Second Quarter Report 2025-2026
Second Quarter Report September 30, 2025
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.
Stewardship We align resources towards the greatest and most responsible impact.
Teamwork We collaborate, respect, and trust
one another. We are diverse and inclusive.
TABLE OF CONTENTS Financial and Operating Highlights Management's Discussion and Analysis Introduction
3 4 4 9
Consolidated Financial Results Liquidity and Capital Resources Capital Additions Outlook Consolidated Financial Statements
11 10 13
Financial and Operating Highlights
Three months ended September 30,
Six months ended September 30,
CONSOLIDATED FINANCIAL INFORMATION ($ millions)
2025
2024
2025
2024
Delivery
47 65
48 61
108 130
109 123
Transportation and storage Realized commodity margin
4 1
3 2
9 7
9 3
Realized asset optimization margin Customer capital contributions
11
12
36
15
Total revenue and margins
128
126
290
259
Employee benefits
29 59 36
28 53 35
62
60
Operating and maintenance Depreciation and amortization
116
102
71 12
69 11
Saskatchewan taxes
7
6
Recovery on trade and other receivables
-
(2)
-
(2)
Net finance expense
18
19
38
38
Other net losses Total expenses
4
2
5
2
153
141
304
280
Net loss before unrealized market value adjustments
(25)
(15)
(14)
(21)
Market value adjustments CONSOLIDATED NET LOSS
(1)
(1)
(7)
(5)
(26)
(16)
(21)
(26)
Cash provided by operating activities Cash (used in) investing activities
37
60
88
139
(118)
(73)
(185)
(109)
Cash provided by (used in) financing activities
80
13
96 12
(48)
Dividends declared
8
4
8
Total assets Total net debt
3,873 2,027 61.2%
3,623 1,840 60.1%
Debt/Equity ratio
OPERATING STATISTICS Distribution energy (petajoules) Residential/Farm
2 2
2 2
6 7
7 7
Commercial
Industrial
49 53
45 49
94
90
Total
107
104
Weather (compared to last 30 years) Transmission energy (petajoules) Domestic
34% warmer 50% warmer 17% warmer 16% warmer
83
80
168
162
Export
3
1
7
1
Total
86
81
175
163
Cash used in Investing Activities $ millions
Loss before MVA $ millions
Cash from Operations $ millions
$185
100 150 200
100 150 200
$142
(30) (20) (10) 0
$139
$111
$109
$88
-$14
-$14
0 50
0 50
-$21
2025
2024
2023
2025
2024
2023
2025
2024
2023
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 six months ended September 30, 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 November 24, 2025 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 three 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 six months ending September 30, 2025, to the results for the six months ending September 30, 2024, unless otherwise noted. Consolidated Financial Results Consolidated Net Loss
Three months ended September 30,
Six months ended September 30,
(millions)
2025
2024
Change
2025
2024
Change
Net loss before unrealized market value adjustments Impact of fair value adjustments Revaluation of natural gas in storage
$
(25)
$
(15)
$
(10)
$
(14)
$
(21)
$
7
(1)
(2)
1
(7)
(5)
(2)
-
1
(1)
-
-
-
Consolidated net loss
$
(26)
$
(16)
$
(10)
$
(21)
$
(26)
$
5
The net loss before unrealized market value adjustments was $14 million at September 30, 2025, $7 million favourable compared to a net loss of $21 million from the same period in 2024. The favourable variance primarily results from higher customer capital contributions, which rose by $22 million in the first half of the year due to increased transmission customer connection activity. These favourable results were partially offset by higher operating and maintenance expenses, as contracts and consulting expenses and third-party transportation costs were higher year over year. Forward natural gas market prices at September 30, 2025, declined below March 2025 levels, generating a $7 million unfavourable fair value adjustment as the unfavourable price differential between average deal price and average market price on outstanding commodity purchase contracts declined a further $0.36 per gigajoule (GJ) at September 30, 2025, compared to March 31, 2025.
