AIF (Z7uiUp7c43Q3gG1 Topaz2024AIF vFinal)

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Note:

1. As at December 31, 2024, Tourmaline held 21.3%, insiders held or represented 4.7% and public shareholders held 74.0% of the issued and outstanding Common Shares.

The Company's head office is located at Suite 2900, 250 6th Avenue SW, Calgary, Alberta T2P 3H7 and its registered office is located at Suite 2400, 525 8th Avenue SW, Calgary, Alberta T2P 1G1.

The Company presently has 13 full-time employees.

Significant Acquisitions

Topaz did not complete any significant acquisitions during its most recently completed financial year for which disclosure is required under Part 8 of National Instrument 51-102.

Potential Acquisitions, Issuance of Securities and Financings

Topaz continues to evaluate potential acquisitions of royalty interests and energy infrastructure related assets and/or companies and/or other strategic acquisitions as part of its ongoing acquisition program. Topaz regularly evaluates potential acquisitions, which individually or together could be material. As of the date hereof, Topaz has not reached agreement on the price or terms of any potential material acquisition. Topaz cannot predict whether any current or future opportunities will result in one or more acquisitions for Topaz. Topaz may, in the future, issue securities in connection with acquisitions or otherwise and complete financings of equity or debt (which may be convertible into equity) for purposes that may include financing of acquisitions, Topaz's operations and capital expenditures and repayment of indebtedness. See ″Risks Relating to Acquisitions and Competition for Acquisition Opportunities″ and ″Risk Factors - Equity Dilution.″

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THE COMPANY'S BUSINESS

Overview

The Company's dynamic and scalable business model combines the best attributes from each of the royalty and energy infrastructure segments and is designed to provide investors with sustainable long-term shareholder returns by:

1. focussing on disciplined capital allocation to capture best-in class assets having high-margin income streams with strong partners which includes: royalty production revenue generated from gross overriding royalty, fee mineral title and gross royalty trust royalty interests, together which are ″Royalty Interests″, which may be underpinned by operator capital development commitments in order to provide a transparent growth outlook and do not require Topaz to incur operating or capital costs or require day-to-day operational decisions, development execution or abandonments; processing revenue generated through its non-operated ownership interests in infrastructure assets whereby the Company has long-term fixed take- or-pay arrangements with high-quality counterparties and is only responsible for certain operating, capital and future abandonment costs; and other income which is generated by way of a contracted interest in third-party revenue generated through fee-for-service processing contracts with no underlying facility ownership and therefore no associated operating or capital costs;
2. integrating sustainability considerations into the Company's investment strategy in order to foster a strong and committed workforce, mitigate environmental-related risk, and uphold strong corporate governance and ethics;
3. having modest corporate general and administrative costs;
4. having a long-term horizon before income tax is payable;
5. acquiring opportunistic growth projects with transparent and predictable financial returns; and
6. providing our strategic partners with innovative non-dilutive financing alternatives to enhance their sustainability.

Topaz's investment criteria is focused on high quality, long life assets, strong risk-adjusted economic returns and investments that facilitate enhanced environmental performance.

The Company's high-quality assets and associated income streams are comprised of:

1. ″Royalty Assets″ - Royalty Interests on approximately nine million gross acres (over 60% of which are undeveloped) from which the Company receives royalty production revenue based on the associated natural gas, crude oil and natural gas liquids gross production revenue (the ″Royalty Production Revenue″); and
2. ″Infrastructure Assets″ - non-operated ownership interests in eight natural gas processing plants with cumulative natural gas processing capacity of approximately 255 MMcf/d with associated crude oil and condensate handling facilities, and certain water management infrastructure from which the Company is entitled to receive processing revenue from processing services provided to customers on a fee-for- service basis, the majority of which is contracted under long-term fixed fee take-or-pay agreements (the ″Processing Revenue″); and a contracted interest in a portion of third-party revenue generated from facilities owned and operated by Tourmaline through fee-for-service agreements with third parties (the
   ″Other Income″).

Topaz has two operating business segments that are reportable segments: the Royalty Assets and the Infrastructure Assets. The Royalty Production Revenue and Processing Revenue and Other Income for the years ended December 31, 2024 and 2023 are contained in the sub-sections ″Royalty″ and ″Infrastructure″ within the section ″Financial Results of Operations″ in the MD&A (as defined herein), which section is incorporated by reference herein, and note 19 of the Consolidated Financial Statements, which note is incorporated by reference herein.

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Business Strategy

Topaz intends to use the majority of its free cash flow(1) to pay dividends to shareholders and the Company has a long-term payout ratio(2) target of 60-90%. The Board has established a dividend policy pursuant to which the Company paid $1.30 per Common Share in total dividends in 2024 which represented a payout ratio of approximately 68% for the year ended December 31, 2024.

