Delivery Revenue Natural gas delivery rates are designed to recoup all distribution facility and operating costs necessary for delivery of natural gas to customers throughout the year and earn a return for its shareholders. Natural gas storage and transportation costs — as well as ongoing investments related to safety, system integrity and growing infrastructure — are factored into delivery rates. Other considerations impacting natural gas delivery services include regulatory code compliance and industry best practices regarding safety. To minimize the financial impacts of these on delivery service customers, the Corporation strives to make the most effective use of resources and technology, and to collaborate with other Crown corporations and executive government. SaskEnergy continues to focus on items within the Corporation’s control to embed efficiency into processes, such as identifying opportunities for standardization, simplification, and the elimination of waste from processes. SaskEnergy will continue to strive to provide customers with delivery charges that are among the lowest in Canada. Delivery revenue is primarily driven by the number of customers and the amount of natural gas they consume. Weather is the most significant external factor affecting delivery revenue, as residential and commercial customers consume natural gas primarily as heating fuel. Delivery revenue of $64 million for the three months ended June 30, 2026, was $3 million higher than the same period in the prior year. Weather during the quarter was 21 per cent colder than the same period in the prior year, resulting in increased customer demand and higher natural gas consumption, which contributed to the increase in delivery revenue. Transportation and Storage Revenue The Corporation generates transportation revenue by receiving gas from customers at various receipt points in Saskatchewan and Alberta and delivering natural gas to customers at various delivery points within Saskatchewan. The transportation toll structure consists of a receipt service charge, which customers pay when they put gas onto the natural gas transportation system, and a delivery service charge that customers pay when they take delivery from the natural gas transportation system. For receipt and delivery services, the Corporation offers both firm and interruptible transportation contracts. Under a firm service contract, the customer has a right to deliver or receive a specified quantity of gas on each day of the contract. With a firm contract, customers pay for the amount of capacity they have contracted for, whether they use it or not. Under an interruptible contract, customers may deliver or receive gas only when there is available capacity on the system and only pay receipt and delivery tolls when they deliver or receive gas. Integral to the Corporation’s transmission system are several strategically located natural gas storage sites, which have the capacity to provide operational flexibility along with a reliable and competitive natural gas storage service. Transportation and storage revenues of $67 million, for the three months ended June 30, 2026, are $2 million higher than the same period in 2025. The primary reason for the variance is higher contracted demand than the prior year. In addition, an average rate increase of nearly two per cent for transportation and storage services was implemented effective April 1, 2026, to address expansion of the transmission system and meet growing demand for natural gas services in Saskatchewan.
7
Management’s Discussion and Analysis
Customer Capital Contributions The Corporation receives capital contributions from customers to offset the cost of constructing facilities to connect them to the transmission and distribution systems. Generally, contributions related to transmission system projects tend to be larger but less frequent than contributions related to the distribution system. The volume and magnitude of contribution revenue can vary significantly period-over-period, as numerous factors influence their receipt and recognition as revenue. Customer contribution revenue was $18 million lower than in the same period of 2025. The decrease was primarily due to the completion of several transmission customer connection projects in the prior year, which generated significant contribution revenue. No transmission customer projects of a similar scale were completed during the same period in 2026. Expenses SaskEnergy’s expenses are driven to a large degree by its investment in its transmission, distribution and storage systems. Depreciation and amortization expense, net finance expenses and Saskatchewan taxes are directly tied to the investment in facilities. As the level of investment in facilities increases, these expenses also increase. Employee benefit expenses, and operating and maintenance expenses, are also driven by the Corporation’s investment in facilities, although less directly. As the number of customers increases, infrastructure to serve those customers grows, and the costs to operate and maintain the system rise in correlation with the increasing kilometres of gas lines, number of service connections and amount of compression equipment. Additional regulatory requirements and changing public perceptions have resulted in accelerated prevention, detection and mitigation initiatives – adding pressure to transmission and storage, and delivery service rates. Expenses, net finance expenses and other net losses, as reported in the condensed consolidated financial statements, are as follows:
Three months ended June 30,
(millions)
2026
2025 Change
Employee benefits
$
32 55 37
$
33 57 35
$
1 2
Operating and maintenance Depreciation and amortization
(2)
Saskatchewan taxes
4
5
1 2 1 1
$ $ $
128 $
130
$ $ $
Net finance expenses
19
$ $
20
Other net losses
-
1
Employee Benefits Employee benefit costs are lower in 2026 than in 2025, primarily due to fewer full-time equivalents than the previous year. Operating and Maintenance Operating and maintenance expenses were $2 million lower than in 2025. The decrease was primarily due to lower costs associated with business technology initiatives, including application management services, and reduced consulting expenditures on advanced metering infrastructure and enterprise support service initiatives. Expenses were also lower as a result of decreased third-party transportation costs, reflecting lower transportation rates, as well as the absence of carbon levy costs incurred in the prior year. These favourable variances were partially offset by higher software licensing and maintenance costs, driven by inflationary price increases and the Corporation's continued reliance on technology solutions to support business operations and enhance customer service. Operating expenses were also impacted by higher rebate payments under energy efficiency initiatives, as customer participation in the Homes Beyond Code programs exceeded expectations. Depreciation and Amortization Depreciation and amortization charges were $2 million higher than the same period in 2025, as the Corporation continues to balance the safety and system integrity of its natural gas infrastructure with the demand of its residential, commercial and industrial customer base. Strategic capital investments required that necessary infrastructure be put into service to meet this
8
Management’s Discussion and Analysis
growing customer demand.
Saskatchewan Taxes
Saskatchewan taxes were lower than in 2025, primarily due to the reduction in the Saskatchewan Corporation Capital Tax rate as part of the Province's two-year phase-out of the tax. Net Finance Expenses Net finance expenses for 2026 were slightly lower than in 2025. In the prior year, a loss was realized on the redemption of a debt retirement fund used to extinguish a long-term debt maturity. No such loss was recognized in the current year, and earnings amounted to $2 million. The debt-to-equity ratio at June 30, 2026, is 60.1 per cent, which falls within the long-term target range of 58 to 63 per cent debt.
Other Net Losses
The Corporation did not report any other gains or losses in the three months ended June 30, 2026. In the prior year, $1 million in other losses were recognized, as costs were incurred for the decommissioning of assets that did not have an established liability. Liquidity and Capital Resources As a Crown corporation, SaskEnergy’s primary sources of capital are cash from operations and debt — which is borrowed through the Province’s General Revenue Fund. Cash from operations is SaskEnergy’s most important source of capital. As a utility, cash from operations is relatively stable and the Corporation relies on it to fund a significant proportion of its investment in its natural gas facilities, and the debt servicing costs on those investments. Long- and short-term debt can be borrowed through the Province of Saskatchewan to meet any long- or short-term incremental capital requirements, and to repay debt as it matures. Sources of liquidity include Order in Council authority to borrow up to $500 million in short-term loans, and a $50 million line of credit with the Toronto-Dominion Bank. Within this line of credit, the Corporation provides a $20 million letter of credit with ICE NGX as security for natural gas purchases and sales conducted by the Corporation of the ICE NGX natural gas exchange in Alberta, leaving $30 million uncommitted. Under The SaskEnergy Act , the Corporation may borrow up to $2,500 million of debt upon approval of the Lieutenant Governor in Council.
Three months ended June 30,
(millions)
2026
2025 Change
Cash provided by operating activities Cash used in investing activities
$
94
$
51
$
43 23
(44) (42)
(67)
Cash (used in) provided by financing activities
16
(58)
Increase in cash and cash equivalents
$
8
$
-
$
8
Operating Activities Cash provided by operating activities increased by $43 million for the three months ended June 30, 2026, compared to the same period in 2025. The increase was primarily attributable to a $31 million favourable change in contract liabilities. In the prior year, a greater amount of customer contribution revenue was recognized as related assets were placed into service, resulting in a reduction of contract liabilities. In the current year, contract liabilities increased as customer contributions continued to be collected for capital projects that are under construction and have not yet been placed into service. The increase in operating cash flows was also driven by a $20 million favourable change in accounts payable and accrued liabilities. During the prior year, the Corporation settled a higher level of short-term liabilities, reflecting unusually high liability balances at the beginning of the fiscal year. As a result, cash outflows related to the settlement of these obligations were lower in the current year.