4
Management’s Discussions and Analysis
In addition, natural gas in storage at September 30, 2025, was recorded at the weighted average cost of gas, which was equal to the net realizable value. There was no impact on 2025 net income resulting from the revaluation of natural gas in storage. 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 the derivative instruments, driven by changes 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 of the natural gas contract, the amount paid or received by SaskEnergy becomes realized and is recorded 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. 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 realize losses on the sale of gas to customers over the long term. Consequently, SaskEnergy accumulates differences between the 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. 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, the balance between the two opposing objectives may change depending on current 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 September 30,
Six months ended September 30,
(millions)
2025
2024
Change
2025
2024
Change
Commodity sales
$
16 12
$
19 16
$
(3) (4)
$
41 32
$
45 36
$
(4) (4)
Commodity purchases
Realized margin on commodity sales Unrealized fair value adjustments
4
3
1
9
9
-
(2)
-
(2) (1)
(9)
(5)
(4) (4)
Margin on commodity sales
$
2
$
3
$
$
-
$
4
$
5
Management’s Discussion and Analysis
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 six months ending September 30, 2025, remained consistent with the prior year, with both periods reporting a margin of $9 million. While overall sales volumes declined due to slightly warmer weather resulting in reduced consumption, the average revenue per GJ improved year-over-year. In the prior year, excess gas was sold at lower prices, which reduced the average revenue by approximately $0.15 per GJ. The improved pricing in the current period offset the impact of lower volumes, resulting in a stable overall margin. The GCVA balance was $13 million owing to customers at September 30, 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 six months ending September 30, 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 $0.36 per GJ, to an unfavourable price differential of $0.53 per GJ at September 30, 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 September 30,
Six months ended September 30,
(millions)
2025
2024
Change
2025
2024
Change
Asset optimization sales
$
16 15
$
14 12
$
2 3
$
49 42
$
27 24
$
22 18
Asset optimization purchases
Realized margin on asset optimization sales Unrealized fair value adjustments Revaluation of natural gas in storage
1 1
2
(1)
7 2
3
4 2
(2)
3
- -
-
1 1
(1)
-
-
Margin on asset optimization sales
$
2
$
$
1
$
9
$
3
$
6
The realized margin on asset optimization sales for the six months ended September 30, 2025, which removes fair value adjustments on derivative instruments and the revaluation of natural gas in storage, totaled $7 million for the period, which was $4 million greater than the same period ended September 30, 2024. During 2025, the average margin on realized asset optimization sales was $0.17 per GJ, which was greater than the same six- month period in 2024 which saw a margin of $0.13 per GJ. Opportunities in the market saw volumes increase by 7 petajoules year over year, in addition to the improved margins realized year to date. The Corporation was also able to leverage unutilized transportation capacity through the period to recover a portion of third-party transportation costs.
