CALGARY,
AB, Sept. 12, 2022 /CNW/ - Tourmaline Oil
Corp. (TSX: TOU) ("Tourmaline" or the "Company") is pleased to
provide a production and marketing update.
2023 OUTLOOK
- Given improving 2023 natural gas strip pricing(1) at
several sales hubs, 2023 cash flow(2)(3) guidance has
been increased to $6.58 billion, up
28% from previous guidance of $5.14
billion.
- 2023 average production guidance remains at 545,000 boepd (2.5
bcf/day of natural gas and 126,000 bpd of oil, condensate, and
NGLs).
- Tourmaline expects to export approximately 926 mmcfpd of
natural gas at exit 2023 including an initial 140 mmcfpd on the
Gulf Coast fully exposed to JKM pricing, commencing January 1, 2023.
PRODUCTION UPDATE
- As a result of the Alberta/BC
pipeline maintenance and related natural gas price collapse at AECO
and Station 2 in the second half of August, Tourmaline shut in
approximately 100 mmcfpd of existing production and delayed the
startup of several new pads from August to September/October 2022.
- In anticipation of this period of planned pipeline maintenance
and resulting weaker expected prices, Tourmaline scheduled facility
turnarounds and hedged higher than usual natural gas volumes during
the month of August 2022.
Furthermore, volumes were also impacted by an unscheduled outage at
the Pembina Resthaven deep cut facility due to start-up issues
which resulted in a subsequent five-day unplanned outage.
- Q3 2022 production average of 480,000 – 485,000 boepd is now
anticipated, down 1.5% from previous guidance of 485,000 – 495,000
boepd.
- The Company also expects to inject approximately 3,200 boepd
into storage facilities at Dawn and California during the third quarter of 2022,
with the majority of those volumes to be withdrawn during winter
months when natural gas prices are expected to be higher.
- Q4 2022 production guidance is expected to average between
525,000 - 530,000 boepd and average full year 2022 production of
507,000 boepd remains unchanged.
_______________________________
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- Based on oil and gas commodity strip pricing
at August 31, 2022.
- This news release contains certain specified
financial measures consisting of non-GAAP financial measures. See
"Non-GAAP and Other Financial Measures" in this news
release for information regarding the following non-GAAP financial
measure used in this news release: "cash flow". Since this
specified financial measure does not have a standardized meaning
under International Financial Reporting Standards ("GAAP"),
securities regulations require that, among other things, it be
identified, defined, qualified and, where required, reconciled with
their nearest GAAP measure and compared to the prior period. See
"Non-GAAP and Other Financial Measures" in this news release and in
the Company's most recently filed Management's Discussion and
Analysis (the "Q2 MD&A"), which information is incorporated by
reference into this news release, for further information on the
composition of and, where required, reconciliation of this
measure.
- "Cash flow" is a non-GAAP financial measure
defined as cash flow from operating activities adjusted for the
change in non-cash working capital (deficit).
|
MARKETING UPDATE
- Since July 1, 2022, Tourmaline
has continued to strategically enter into additional commodity
hedges. Approximately 26% of 2023 average production is now hedged
at a weighted average fixed price of CAD $5.26/mcf. Additionally, for this time frame, the
Company has 110 mmcfpd of natural gas hedged at a basis to NYMEX of
USD $0.12/mcf.
- Since July 1, 2022, Tourmaline
has continued to capitalize on strong LNG prices and has entered
into an additional 20 mmcfpd of JKM hedges for April to
October 2023, and 20 mmcfpd for April
to October 2024. This provides fixed
price protection on a portion of Tourmaline's 140 mmcfpd Gulf Coast
LNG deal which commences on January 1,
2023. The 2023 JKM strip price was $50.46 US/mmbtu as of September 6, 2022.
- Tourmaline also continues to realize strong prices through its
Western-US exposure. As of September 6,
2022, the November 2022 to
March 2023 strip at Malin was trading
at $8.35 US/mmbtu and PG&E
Citygate strip for the same period was trading at $9.07 US/mmbtu. For this term, 56% of
Tourmaline's Malin volumes and 64% of the Company's PG&E
volumes are floating and will benefit from these strong
prices.
