| INCOME TAXES |
The following table reconciles the expected income
tax (recovery) expense calculated at the Canadian statutory rate of 23% (2024 – 23%) to the actual income tax expense (recovery).
| ($ thousands) |
|
Year ended
December 31,
2025 |
|
|
Year ended
December 31,
2024 |
|
| Income before taxes |
|
$ |
55,323 |
|
|
$ |
36,532 |
|
| Expected statutory income tax rate |
|
|
23.00 |
% |
|
|
23.00 |
% |
| Expected income tax expense |
|
|
12,724 |
|
|
|
8,402 |
|
| Gain on warrant revaluation |
|
|
(3,261 |
) |
|
|
(75 |
) |
| Capital gain on debt settlement |
|
|
(1,688 |
) |
|
|
- |
|
| Effect of change of control (Note1) |
|
|
- |
|
|
|
8,663 |
|
| Other permanent differences |
|
|
44 |
|
|
|
2,100 |
|
| Change in unrecognized deferred income tax asset |
|
|
- |
|
|
|
(103,969 |
) |
| Deferred income tax expense (recovery) |
|
$ |
7,819 |
|
|
$ |
(84,879 |
) |
| ($ thousands) | |
December 31,
2025 | | |
December 31,
2024 | |
| Deferred tax asset (liability) related to: | |
| | |
| |
| Property, plant & equipment | |
$ | (143,797 | ) | |
$ | (146,895 | ) |
| Corporate non-capital tax losses carried forward | |
| 285,423 | | |
| 293,561 | |
| Risk management contracts | |
| (2,534 | ) | |
| 57 | |
| Share issuance costs | |
| 1,875 | | |
| 1,913 | |
| Long-term debt and issuance costs | |
| 5,189 | | |
| 4,538 | |
| Deferred tax asset | |
$ | 146,156 | | |
$ | 153,174 | |
| Change in tax asset recognized as: | |
| | | |
| | |
| Deferred tax expense (recovery) | |
$ | 7,819 | | |
$ | (84,879 | ) |
| Share issuance costs - equity | |
$ | (801 | ) | |
$ | - | |
As at December 31, 2025 the Company had the following income tax pools,
which may be used to reduce taxable income in future years, limited to the applicable rates of utilization:
| ($ thousands) | |
Rate of Utilization (%) | | |
December 31, 2025 | |
| Undepreciated capital cost | |
| 7-55 | | |
$ | 193,587 | |
| Canadian oil and gas property expenditures | |
| 10 | | |
| 54,373 | |
| Canadian development expenditures | |
| 30 | | |
| 90,251 | |
| Non-capital and other losses carried forward(1) | |
| 100 | | |
| 1,378,333 | |
| Other | |
| Various | | |
| 32,507 | |
| Total federal income tax pools | |
| | | |
$ | 1,749,051 | |
| Adjustment for differences in provincial income tax pools(2) | |
| | | |
| (136,716 | ) |
| Combined federal and provincial income tax pools | |
| | | |
$ | 1,612,335 | |
| (1) | Other losses include restricted interest and finance expenses that are fully deductible against eligible income. |
| (2) | Provincial non-capital losses carried forward are approximately $397.4 million less than federal non-capital losses. |
The Company’s non-capital losses have an expiry profile between
2036 and 2045.
|