6
Management’s Discussions and Analysis
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. The unrealized fair value adjustment on outstanding asset optimization derivative instruments had a favourable impact of $2 million on the asset optimization margin. Declining natural gas market prices through 2025 resulted in the differential between contract prices and market prices on future asset optimization sales contracts improving $0.30 per GJ, resulting in a $4 million favourable fair value adjustment, offset by a $2 million unfavourable fair value adjustment on asset optimization purchase contracts, which had a $0.14 per GJ margin reduction since the fiscal year end. Revaluation of Natural Gas in Storage The carrying amount of natural gas in storage is adjusted to reflect the lower of weighted average cost and net realizable value. At each reporting period, the Corporation measures net realizable value of natural gas in storage held for asset optimization transactions based on forward market prices and anticipated delivery dates. For the six months ended September 30, 2025, there was no revaluation on natural gas in storage inventory. 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 September 30,
Six months ended September 30,
(millions)
2025
2024
Change
2025
2024
Change
Delivery revenue
$
47 65 11
$
48 61 12
$
(1)
$
108 $
109 123
$
(1)
Transportation and storage revenue Customer capital contributions
4
130
7
(1)
36
15
21 27
Revenue
$
123 $
121
$
2
$
274 $
247
$
Delivery Revenue SaskEnergy provides reliable energy and competitive rates to customers, as they value low delivery charges. 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 access to low-cost energy sources compared to alternatives and 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 $108 million through the six months ended September 30, 2025, was only slightly lower than the same period in the prior year. While weather was slightly warmer than the prior year, resulting in less natural gas used as a heat source in homes around the province, the resulting reduction in revenues was offset by more customers served by the Corporation year-over-year. 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 in the province. 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
7
Management’s Discussion and Analysis
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 $130 million, for the six months ended September 30, 2025, are $7 million higher than the same period in 2024. An average rate increase of just over three per cent for transportation and storage services was implemented effective April 1, 2025, to address expansion of the transmission system and meet growing demand for natural gas services in Saskatchewan. 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 capital contributions were $21 million higher in 2025, resulting from the completion of a few significant transmission utility customers connections early in the year. Other 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.
Other expenses, net finance expenses and other net losses, as reported in the condensed consolidated financial statements, are as follows:
Three months ended September 30,
Six months ended September 30,
(millions)
2025
2024
Change
2025
2024
Change
Employee benefits
$
29 59 36
$
28 53 36
$
(1) (6)
$
62
$
60
$
(2)
Operating and maintenance Depreciation and amortization
116
102
(14)
-
71 12
69 11
(2) (1)
Saskatchewan taxes
7
6
(1) (8)
$ $ $
131 $
123
$ $ $
$ $ $
261 $
242
$ $ $
(19)
Net finance expenses
18
$ $
19
1
38
$ $
38
-
Other net losses
4
2
(2)
5
(2)
(7)
Employee Benefits Employee benefit costs are trending slightly higher in 2025 than 2024 levels as a result of inflationary wage and salary increases and a small increase in the number of full time equivalents as the Corporation was able to fill previously vacant positions.
8
Management’s Discussions and Analysis
Operating and Maintenance Operating and maintenance expenses were $14 million higher than in 2024, primarily due to system licensing and hosting costs, implementation costs of new business support software, and third-party transportation costs increasing. As the Corporation continues to leverage technology to improve the customer’s experience while also implementing business process improvements, the costs of implementing and hosting these applications continue to rise as more applications are transitioned from owned to subscription models. In addition, the Corporation utilizes third-party transportation to serve customer needs when it is more cost effective than developing new assets. With growing system requirements — resulting from customers continuing to choose, and other customers transitioning to, natural gas as their energy source — transportation costs are increasing due to both rate increases and additional demand service contracts have been placed with third-party transportation providers. Depreciation and Amortization Depreciation and amortization were $2 million higher than the same period in 2024, 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 growing customer demand. Net Finance Expenses Net finance expenses for 2025 were comparable to 2024. Although a loss was realized on the redemption of a debt retirement fund used to extinguish a long-term debt maturity during the period, interest rates have declined year-over-year, offsetting the one-time loss. The debt-to-equity ratio at September 30, 2025, is 61 per cent, which falls within the long-term target range of 58 to 63 per cent debt. 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 September 30,
Six months ended September 30,
(millions)
2025
2024
Change
2025
2024
Change
Cash provided by operating activities Cash used in investing activities
$
37
$
60
$
(23) (45)
$
88
$
139
$
(51) (76)
(118)
(73)
(185)
(109)
Cash provided by (used in) financing activities Decrease in cash and cash equivalents
80
13
67
96
(48) (18)
144
$
(1)
$
-
$
(1)
$
(1)
$
$
17
Operating Activities Cash provided by operating activities decreased $51 million through the six months ended September 30, 2025, compared to the same period in 2024, primarily due to unfavourable changes in working capital offsetting the positive operating results. High short term liability balances were paid down in the first quarter which more than offset the positive cash flow from asset optimization activities and customer capital contributions.