9
Management’s Discussion and Analysis
Investing Activities Cash used in investing activities decreased by $23 million compared to the same period in 2025, primarily reflecting lower capital investments in customer growth projects. Lower capital spending in the current period reduced overall cash requirements compared to the prior year. Financing Activities Cash used in financing activities was $42 million for the three months ended June 30, 2026, compared to cash provided by financing activities of $16 million in the same period in 2025. The $58 million decrease was primarily attributable to changes in short-term debt, which decreased by $33 million in the current period compared to an increase of $30 million in the prior- year period. In 2025, short-term debt was utilized to fund operating requirements and short-term liabilities while interest rates were favourable. Improved operating cash flows and lower overall cash requirements in the current period reduced the need for short-term financing, resulting in the repayment of short-term debt. Capital Additions Capital additions, as reported in the condensed consolidated financial statements, were as follows:
Three months ended June 30,
(millions)
2026
2025 Change
Customer growth System expansion Risk management
$
15
$
31
$
(16)
7
7
- -
17
17
Reliability of natural gas service
3 1
7 4
(4) (3)
Business and technology optimization
Capital additions
$
43
$
66
$
(23)
SaskEnergy is committed to providing solutions and services that benefit customers and Saskatchewan, leveraging the Corporation’s expertise and Saskatchewan’s private sector. To meet these needs the Corporation deploys capital among strategic projects to fund customer growth or create new business capabilities. Maintaining current capacity and service levels are the focus of sustainment capital programs which include key focus areas of maintaining the safety and reliability of the natural gas transmission and distribution systems and supporting the emissions reduction strategy. Following recent years of near record capital plans, the 2026-27 budget indicates a more modest level of capital investment as several large projects are winding down and efforts to streamline operational capital programs have been undertaken. Throughout the year, SaskEnergy will make more than $221 million in net capital investments across the province. Customer Growth SaskEnergy has a franchise obligation to provide distribution and transmission service to customers in Saskatchewan. Investment in customer growth projects of $15 million were $16 million lower than 2025 investment levels due to timing of spend on some major customer projects. System Expansion SaskEnergy closely scrutinizes the need for additional infrastructure and monitors customer activity through a variety of channels to identify when system expansion is needed to accommodate growth. Recent years have included significant spending on several large compression expansion projects around the province, however 2026-27 will see a transition as some of those projects have been principally completed. While some large projects remain in execution, there is minimal change to the year over year spend. Risk Management Capital investment in safety and system integrity continues to be SaskEnergy’s top priority. SaskEnergy takes a long-term view and uses a risk-based approach to determine project priorities and the appropriate level of total integrity spending. Industry comparable data also provides reference, as the industry as a whole has progressively elevated safety and system integrity
10
Management’s Discussion and Analysis
capital investment over the last number of years.
Risk management capital projects concentrate on mitigating the likelihood of a negative consequence occurring on the SaskEnergy system, such as damage or loss of gas containment. These consequences typically include damage to infrastructure, environment and potential harm to or loss of human life. Risk management spending of $17 million is in line with the year-to-date spend in 2025. Reliability of Natural Gas Service SaskEnergy’s network of transmission and distribution infrastructure requires regular monitoring and inspection, maintenance, upgrading and replacement to maintain service reliability for customers, avoid public safety incidents, and meet growing regulatory requirements. Recent years have also seen an increase in the cyber threat landscape and as a critical infrastructure operator, the Corporation has developed a robust Enterprise Security program that addresses both cyber and physical risks. This