Big Sky Industrial Inc. — Second Quarter 2026 Earnings Summary

Financial Performance

• Second quarter 2026 revenue totaled $2.1 million (84% from oil), compared to $2.0 million in the second quarter of 2025.
• Second quarter 2026 production was 33,747 barrels of oil equivalent (BOE) (68% oil), down from 48,816 BOE in the second quarter of 2025.
• Second quarter 2026 realized average sales prices were $63.24/BOE, up from $41.54/BOE in the prior-year period.
• Second quarter 2026 lease operating expenses totaled $1.0 million, down from $1.5 million in the second quarter of 2025.
• Cash general and administrative expenses were $1.8 million in the second quarter of 2026, compared to $1.7 million in the second quarter of 2025.
• Equity compensation expense was $1.1 million for both the second quarter of 2026 and 2025.
• Big Sky Industrial reported a net loss of $2.3 million ($0.04 per diluted share) for the second quarter of 2026, compared to a net loss of $6.1 million ($0.19 per share) in the second quarter of 2025, which included a $2.8 million impairment.
• Adjusted EBITDA was $(0.9) million for the second quarter of 2026, compared to $(1.3) million in the second quarter of 2025.
• As of June 30, 2026, cash balance was $6.0 million with total available liquidity of $21.5 million, including $17.5 million of undrawn capacity under the senior secured credit facility.
• Total debt outstanding was $4.5 million as of June 30, 2026, compared to $2.5 million as of December 31, 2025.
• Net debt balance was $(1.5) million as of June 30, 2026, compared to $2.1 million as of December 31, 2025.
• For the six months ended June 30, 2026, industrial gas capital expenditures totaled $9.6 million, compared to $2.5 million in the prior-year period.

Guidance and Future Outlook

• Commercial operations and first revenue at the Big Sky Carbon Hub are targeted for the first quarter of 2027.
• Phase 1 facility commissioning is targeted for late 2026.
• Gathering infrastructure installation is scheduled across the summer and fall of 2026.
• MRV approvals for Big Rose and Cut Bank are expected in the coming months.
• The company plans to advance planning for Phase 2, a second processing plant on the same footprint, though it is not included in the base case.
• Management expects G&A costs to normalize as Phase 1 transitions from development to construction execution.

Business Segments and Product Lines

• Executed a five-year, 100% take-or-pay helium offtake agreement with an investment-grade global industrial gas counterparty.
• The helium contract is structured at a fixed price of $285 per Mcf realized at the plant gate, with CPI-linked escalation beginning March 1, 2028, and a year-three pricing redetermination.
• The counterparty is responsible for all transportation, logistics, and downstream delivery costs.
• Phase 1 processing facility construction advanced on schedule following the Final Investment Decision (FID) on March 18, 2026.
• The Phase 1 plant is designed for approximately 8 MMcf/d inlet capacity, targeting 14 MMcf of high-purity helium and the capture/sequestration of approximately 125,000 metric tons of CO₂ per year.
• Drilling and completions were completed in August 2025 with three successfully drilled wells plus two acquired wells; two Class II permitted injection wells are operational.
• Unproved industrial gas properties increased to $32.4 million as of June 30, 2026, from $22.5 million as of December 31, 2025.

Market and Competitive Landscape

• Helium demand continues to grow while global supply remains structurally constrained.
• The market for captured and sequestered CO₂ is expanding alongside supportive federal 45Q policy.
• MRV submissions represent a pathway to access approximately $130 million of Section 45Q tax credit value over the first 12 years of Phase 1 operations.
• Helium is designated as a critical mineral by the federal government.

Risks and Challenges

• Risks include the ability to complete construction of the Big Sky Carbon Hub on time and on budget.
• Risks related to compliance with senior credit facility terms and access to capital on acceptable terms.
• Volatility of commodity prices, including helium, oil, and natural gas.
• Regulatory changes related to Section 45Q tax credits, carbon dioxide, and greenhouse gas emissions.
• Potential disruption from war, accidents, political events, severe weather, cyber threats, or natural causes.

Management Commentary and Tone

• CEO Ryan Smith described the second quarter of 2026 as one of the most productive stretches in the Company's history.
• Management stated that milestones advanced the transition from a legacy E&P company and materially de-risked the path to first revenue.
• Management expressed confidence that value will become increasingly visible to the market as they execute against the plan to deliver long-term shareholder value.
• The company believes it is well positioned to advance Phase 1 toward commercial operations while retaining financing levers for future development.

Other Key Points

• Completed corporate rebrand from U.S. Energy Corp. to Big Sky Industrial Inc., with common stock now trading on Nasdaq under ticker "BSIN" effective June 8, 2026.
• Amended senior secured credit facility on April 20, 2026, doubling the borrowing base to $20 million, fixing interest margin at 200 basis points over the alternate base rate, and suspending quarterly financial covenant testing through March 31, 2027.
• Facility matures May 31, 2029, with no prepayment penalties.
• Subsequent to quarter end, the Company drew $4.0 million under the credit facility to fund capital expenditures; as of August 4, 2026, cash balance was $4.9 million and total liquidity was $16.4 million.
• The strategic divestiture program to fund the pivot to the industrial gas platform is substantially complete.
• An underwritten equity offering was completed in March 2026.
• The company reported a commodity derivative gain of $167,000 for the three months ended June 30, 2026.