9
Management’s Discussion and Analysis
Investing Activities Cash used in investing activities increased $76 million compared to 2024, primarily due to major capital investments in customer growth projects. Financing Activities Cash provided by financing activities increased by $144 million in 2025 compared to the same period in 2024, primarily due to the use of short-term debt at lower interest rates to support operating activities. In the first half of the fiscal year, the Corporation borrowed an additional $75 million of long-term debt at a discount of $1 million. These proceeds, along with $44 million from the associated debt retirement funds, were used to repay a $75 million long-term debt maturity and to support capital expenditures throughout the period. Additionally, the Corporation made interest payments totaling $39 million and distributed $20 million in dividends. Capital Additions Capital additions, as reported in the condensed consolidated financial statements, were as follows:
Three months ended September 30,
Six months ended September 30,
(millions)
2025
2024
Change
2025
2024
Change
Customer growth System expansion Risk management
$
53 19 32 10
$
16 21 24
$
37
$
84 26 49 17
$
27 23 40
$
57
(2)
3 9 8
8 4
Reliability of natural gas service
6 2
9 4
Business and technology optimization
-
(2)
4
-
Capital additions
$
114
$
69
$
45
$
180 $
103
$
77
SaskEnergy is committed to providing solutions and services that benefit customers and Saskatchewan, leveraging the Corporation’s expertise and Saskatchewan’s private sector. The Corporation deploys its strategic capital to fund customer growth and create new business capabilities. Fulfilling customer demand for additional natural gas capacity is a core responsibility for the Corporation and demand is forecasted to moderately increase as a result of the growing industrial and power generation sectors. Key focus areas include maintaining the safety and reliability of the natural gas transmission and distribution systems, enhancing customer experience, and supporting the emissions reduction strategy. Capital additions through the six months ended September 30, 2025, were $77 million higher than the investment made in 2024, primarily due to increasing expenditures in customer growth, system expansion and risk management projects. Customer Growth Investment in customer growth projects of $84 million were $57 million higher than 2024 investment levels, as the Corporation continues to focus on investments that connect customers to the transmission system, particularly larger projects connecting major power generation facilities. System Expansion System expansion capital projects provide incremental capacity for the transmission and distribution systems, through the installation of new or expanded gas line or facility assets, thus enabling demand growth and the addition of new customers. A higher investment of $3 million in system expansion projects through 2025 compared to 2024 is resulting from spending on compression projects around the province including east Regina, Bayhurst and Unity. 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 capital investment over the last number of years.
10
Management’s Discussions and Analysis
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 $49 million is moderately higher in 2025 than the prior year as the Corporation continues its focus on cathodic protection, measurement and service replacement projects. 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 increased by $8 million in 2025, as the Corporation focuses investment on purchasing construction equipment, system improvement work on town border stations and network improvements. 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 2025 year-to-date investment in business and technology optimization of $4 million is comparable to 2024 and focused on the work management system upgrade project, which centers on work management business processes, foundational core systems integrations, and execution of ongoing enhancements. Outlook Safe, reliable, and affordable energy is crucial for the prosperity of Saskatchewan’s people, businesses, and industries. Addressing the impacts of inflation while continuing to provide affordable energy is increasingly challenging. Upholding the integrity and reliability of our system, expanding to meet our customers’ growing needs, and enhancing customer service is essential for SaskEnergy’s present and future success. These goals are supported by both operational efforts as well as our substantial capital investment program. Expectations for natural gas demand growth in 2025-26 remain consistent with recent years reflecting a modest increase from the growing industrial and power generation sectors. Meanwhile, the number of new customers connecting to SaskEnergy’s distribution system is expected to remain similar to recent years at around 3,000 in 2025-26. As a result, overall distribution and transmission revenue growth is expected to be small, absent the effect of the transportation and storage rate changes from April 1, 2025. Overall, lower earnings are forecasted in 2025-26 than the prior year as asset optimization margins are expected to moderate due to changing market opportunities, and the modest revenue growth noted above is surpassed by increased operating costs. Affordability remains a top priority for SaskEnergy and its focus on operational excellence will look to offset that cost growth as much as possible.