On December 20, 2024, Topaz published its 2023 Sustainability Report which highlights the Company's commitment to deliver superior, sustainable investment returns to shareholders through its sustainable investment strategy and by fostering a strong and committed workforce, mitigating climate-related risk, and upholding strong corporate governance and ethics. The 2023 Sustainability Report provides Topaz's performance metrics, including zero scope 1 and 2 emissions under the Company's operational control reporting boundary. Topaz's ESG reporting also incorporates the recommended disclosures of the Task Force on Climate-Related Financial Disclosures (TCFD) and third-party verification of certain performance data. The report is available on the Company's website at www.topazenergy.ca.

Notes:

1. Defined as a capital management measure. Refer to ″Non-GAAPand Other Financial Measures″.
2. Defined as a supplementary financial measure. Refer to ″Non-GAAPand Other Financial Measures″.

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GENERAL DEVELOPMENT OF TOPAZ'S BUSINESS

The general development of Topaz's business since 2022 and up to the date of this Annual Information Form which includes events, such as acquisitions or dispositions, or conditions that have had an influence on that development, are described below.

2022

On March 1, 2022, Topaz increased its dividend by 8% resulting in a $0.26 per share quarterly dividend ($1.04 per share annually) for the first quarter of 2022 which was the Company's third dividend increase since the inaugural quarterly dividend in the first quarter of 2020.

On April 29, 2022, the Company completed the acquisition of Keystone Royalty Corp. (″Keystone Royalty″) for consideration of $85.0 million, paid through the issuance of 4.2 million Common Shares. The acquisition added a large and diversified royalty portfolio consisting of over 480,000 gross acres of developed and undeveloped fee mineral title and GORR Interest lands focused in Southeast Saskatchewan.

On May 11, 2022, the Company completed the acquisition of a newly created gross overriding royalty for total cash consideration, before closing adjustments, of $15.0 million.

On July 26, 2022, Topaz increased its dividend by 8% resulting in a $0.28 per share quarterly dividend ($1.12 per share annually) for the third quarter of 2022 which was the Company's fourth dividend increase since the inaugural quarterly dividend in the first quarter of 2020.

On August 1, 2022, Topaz elected to participate in an addition at the Glacier Facility, where Topaz currently owns 12.5% working interest, and invested $5.0 million, before customary closing adjustments, which generates long-term fixed processing fees to Topaz.

On September 1, 2022, Topaz acquired a newly created gross overriding royalty interest on natural gas, crude oil and natural gas liquids production, from Tourmaline, for total cash consideration before closing adjustments of $52.0 million (the ″Tourmaline September 2022 Peace River and Deep Basin GORR Acquisition″).

On September 21, 2022, Topaz acquired a 49.5% working interest in certain water infrastructure assets with a new operator, along with a long-term fixed fee take-or-pay agreement, for consideration of up to $12.5 million, $7.0 million of which was paid in Q3 2022. Topaz also entered into agreements that provide Topaz the option to invest incremental capital of up to $8.0 million in the fourth quarter of 2022 and up to $25.0 million in 2023 for future expansion of its water management assets.

On September 29, 2022, Topaz acquired from Deltastream Energy Corporation (″Deltastream″) a newly created gross overriding royalty interest on heavy oil production for total cash consideration before closing adjustments of $265.3 million. The acquisition added approximately 140,000 gross acres of developed and undeveloped land in the Clearwater resource play.

On November 1, 2022, Topaz increased its dividend by 7% resulting in a $0.30 per share quarterly dividend ($1.20 per share annually) for the fourth quarter of 2022 which was the Company's fifth dividend increase since the inaugural quarterly dividend in the first quarter of 2020.

On December 6, 2022, Topaz entered into an amended and restated credit agreement with a syndicate of Canadian banks providing for a $700.0 million combined operating and syndicated unsecured credit facility, due December 6, 2026 (the ″Syndicated Credit Facility″). The Syndicated Credit Facility provides for a permitted increase to $1.0 billion, subject to agent consent, and is subject to covenants which are consistent with the covenants under its prior credit facility. The Syndicated Credit Facility replaced the Company's prior syndicated secured credit facility, which had provided for aggregate borrowing capacity of $500.0 million and was due December 6, 2025.

In 2022, Topaz's average royalty production was 16,913 Boe/d and the Company generated total cash flow of $333.8 million and net income of $99.4 million. Topaz paid $157.3 million in dividends in 2022 and invested $435.6 million in royalty and

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infrastructure acquisitions, excluding decommissioning obligations(2). Topaz ended 2022 with net debt(1) of $405.9 million and 144.2 million common shares outstanding.