- As of September 6, 2022, the
April to October 2023 strip at Malin
was trading at $5.27 US/mmbtu and
PG&E Citygate strip for the same period was trading at
$6.63 US/mmbtu. For this term, 82% of
Tourmaline's Malin volumes and 80% of the Company's PG&E
volumes are floating and will benefit from these strong
prices.
Reader Advisories
CURRENCY
All amounts in this news release are stated in Canadian dollars
unless otherwise specified.
FORWARD-LOOKING
INFORMATION
This news release contains forward-looking information and
statements (collectively, "forward-looking information") within the
meaning of applicable securities laws. The use of any of the words
"forecast", "expect", "anticipate", "continue", "estimate",
"objective", "ongoing", "on track", "may", "will", "project",
"should", "believe", "plans", "intends" and similar expressions are
intended to identify forward-looking information. More particularly
and without limitation, this news release contains forward-looking
information concerning Tourmaline's plans and other aspects of its
anticipated future operations, management focus, objectives,
strategies, financial, operating and production results and
business opportunities, including the following: forecast 2023 cash
flow; forecast 2023, Q3 2022, Q4 2022 and full year 2022 average
production levels; the amount of natural gas planned for export at
various periods; the planned amount of volumes to be injected into
storage and the timing for the withdraw of such volumes; and
anticipated future commodity prices including expectations for
natural gas prices in the winter months. The forward-looking
information is based on certain key expectations and assumptions
made by Tourmaline, including expectations and assumptions
concerning the following: prevailing and future commodity prices
and currency exchange rates; prevailing and future commodity prices
and currency exchange rates; applicable royalty rates and tax laws;
interest rates; future well production rates and reserve volumes;
operating costs, the timing of receipt of regulatory approvals; the
performance of existing wells; the success obtained in drilling new
wells; anticipated timing and results of capital expenditures; the
sufficiency of budgeted capital expenditures in carrying out
planned activities; the timing, location and extent of future
drilling operations; the successful completion of acquisitions and
dispositions and the benefits to be derived therefrom; the state of
the economy and the exploration and production business; the
availability and cost of financing, labour and services; and
ability to market crude oil, natural gas and NGL successfully.
Without limitation of the foregoing, future dividend payments, if
any, and the level thereof is uncertain, as the Company's dividend
policy and the funds available for the payment of dividends from
time to time is dependent upon, among other things, free cash flow,
financial requirements for the Company's operations and the
execution of its growth strategy, fluctuations in working capital
and the timing and amount of capital expenditures, debt service
requirements and other factors beyond the Company's control.
Further, the ability of Tourmaline to pay dividends will be subject
to applicable laws (including the satisfaction of the solvency test
contained in applicable corporate legislation) and contractual
restrictions contained in the instruments governing its
indebtedness, including its credit facility.
Although Tourmaline believes that the expectations and
assumptions on which such forward-looking information is based are
reasonable, undue reliance should not be placed on the
forward-looking information because Tourmaline can give no
assurances that it will prove to be correct. Since forward-looking
information addresses future events and conditions, by its very
nature it involves inherent risks and uncertainties. Actual results
could differ materially from those currently anticipated due to a
number of factors and risks. These include, but are not limited to:
the risks associated with the oil and natural gas industry in
general such as operational risks in development, exploration and
production; delays or changes in plans with respect to exploration
or development projects or capital expenditures; the uncertainty of
estimates and projections relating to reserves, production,
revenues, costs and expenses; health, safety and environmental
risks; commodity price and exchange rate fluctuations; interest
rate fluctuations; marketing and transportation; loss of markets;
environmental risks; competition; incorrect assessment of the value
of acquisitions; failure to complete or realize the anticipated
benefits of acquisitions or dispositions; ability to access
sufficient capital from internal and external sources; failure to
obtain required regulatory and other approvals; and changes in
legislation, including but not limited to tax laws, royalties and
environmental regulations.
In addition, wars (including the war in Ukraine), hostilities, civil insurrections,
pandemics, epidemics or outbreaks of an infectious disease in
Canada or worldwide, including
COVID-19 or other illnesses could have an adverse impact on the
Company's results, business, financial condition or liquidity.