11
Consolidated Financial Statements
Contents Condensed C onsolidated Statement of Financial Position Condensed Consolidated Statement of Comprehensive Loss Condensed Consolidated Statement of Changes in Equity Condensed Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements
Long-Term Debt Commitments Unrealized Market Value Adjustments Natural Gas Sales and Purchases Delivery Revenue Transportation and Storage Revenue Net Finance Expenses
General Information Basis of Preparation Material Accounting Policy Information Financial and Derivative Instruments Financial Risk Management Property, Plant and Equipment Lease Liability
25
Consolidated Financial Statements (unaudited)
Condensed Consolidated Statement of Financial Position
September 30, 2025
March 31, 2025
(millions)
Notes
ASSETS Current assets Cash and cash equivalents
$
1
$
2
Trade and other receivables
102
171
Natural gas in storage held for resale
35 21
3
Inventory of supplies
19 45
Current portion of debt retirement funds Fair value of derivative instruments
-
4
5
5
164
245
Right-of-use assets Intangible assets
17 41
16 44
Property, plant and equipment
6
3,490
3,377
Debt retirement funds
161
152
$
3,873
$
3,834
LIABILITIES AND PROVINCE'S EQUITY Current liabilities Short-term debt
$
314 148
$
187 192
Trade and other payables
Dividends payable Contract liability
8
16 59
60
Current portion of lease liability Current portion of provisions Current portion of long-term debt Fair value of derivative instruments
7
5 7
5 9
8 4
-
75 12
19
561
555
Employee future benefits
2 5 9
3 5 8
Deferred revenue
Lease liability
7
Provisions
162
165
Long-term debt
8
1,861 2,600
1,787 2,523
Province's equity Equity advances
22
22
Other components of equity
(10)
(5)
Retained earnings
1,261 1,273 3,873
1,294 1,311 3,834
$
$
The accompanying notes are an integral part of the condensed consolidated financial statements
13
Consolidated Financial Statements (unaudited)
Condensed Consolidated Statement of Comprehensive Loss
For the Three Months Ended September 30, 2025
For the Three Months Ended September 30, 2024
Loss before Unrealized Market Value Adjust- ments
Loss 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
$
32 47 65 11
$
- - - - -
$
32 47 65 11
$
33 48 61 12
$
(2)
$
31 48 61 12
Delivery
- - -
Transportation and storage Customer capital contributions
155
155
154
( 2)
152
EXPENSES Natural gas purchases (net of change in inventory)
11
27 29 59 36
1
28 29 59 36
28 28 53 35
( 1)
27 28 53 35
Employee benefits
- - - -
- - - -
Operating and maintenance Depreciation and amortization
Saskatchewan taxes
7
7
6
6
Recovery on trade and other receivables
-
-
-
( 2)
-
(2)
158
1
159
148
( 1)
147
NET (LOSS) INCOME BEFORE THE FOLLOWING
(3)
(1)
(4)
6
( 1)
5
Net finance expenses
14
(18)
- -
(18)
(19)
- -
(19)
Other losses
(4)
(4)
( 2)
(2)
TOTAL NET LOSS
$
(25)
$
(1)
$
(26)
$
(15)
$
(1)
$
(16)
ITEMS THAT MAY BE RECLASSIFIED TO NET LOSS Change in fair value of debt retirement funds designated as FVOCI (1)
-
(4)
(4)
-
7
7
COMPREHENSIVE LOSS
$
(25)
$
(5)
$
(30)
$
(15)
$
6
$
(9)
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 Comprehensive Loss
For the Six Months Ended September 30, 2025
For the Six Months Ended September 30, 2024
Loss before Unrealized Market Value Adjust- ments
Loss 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
