Birchcliff Energy reported stronger fourth-quarter revenue and record annual production, even as profit declined due to unrealized mark-to-market losses. The Calgary-based oil and gas producer says lower costs and diversified gas sales positions it for continued growth in 2026.
BNN Bloomberg spoke with Chris Carlsen, president and CEO of Birchcliff Energy, about record output, cost reductions, debt repayment and the company’s development plans in Alberta’s Montney region.
Key Takeaways
- Profit declined in the fourth quarter due to unrealized mark-to-market losses on hedging positions, while revenue rose on higher production.
- Full-year production averaged more than 80,000 barrels of oil equivalent per day, marking a company record.
- Operating and drilling costs fell by about 10 per cent year over year, supporting stronger margins and free cash flow.
- Approximately 72 per cent of natural gas sales were diversified outside the AECO market, reducing exposure to regional price weakness.
- Management expects five to six per cent production growth in 2026 by filling existing infrastructure, with a potential Elmworth expansion decision in late 2026 or early 2027.
Read the full transcript below:
LINDSAY: Birchcliff Energy posted lower profits but higher revenue for its fourth quarter. The Calgary-based oil and gas company says it is still positioned for growth despite fluctuating oil and natural gas prices. To tell us more is Chris Carlsen, president and CEO of Birchcliff Energy. It’s good to have you join us. Thanks so much.
CHRIS: Thanks for having me, Lindsay.
LINDSAY: Are you happy with the fourth-quarter results?
CHRIS: Yes, I’d say from Birchcliff’s point of view we had an excellent fourth quarter, and actually a full-year 2025. If you look at production for the full year, we averaged over 80,000 barrels a day in 2025, which is a record for Birchcliff, so that’s a milestone. Production in the fourth quarter was really strong as well, sitting at 83,000 BOE a day. Production is really strong, and that’s on the back of efficient execution throughout the year and driving our costs lower. Our business and our people have been focused on those two initiatives — looking for efficiencies throughout the business to drive our capital costs down, as well as our operating costs. You saw both fall in 2025. We were able to drop our per-well cost by just over 10 per cent year over year, and our operating costs are down to a record low of $2.88, which is down 10 per cent from 2024. Overall, we’re really happy with the performance. In addition, we had really strong cash flow for 2025 and in the fourth quarter, which allowed us to pay down debt. We paid down almost 14 per cent of our debt position from where we were at the end of 2024. The company is in a really strong position as we move toward 2026.
LINDSAY: There are some really strong numbers in this latest report, but I did want to ask about the lower profits that were reported. What are you attributing that to?
CHRIS: In the profit line and net income, it’s usually unrealized future gains or losses on positions we have at Dawn or at NYMEX. That can swing from quarter to quarter. It’s just a mark-to-market based on where forward prices are going, and as you know, that’s quite volatile. Where we’re focused is adjusted funds flow, which is how much cash the business is creating. We generated about $422 million of cash flow in 2025 against spending of around $300 million, so we had approximately $117 million of free cash flow. We were able to pay a sustainable dividend of 12 cents annually, about $33 million a year, as well as reduce our debt and strengthen the balance sheet. Overall, the numbers look really strong from our point of view.
LINDSAY: As you mentioned, oil and natural gas prices have been swinging. Natural gas prices moved higher for much of the winter because it’s been so cold. How much of what you’re seeing in the numbers can you attribute to that?
CHRIS: We’ve certainly seen cold weather in the eastern part of the country. One of the differentiating factors for Birchcliff is that in 2025 we had about 72 per cent of our gas sold outside of the local AECO market. About 40 per cent of our gas is long-term committed to Dawn in southern Ontario, and we also sell volumes at U.S. prices, including NYMEX, which has been a strong market. As we moved into 2026, the cold weather that really amplified in late January and early February has benefited us, particularly with volumes sold into eastern markets. At the same time, the local AECO market has been relatively weak, and weather in Western Canada has been unseasonably warm. We expect LNG development on the West Coast to continue ramping up, which should support additional demand over time. The most important thing is diversification in gas sales points, and Birchcliff has that.
LINDSAY: Looking ahead, Birchcliff is developing a new land position in the Elmworth area of Alberta. What specific milestones or conditions would give management the confidence to approve a positive final investment decision?
CHRIS: Our first priority in 2026 is to fill the existing infrastructure we have in our core Pouce Coupe and Gordondale area. We expect to grow the business in 2026 by five to six per cent. If you compare fourth-quarter 2025 to fourth-quarter 2026, when we expect that infrastructure to be full, growth could be closer to eight to 10 per cent. That’s low-risk and profitable growth by filling existing infrastructure. Elmworth is more of a late-2026 or early-2027 decision point, potentially building a 100-million-cubic-foot-per-day gas plant and drilling the associated wells to fill it. We’ve only drilled three wells on roughly 150 square miles of mineral rights there, so it’s early days. We can apply what we’ve learned from our core areas to that development and aim to create long-term shareholder value.
LINDSAY: We’ll leave it there. That’s Chris Carlsen, president and CEO of Birchcliff Energy. Thanks for your time.
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This BNN Bloomberg summary and transcript of the Feb. 12, 2026 interview with Chris Carlsen are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