Ongoing military actions between Russia and Ukraine have the potential to threaten the
supply of oil and gas from the region. The long-term impacts of the
actions between these nations remains uncertain. If the
pandemic is further prolonged, including through subsequent waves,
or if additional variants of COVID-19 emerge which are more
transmissible or cause more severe disease, or if other diseases
emerge with similar effects, the adverse impact on the economy
could worsen. It remains uncertain how the macroeconomic
environment, and societal and business norms will be impacted
following the COVID-19 pandemic. In addition, in 2022, industry has
been impacted by significant cost inflation, rising interest rates,
labour shortages and supply constraints, and the Company expects
these pressures will continue through the balance of the year and
into next year. The Company will continue to actively monitor
inflationary pressures and supply chain constraints and their
impact on the Company's business.
Readers are cautioned that the foregoing list of factors is not
exhaustive.
Additional information on these and other factors that could
affect Tourmaline, or its operations or financial results, are
included in the Company's most recently filed Management's
Discussion and Analysis (See "Forward-Looking Statements" therein),
Annual Information Form (See "Risk Factors" and "Forward-Looking
Statements" therein) and other reports on file with applicable
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com) or Tourmaline's website
(www.tourmalineoil.com).
The forward-looking information contained in this news release
is made as of the date hereof and Tourmaline undertakes no
obligation to update publicly or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, unless expressly required by applicable securities
laws.
BOE EQUIVALENCY
In this news release, production and reserves information may be
presented on a "barrel of oil equivalent" or "BOE" basis. BOEs may
be misleading, particularly if used in isolation. A BOE
conversion ratio of 6 Mcf:1 bbl is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the
wellhead. In addition, as the value ratio between natural gas
and crude oil based on the current prices of natural gas and crude
oil is significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
FINANCIAL OUTLOOKS
Also included in this news release are estimates of Tourmaline's
2023 cash flow, which is based on, among other things, the various
assumptions as to production levels, capital expenditures, annual
cash flows and other assumptions disclosed in this news release and
including Tourmaline's estimated 2023 average daily production of
545,000 boepd, 2023 commodity price assumptions for natural gas
($6.60/mcf NYMEX US, $6.06/mcf AECO, $56.27/mcf JKM US), crude oil ($82.42/bbl WTI US) and an exchange rate
assumption of $0.76 (US/CAD).
Further, readers are cautioned that such estimate is provided for
illustration only and are based on budgets and forecasts that have
not been finalized or approved by the Board of Directors and are
subject to a variety of additional factors and contingencies
including prior years' results. To the extent such estimate
constitutes a financial outlook, it was approved by management and
the Board of Directors of Tourmaline on September 12, 2022 and is included to provide
readers with an understanding of Tourmaline's anticipated cash flow
based on the capital expenditure, production and other assumptions
described herein and readers are cautioned that the information may
not be appropriate for other purposes.
NON-GAAP AND OTHER FINANCIAL
MEASURES
This news release contains the term cash flow which is
considered "non-GAAP financial measures", This term does not have a
standardized meaning prescribed by GAAP. Accordingly, the Company's
use of this term may not be comparable to similarly defined
measures presented by other companies. Investors are cautioned that
this measure should not be construed as an alternative to net
income determined in accordance with GAAP and these measures should
not be considered to be more meaningful than GAAP measures in
evaluating the Company's performance.
Non-GAAP Financial
Measures
Cash Flow
Management uses the term "cash flow" for its own performance
measure and to provide shareholders and potential investors with a
measurement of the Company's efficiency and its ability to generate
the cash necessary to fund its future growth expenditures, to repay
debt or to pay dividends. The most directly comparable GAAP measure
for cash flow is cash flow from operating activities. A
summary of the reconciliation of cash flow from operating
activities to cash flow for the most recently filed quarter, is set
forth below:
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
(000s)
|
2022
|
2021
|
2022
|
2021
|
Cash flow from
operating activities (per GAAP)
|
$1,351,481
|
$
494,673
|
$
2,465,130
|
$ 1,244,802
|
Change in non-cash
working capital
|
2,445
|
75,559
|
(35,228)
|
(45,245)
|
Cash flow
|
$1,353,926
|
$
570,232
|
$
2,429,902
|
$ 1,199,557
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OIL AND GAS METRICS
This news release contains certain oil and gas metrics which do
not have standardized meanings or standard methods of calculation
and therefore such measures may not be comparable to similar
measures used by other companies and should not be used to make
comparisons. Such metrics have been included in this document to
provide readers with additional measures to evaluate the Company's
performance; however, such measures are not reliable indicators of
the Company's future performance and future performance may not
compare to the Company's performance in previous periods and
therefore such metrics should not be unduly relied upon.