2023

On July 31, 2023, Topaz completed a royalty and infrastructure acquisition for consideration of $39.5 million, funded through existing credit facilities, which added a 49.9% non-operated working interest in a newly constructed and commissioned 15 MMcf/d sweet natural gas processing facility and associated 1,500 bbl/d crude oil battery in the Wembley area in addition to amendments to existing royalty agreements between Tamarack and Topaz in order to acquire royalty interests on approximately 17,000 gross acres and to amend certain contractual terms under an existing royalty agreement between Tamarack and Topaz.

On July 31, 2023, Topaz increased its dividend by 3% resulting in a $0.31 per share quarterly dividend ($1.24 per share annually) for the third quarter of 2023 which was the Company's sixth dividend increase since the inaugural quarterly dividend in the first quarter of 2020.

On October 25, 2023, Topaz entered into definitive agreements for total consideration of $26.3 million, that provide new gross overriding royalty interests and a 99% working interest in a planned natural gas gathering system in the Clearwater operating area. The gathering system will be funded by Topaz upon final commissioning of the pipeline, targeted for completion late 2024.

On November 20, 2023, Topaz elected to participate in an expansion of the Glacier Facility, where Topaz currently owns 12.5% working interest, and invested $2.5 million, before customary closing adjustments, which generates long-term fixed processing fees to Topaz and provides incremental processing capacity ownership.

In 2023, Topaz's average royalty production was 18,853 Boe/d and the Company generated total cash flow of $286.3 million and net income of $47.6 million. Topaz paid $176.3 million in dividends in 2023 and invested $46.4 million in royalty and infrastructure acquisitions, excluding decommissioning obligations(2). Topaz ended 2023 with net debt(1) of $342.7 million and 144.7 million common shares outstanding.

2024

On March 4, 2024, Topaz increased its dividend by 3% resulting in a $0.32 per share quarterly dividend ($1.28 per share annually) for the first quarter of 2024 which was the Company's seventh dividend increase since the inaugural quarterly dividend in the first quarter of 2020.

On June 24, 2024, Topaz completed the acquisition of a 50% non-operated working interest in Whitecap's newly commissioned natural gas and condensate facility, which includes natural gas compression capacity of 43 MMcf/d and condensate stabilization capacity of 12,500 bbl/d, located in the Musreau area of the Alberta Montney, for total cash consideration of $100.0 million before customary closing adjustments, funded through existing credit facilities.

On July 29, 2024, Topaz increased its dividend by 3% resulting in a $0.33 per share quarterly dividend ($1.32 per share annually) for the third quarter of 2024 which was the Company's eighth dividend increase since the inaugural quarterly dividend in the first quarter of 2020.

On October 22, 2024, Topaz completed a bought-deal equity financing (the ″Fall 2024 Equity Financing″) of Common Shares. Pursuant to the Fall 2024 Equity Financing, Topaz issued 7,000,000 Common Shares, in addition to 1,050,000 Common Shares issued pursuant to the exercise in full of an over-allotment option granted to the underwriters. The Common Shares were issued at a price of $25.05 per Common Share for total gross proceeds of approximately $201.7 million. Concurrent with the closing of the Fall 2024 Equity Financing, certain directors, officers, employees and their associates of the Company purchased a total of 209,177 Common Shares at a price of $25.05 per Common Share on a private placement basis for gross proceeds of approximately $5.2 million. The aggregate gross proceeds from the Fall 2024 Equity Financing and concurrent private placement of $206.9 million were used to fund a portion of the Tourmaline 2024 Core Area GORR Acquisition which closed on November 1, 2024.

On November 1, 2024, Topaz acquired from Tourmaline a newly created gross overriding royalty interest on approximately 3.0 million gross acres of developed and undeveloped lands in Topaz's NEBC Montney, Alberta Deep Basin and Peace

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River High core areas (which included a follow-on, tuck-in acquisition completed December 1, 2024), for aggregate cash consideration before closing adjustments of $301.7 million (the ″Tourmaline 2024 Core Area GORR Acquisition″).

On December 11, 2024, Topaz completed a secondary offering (the ″Secondary Offering″) of Common Shares. Pursuant to the Secondary Offering, Tourmaline sold 10,800,000 Common Shares in addition to 1,620,000 Common Shares sold pursuant to the exercise in full of an over-allotment option granted to the underwriters, at a price of $27.80 per Common Share for total gross proceeds to Tourmaline of $345.28 million. The Company did not receive any of the proceeds of the Secondary Offering. Following the closing of the Secondary Offering, Tourmaline held 32,729,494 Common Shares, representing approximately 21.3% of the issued and outstanding Common Shares. The Secondary Offering expanded Topaz's free trading share float and provided new and existing shareholders with enhanced trading liquidity which was inline with Topaz's strategic objectives.