program requires continual improvement to mitigate risks and ensure secure systems for reliable operations. Reliability of natural gas in service includes enhancements, modifications or upgrades to facilities, ensuring that natural gas demand will be met without failure or loss of service. Reliability of natural gas service spending decreased by $4 million in 2026 year-to-date. Business and Technology Optimization Business and technology optimization ensures that every investment in information technology, every resource allocated and every application in development or in production, meets the Corporation’s business goals. The 2026 year-to-date investment in business and technology optimization of $1 million is lower than 2025. SaskEnergy has adopted more cloud computing services and Software as a Service (SaaS) arrangement to meet its software and technology infrastructure needs. In doing so, spending on these systems has shifted increasingly from capital investment to operating expenses. Outlook Safe, reliable, and affordable energy remain crucial for the prosperity of Saskatchewan’s people, businesses, and industries. Maintaining affordability while earning a return aligned to long-term expectations for a natural gas utility, is an increasing challenge given the growing cost pressures of recent years. The 2026-27 financial budget includes cost control measures, such as maintaining a consistent level of operating expenses and executing on a lower operational sustainment capital program, to begin addressing this challenge. SaskEnergy's distribution utility serves more than 414,000 customers and is expected to continue growing at a modest rate of less than 1 per cent annually, resulting in limited revenue growth. At the same time, operating costs continue to rise due to inflation, ongoing investment in system reliability, technology modernization, and cybersecurity. While efficiency initiatives and steady customer growth have helped maintain affordable rates, earnings have declined below long-term targets. To support the financial sustainability of the distribution system while balancing customer affordability, SaskEnergy is relying on continued cost management and a regulatory revenue framework that supports the achievement of target returns by 2030- 31. Revenues from transmission and storage have risen steadily in recent years from both modest demand growth as well as timely rate adjustments needed to account for increasing operating costs, primarily from rising third-party transportation costs. As a result, returns for the Corporation’s transmission and storage utility have been closely aligned with its long-term return target of 8.57 per cent.
11
Consolidated Financial Statements
Contents
13 Condensed Consolidated Statement of Financial Position 14 Condensed Consolidated Statement of Income and Comprehensive Income 15 Condensed Consolidated Statement of Changes in Equity 16 Condensed Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements 17
General Information Basis o f Preparation
18 19 20 23 23 24 24 25 25 26 26 26
Material Accounting Policy Information Financial and Derivative Instruments
Financial Risk Management Property, Plant and Equipment
Lease Liability Long-Term Debt Commitments
Unrealized Market Value Adjustments Natural Gas Sales and Purchases
Delivery Revenue
Transportation and Storage Revenue
Net Finance Expenses
Consolidated Financial Statements (unaudited)
Condensed Consolidated Statement of Financial Position
June 30, 2026
March 31, 2026
(millions)
Notes
ASSETS Current assets Cash and cash equivalents
$
11
$
1
Trade and other receivables
112
167
Natural gas in storage held for resale
15 21
8
Inventory of supplies
19
Current portion of debt retirement funds Fair value of derivative instruments
2 2
2 3
4
163
200
Right-of-use assets Intangible assets
22 44
21 42
Property, plant and equipment
6
3,675
3,663
Debt retirement funds
184
171
$
4,088
$
4,097
LIABILITIES AND PROVINCE'S EQUITY Current liabilities Short-term debt
$
262 103
$
295 152
Trade and other payables
Dividends payable Contract liability
1
16
159
128
Current portion of lease liability Current portion of provisions Current portion of long-term debt Fair value of derivative instruments
7
6 9
6 7
8 4
17 20
17 22
577
643
Employee future benefits
2 5
2 5
Deferred revenue
Lease liability
7
11
12
Provisions
164
158
Long-term debt
8
1,967 2,726
1,919 2,739
Province's equity Equity advances
22
22
Other components of equity
(6)
(8)
Retained earnings
1,346 1,362 4,088
1,344 1,358 4,097
$
$
The accompanying notes are an integral part of the condensed consolidated financial statements