$
90
$
4
$
94
$
72
$
1
$
73
Delivery
108 130
- - -
108 130
109 123
- - -
109 123
Transportation and storage Customer capital contributions
36
36
15
15
364
4
368
319
1
320
EXPENSES Natural gas purchases (net of change in inventory)
11
74 62
11
85 62
60 60
6
66 60
Employee benefits
- - - -
- - - -
Operating and maintenance Depreciation and amortization
116
116
102
102
71 12
71 12
69 11
69 11
Saskatchewan taxes
Recovery on trade and other receivables
-
-
-
( 2)
-
(2)
335
11
346
300
6
306
NET INCOME BEFORE THE FOLLOWING Net finance expenses
29
(7)
22
19
( 5)
14
14
(38)
- -
(38)
(38)
- -
(38)
Other losses
(5)
(5)
( 2)
(2)
TOTAL NET LOSS
$
(14)
$
(7)
$
(21)
$
(21)
$
(5)
$
(26)
ITEMS THAT MAY BE RECLASSIFIED TO NET LOSS Change in fair value of debt retirement funds designated as FVOCI (1)
-
(5)
(5)
-
7
7
COMPREHENSIVE LOSS
$
(14)
$
(12)
$
(26)
$
(21)
$
2
$
(19)
The accompanying notes are an integral part of the condensed consolidated financial statements (1) Fair value through other comprehensive income (FVOCI)
15
Consolidated Financial Statements (unaudited)
Condensed Consolidated Statement of Changes in Equity
Other Components of Equity
Retained Earnings
Equity Advances
(millions)
Total
BALANCE, AT APRIL 1, 2024 Comprehensive income
$
1,235
$
22
$
(11)
$
1,246
90
- -
6
96
Dividends
( 31)
-
(31)
BALANCE, AT MARCH 31, 2025
1,294
22
(5) (5)
1,311
Comprehensive loss
( 21) ( 12)
- -
(26) (12)
Dividends
-
BALANCE, AT SEPTEMBER 30, 2025
$
1,261
$
22
$
(10)
$
1,273
The accompanying notes are an integral part of the condensed consolidated financial statements
16
Consolidated Financial Statements (unaudited)
Condensed Consolidated Statement of Cash Flows
For the Six Months Ended September 30,
(millions)
Notes
2025
2024
OPERATING ACTIVITIES Net loss
$
(21)
$
(26)
Add items not requiring an outlay of cash Net change in fair value of derivative instrument assets and liabilities
10
7
5
Depreciation and amortization
71 38
69 38
Net finance expenses
14
Loss on impairment of assets Net loss on disposal of assets
-
1
1
-
96
87 52
Net change in non-cash working capital related to operations
(8)
Cash provided by operating activities
88
139
INVESTING ACTIVITIES Additions to intangible assets
(3)
(5)
Additions to property, plant and equipment
(178)
(103)
Proceeds on disposal of assets
1
1
Decommissioning costs
(5)
(2)
Cash used in investing activities
(185)
(109)
FINANCING ACTIVITIES Debt retirement funds redemptions Debt retirement funds installments Net proceeds from short-term debt Net repayment of short-term debt
44
10
(12)
( 10)
127
-
-
( 91)
Proceeds from long-term debt Repayment of long-term debt
8 8 7
74
195
(75)
(100)
Repayment of principal on lease liability
(3)
(3)
Interest paid Dividends paid
(39) (20)
( 40)
(9)
Cash provided by (used in) financing activities
96
( 48)
DECREASE IN CASH AND CASH EQUIVALENTS
$
(1)
$
(18)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
$
2
$
20
CASH AND CASH EQUIVALENTS, END OF PERIOD
$
1
$
2
The accompanying notes are an integral part of the condensed consolidated financial statements
17
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, 2025.
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 November 24, 2025.
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.
18
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