On December 17, 2024, following commissioning of the gathering system, Topaz completed the acquisition of a 99% interest in the Headwater natural gas gathering system and paid cash consideration of $31.2 million, before customary closing adjustments.

On December 20, 2024, Topaz published its 2023 Sustainability Report which outlines the Company's sustainable investment strategy and commitment toward continuous improvement. The report is available on the Company's website at www.topazenergy.ca.

In 2024, Topaz's average royalty production was 19,227 Boe/d and the Company generated total cash flow of $279.3 million and net income of $46.4 million. Topaz paid $191.2 million in dividends in 2024 and invested $430.6 million in royalty and infrastructure acquisitions, excluding decommissioning obligations(2). Topaz ended 2024 with net debt(1) of $492.0 million and 153.5 million common shares outstanding.

Recent Developments

On January 31, 2025, Topaz acquired a newly created gross overriding royalty interest on approximately 0.1 million gross acres of developed and undeveloped lands in the Alberta Montney operating area and entered into a definitive agreement to acquire a 35% working interest in a 40 MMcf/d natural gas processing and condensate handling facility, for total cash consideration of $43.0 million before customary closing adjustments. The facility interest will be funded by Topaz upon final commissioning, targeted for mid-2025.

Notes:

1. Defined as a capital management measure. Refer to ″Non-GAAPand Other Financial Measures″.
2. Defined as a non-GAAP financial measure. Refer to ″Non-GAAPand Other Financial Measures″.

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THE COMPANY'S STRATEGIC COUNTERPARTIES

The Company has strategic relationships with high-quality counterparties that have medium to large-scale, low cost and reliable business models, significant growth potential, strong capital discipline, and continue to demonstrate active stewardship of environmental, social and governance practices including investment in technological innovation.

A key component of Topaz's long-term business strategy is seeking alignment with counterparties who are low-cost operators with significant land holdings and long-term growth prospects in top quartile, prolific exploration and production regions or plays which are resilient to lower commodity prices. The Company's counterparties are characterized by owning strategic acreage and long-term drilling inventory, meaningful size, concentration, and other attributes in order to achieve operating cost, reserve recovery, deliverability and production efficiencies through repeatable capital exploration and development programs. Topaz's unique, low risk, income-oriented business model positions the Company to be a partner of choice for high quality operators seeking to access capital to achieve their business plans.

Tourmaline

Tourmaline is a publicly traded, investment grade senior Canadian E&P company with a long-term business strategy to increase shareholder value by providing strong and predictable long-term growth and a steady return to shareholders through a strong exploration, development, production and acquisition program in the WCSB. Tourmaline common shares are listed on the TSX.

Tourmaline continues to build its extensive asset base in its three, core exploration and production areas and exploiting and developing these areas to increase reserves, production, and cash flow at an attractive return on invested capital. Tourmaline strives to be one of the lowest cost producers in the WCSB in order to accomplish its business strategy in any economic and commodity price environment. Tourmaline prudently manages its commodity risk by diversifying the markets where its natural gas is sold throughout North America.

For additional information regarding Tourmaline refer to their corporate profile on SEDAR+ at www.sedarplus.ca.

Advantage

Advantage is a publicly traded, Canadian E&P company engaged in the business of natural gas, crude oil, and liquids exploitation, development, and production in Alberta. Advantage's current exploitation and development program is focused on its liquids-rich natural gas and oil Montney resources in the Glacier, Valhalla, Pipestone/Wembley and Progress areas of Alberta. Advantage's owned infrastructure, top-tier cost structure and capital efficiency provide a strong foundation for sustainable, disciplined production growth and a business able to withstand fluctuations in commodity prices. Advantage common shares are listed on the TSX.

For additional information regarding Advantage refer to their corporate profile on SEDAR+ at www.sedarplus.ca.

Tamarack

Tamarack is a publicly traded, Canadian E&P company committed to creating long-term value for its shareholders and has an extensive inventory of low-risk, oil development drilling locations focused primarily on Charlie Lake, Clearwater and enhanced oil recovery plays in Alberta. Tamarack common shares are listed on the TSX.

For additional information regarding Tamarack refer to their corporate profile on SEDAR+ at www.sedarplus.ca.

Headwater

Headwater is a publicly traded, Canadian E&P company engaged in the exploration for and development and production of crude oil and natural gas in Canada. Headwater currently has high quality heavy oil production, reserves, and lands in the prolific Clearwater play in the Marten Hills area of Alberta as well as low decline natural gas production and reserves in the McCully Field near Sussex, New Brunswick. Headwater is focused on providing superior corporate level returns by focusing on sustainability, asset quality and balance sheet strength. Headwater common shares are listed on the TSX.

For additional information regarding Headwater refer to their corporate profile on SEDAR+ at www.sedarplus.ca.