SUPPLEMENTAL INFORMATION REGARDING
PRODUCT TYPES
This news release includes references to current, Q3 2022, Q4
2022, and full years 2022 and 2023 average daily production.
The following table is intended to provide supplemental
information about the product type composition for each of the
production figures that are provided in this news release:
|
Light and
Medium
Crude Oil(1)
|
Conventional
Natural Gas
|
Shale Natural
Gas
|
Natural Gas
Liquids(1)
|
Oil Equivalent
Total
|
|
Company Gross
(Bbls)
|
Company Gross
(Mcf)
|
Company Gross
(Mcf)
|
Company Gross
(Bbls)
|
Company Gross
(Boe)
|
Q3 2022 Average
Daily
Production...............
|
43,600
|
1,224,900
|
993,300
|
69,200
|
482,500
|
Q4 2022 Average
Daily
Production………………
|
47,600
|
1,346,800
|
1,080,200
|
75,400
|
527,500
|
2022 Average Daily
Production...............
|
44,800
|
1,296,600
|
1,050,000
|
71,100
|
507,000
|
2023 Average Daily
Production...............
|
47,900
|
1,349,200
|
1,162,400
|
78,500
|
545,000
|
|
|
|
|
|
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(1) For the purposes of this
disclosure, condensate has been combined with Light and Medium
Crude Oil as the associated revenues and certain costs of
condensate are similar to Light and Medium Crude Oil. Accordingly,
NGLs in this disclosure exclude condensate.
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GENERAL
See also "Forward-Looking Statements", and "Non-GAAP Financial
Measures" in the most recently filed Management's Discussion and
Analysis.
CERTAIN DEFINITIONS:
1H
2H
bbl
bbls/day
bbl/mmcf
bcf
bcfe
bpd or bbl/d
boe
boepd or boe/d
bopd or bbl/d
CCUS
DUC
EP
gj
gjs/d
JKM
mbbls
mmbbls
mboe
mboepd
mcf
mcfpd or mcf/d
mcfe
mmboe
mmbtu
mmbtu/d
mmcf
mmcfpd or mmcf/d
MPa
mstb
natural gas
NCIB
NGL or NGLs
tcf
|
first half
second half
barrel
barrels per
day
barrels per million
cubic feet
billion cubic
feet
billion cubic feet
equivalent
barrels per
day
barrel of oil
equivalent
barrel of oil
equivalent per day
barrel of oil,
condensate or liquids per day
carbon capture, usage
and storage
drilled but uncompleted
wells
exploration and
production
gigajoule
gigajoules per
day
Japan Korea
Marker
thousand
barrels
million
barrels
thousand barrels of oil
equivalent
thousand barrels of oil
equivalent per day
thousand cubic
feet
thousand cubic feet per
day
thousand cubic feet
equivalent
million barrels of oil
equivalent
million British thermal
units
million British thermal
units per day
million cubic
feet
million cubic feet per
day
megapascal
thousand stock tank
barrels
conventional natural
gas and shale gas
normal course issuer
bid
natural gas
liquids
trillion cubic
feet
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ABOUT TOURMALINE OIL CORP.
Tourmaline is Canada's largest
and most active natural gas producer dedicated to producing the
lowest-emission and lowest-cost natural gas in North America. We are an investment grade
exploration and production company providing strong and predictable
operating and financial performance through the development of our
three core areas in the Western Canadian Sedimentary Basin. With
our existing large reserve base, decades-long drilling inventory,
relentless focus on execution and cost management, and
industry-leading environmental performance, we are excited to
provide shareholders an excellent return on capital, and an
attractive source of income through our base dividend and surplus
free cash flow distribution strategies.
SOURCE Tourmaline Oil Corp.