13
Consolidated Financial Statements (unaudited)
Condensed Consolidated Statement of Comprehensive Income
For the Three Months Ended June 30, 2026
For the Three Months Ended June 30, 2025
Income before Unrealized Market Value Adjust- ments
Income before Unrealized Market Value Adjust- ments
Unrealized Market Value Adjust- ments (Note 10)
Unrealized Market Value Adjust- ments (Note 10)
Total
Total
(millions)
Notes
REVENUE Natural gas sales
11 12 13
$
55 64 67
$
(1)
$
54 64 67
$
58 61 65 25
$
4
$
62 61 65 25
Delivery
- - -
- - -
Transportation and storage Customer capital contributions
7
7
193
(1)
192
209
4
213
EXPENSES Natural gas purchases (net of change in inventory)
11
44 32 55 37
(2)
42 32 55 37
47 33 57 35
10
57 33 57 35
Employee benefits
- - - -
- - - -
Operating and maintenance Depreciation and amortization
Saskatchewan taxes
4
4
5
5
172
(2)
170
177
10
187
NET INCOME BEFORE THE FOLLOWING Net finance expenses
21
1
22
32
(6)
26
14
(19)
- -
(19)
(20)
- -
(20)
Other losses
-
-
(1)
(1)
TOTAL NET INCOME
$
2
$
1
$
3
$
11
$
(6)
$
5
ITEMS THAT MAY BE RECLASSIFIED TO NET INCOME Change in fair value of debt retirement funds designated as FVOCI (1)
-
2 3
2 5
-
(1) (7)
(1)
COMPREHENSIVE INCOME
$
2
$
$
$
11
$
$
4
The accompanying notes are an integral part of the condensed consolidated financial statements (1) Fair value through other comprehensive income (FVOCI)
14
Consolidated Financial Statements (unaudited)
Condensed Consolidated Statement of Changes in Equity
Other Components of Equity
Retained Earnings
Equity Advances
Total
(millions)
BALANCE, AT APRIL 1, 2025 Comprehensive income
$
1,294
$
22
$
(5) (3)
$
1,311
84
- -
81
Dividends
( 34)
-
(34)
BALANCE, AT MARCH 31, 2026
1,344
22
(8)
1,358
Comprehensive income
3
- -
2
5
Dividends
(1)
-
(1)
BALANCE, AT JUNE 30, 2026
$
1,346
$
22
$
(6)
$
1,362
The accompanying notes are an integral part of the condensed consolidated financial statements
15
Consolidated Financial Statements (unaudited)
Condensed Consolidated Statement of Cash Flows
For the Three Months Ended June 30,
(millions)
Notes
2026
2025
OPERATING ACTIVITIES Net income
$
3
$
5
Add (deduct) items not requiring an outlay of cash Net change in fair value of derivative instrument assets and liabilities
10
(1)
6
Depreciation and amortization
37 19 58 36 94
35 20 66
Net finance expenses
14
Net change in non-cash working capital related to operations
(15)
Cash provided by operating activities
51
INVESTING ACTIVITIES Additions to intangible assets
(2)
(3)
Additions to property, plant and equipment
(41)
(63)
Decommissioning costs
(1)
(1)
Cash used in investing activities
(44)
(67)
FINANCING ACTIVITIES Debt retirement funds redemptions Debt retirement funds installments
-
44
(10) (33)
(11)
Net (repayment of) proceeds from short-term debt
30 74
Proceeds from long-term debt Repayment of long-term debt
8 8 7
48
-
(75)
Repayment of principal on lease liability
(2)
(1)
Interest paid Dividends paid
(29) (16) (42)
(29) (16)
Cash (used in) provided by financing activities
16
INCREASE IN CASH AND CASH EQUIVALENTS
$
8
$
-
Cash and cash equivalents, beginning of period, prior to IFRS 9 amendments
3 3
1 2
Adjustment on initial application of IFRS 9 amendments
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
$
3
$
2
CASH AND CASH EQUIVALENTS, END OF PERIOD
$
11
$
2
The accompanying notes are an integral part of the condensed consolidated financial statements
16
Notes to the Consolidated Financial Statements (unaudited)
1. General Information
SaskEnergy Incorporated (SaskEnergy or the Corporation) is a Saskatchewan provincially owned Crown corporation operating under authority of The SaskEnergy Act . The address of SaskEnergy’s registered office and principal place of business is 1777 Victoria Avenue, Regina, Saskatchewan, Canada S4P 4K5. The Corporation owns and operates natural gas-related businesses located both within and outside of Saskatchewan. The condensed consolidated financial statements should not be taken as indicative of the performance to be expected for the full year due to the seasonal nature of the natural gas utility business. By virtue of The Crown Corporations Act, 1993 , SaskEnergy has been designated as a subsidiary of Crown Investments Corporation of Saskatchewan (CIC), a Saskatchewan provincially owned Crown corporation. Accordingly, the financial results of SaskEnergy are included in the consolidated financial statements of CIC. As a provincial Crown corporation, SaskEnergy and its wholly owned subsidiaries are not subject to Federal or Provincial income taxes in Canada.
2. Basis of Preparation
a. Statement of compliance
The Corporation’s condensed consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting using accounting policies consistent with IFRS® Accounting Standards, as issued by the International Accounting Standards Board (IASB). The condensed consolidated financial statements do not include all of the information required for the Corporation’s annual consolidated financial statements. Accordingly, these statements should be read with reference to the annual report for the year ended March 31, 2026.
The accounting policies used in the preparation of these condensed consolidated financial statements conform with those used in the Corporation's most recent annual consolidated financial statements.
The condensed consolidated financial statements were authorized for issue by the Audit and Finance Committee of the Board of Directors on August 26, 2026.
b. Basis of measurement
The condensed consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries with all significant transactions and balances being eliminated. The condensed consolidated financial statements have been prepared on the historical cost basis except for the following items, which are described in Note 3:
Financial instruments classified as at fair value through profit or loss Financial instruments classified as at fair value through other comprehensive income Employee future benefits Provisions Natural gas in storage held for resale
c. Functional and presentation currency
The condensed consolidated financial statements are presented in Canadian dollars, the Corporation’s functional currency, unless otherwise stated. All financial information presented in Canadian dollars has been rounded to the nearest million.
d. Use of estimates and judgments
In the application of the Corporation’s accounting policies, which are described in Note 3, management is required to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. Actual results may differ from these estimates.
17
Notes to the Consolidated Financial Statements (unaudited)
The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. The estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised as well as any future periods affected.
Information about critical judgments in applying accounting policies that have a material effect on the amounts recognized in the condensed consolidated financial statements include:
Revenue recognition related to unbilled revenue Existence of decommissioning liabilities Designation of own-use derivative contracts (Note 9)
Information about significant management estimates and assumptions that have a risk of resulting in a significant adjustment within the next financial period include:
Estimated unbilled revenue Expected credit losses
Net realizable value of natural gas in storage held for resale Fair value of financial and derivative instruments (Note 4) Useful lives and depreciation rates for right-of-use (ROU) assets Useful lives and amortization rates for intangible assets Useful lives and depreciation rates for property, plant and equipment (Note 6) Recoverable amount of non-financial assets (Note 6) Estimated lease liability (Note 7)
Estimated unearned customer capital contributions Estimated future cost of decommissioning liabilities
3. Material Accounting Policy Information Accounting policies applied by the Corporation and its subsidiaries to the condensed consolidated financial statements are consistent with those applied to the consolidated financial statements prepared for the year ended March 31, 2026, unless otherwise noted. a. New accounting standards and amendments adopted
The Corporation adopted the following amendments effective April 1, 2026:
Amendments to IFRS 9, Financial Instruments , and IFRS 7, Financial Instruments: Disclosures Effective April 1, 2026, the Corporation adopted amendments to IFRS 9, Financial Instruments and IFRS 7, Financial Instruments: Disclosures, relating to the classification and measurement of financial instruments. The amendments were applied prospectively, without restatement of comparative periods, in accordance with the transitional provisions. Adoption of the amendments resulted in a change to the Company’s accounting policy for the derecognition of trade payables, whereby derecognition occurs upon settlement through the counterparty’s bank. On transition, accounts payable and cash and cash equivalents were each higher by $2 million as at April 1, 2026, with the adjustment reflected in the condensed consolidated statement of cash flows for the three months ended June 30, 2026.
The Corporation also adopted other amendments to IFRS Accounting Standards that became effective April 1, 2026; however, these amendments did not have a material impact on the Corporation's consolidated financial statements.
b. New standards and amendments not yet effective
IFRS 18, Presentation and Disclosure in Financial Statements IFRS 18 introduces new requirements for the presentation and disclosure of financial statements, including the introduction of new subtotals in the statement of profit or loss, enhanced principles for aggregation and disaggregation of items, and disclosure of management-defined performance measures.
18
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