CALGARY,
AB, Jan. 15, 2024 /CNW/ - Tourmaline Oil
Corp. (TSX: TOU) ("Tourmaline" or the "Company") is pleased to
provide an EP activity update and to announce two additional LNG
agreements.
EP ACTIVITY UPDATE
Tourmaline exited 2023 with average daily production in excess
of 600,000 boepd including over 150,000 bbls/d of average
liquids production and has continued at these production levels in
January. The Company is operating all 16 drilling rigs as
planned in the Q1 2024 EP program and the planned 2024 capital
program has minimal associated facility expenditures. Similar
to 2023, Tourmaline plans to maximize free cash
flow(1) in 2024. The Company will closely
monitor exploration and production
expenditures(2) and the natural gas pricing
environment throughout the year and adjust the EP program
accordingly. Tourmaline has 724 mmcfpd of natural gas hedged
at an average price of C$5.28/mcf in
2024. The Company has an average 959 mmcfpd of unhedged
volumes exposed to the export markets in 2024, of which 61% is
exposed to premium priced markets such as US Gulf Coast, Western
US, JKM, TTF and Sumas. The Company continues to believe in
the strong North American natural gas outlook for the 2025-2030
time frame and will match planned growth with improving
pricing.
ADDITIONAL LNG AGREEMENTS
Tourmaline is pleased to announce that it has increased its
exposure to JKM by entering into a netback agreement with Trafigura
Pte Limited based on 62,500 mmbtu/d of Liquified Natural Gas (~0.5
mtpa) for a seven-year term starting January
2027, with the potential for extension to December 2039.
Tourmaline has also expanded its international exposure to
include a physical netback agreement with Trafigura Canada Limited
which will receive Dutch TTF index pricing. Starting in
March 2024, Tourmaline will deliver
50,000 mmbtu/d of natural gas at AB-NIT and receive a Dutch TTF
index price (less associated deductions) until December 2026.
FINANCIAL UPDATE
Tourmaline plans to pay four quarterly special dividends in 2024
in addition to the quarterly base dividend of $0.28/share, while also maintaining the net
debt(3) to cash
flow(4) target of between 0.25 and 0.35
times by year-end 2024. The Company has determined to
commence a process to sell the Duvernay assets which were acquired pursuant
to the acquisition of Bonavista Energy Corporation completed by the
Company in November 2023.
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(1)
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"Free cash flow" is
a non-GAAP financial measure defined as cash flow less capital
expenditures, excluding acquisitions and dispositions. Free
cash flow is prior to dividend payments. See "Non-GAAP and
Other Financial Measures" in the Company's most recently filed
Management's Discussion and Analysis (the "Q3 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.
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(2)
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"Exploration and
production expenditures" is defined as Capital Expenditures,
excluding acquisitions, dispositions, and other corporate
expenditures. "Capital Expenditures" is a non-GAAP financial
measure. See "Non-GAAP and Other Financial Measures" in the Q3
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.
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(3)
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Net debt is a
capital management measure. See "Non-GAAP and Other Financial
Measures" in the Q3 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.
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(4)
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"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) and current income taxes. See "Non-GAAP and Other
Financial Measures" in the Q3 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.
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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, business opportunities and shareholder return plan,
including the following: the number of drilling rigs expected to be
operated for the Q1 2024 EP program; the expectation that the 2024
capital program will have minimal facility expenditures; plans to
maximize free cash flow in 2024 and closely monitor
exploration and production expenditures and the natural gas
pricing environment throughout the year and adjust the EP program
accordingly; plans to pay quarterly special dividends in 2024 and
maintain current quarterly base dividend levels; plans to maintain
the net debt to cash flow target of between 0.25 and 0.35 times by
year-end 2024; plans to commence a process to sell Duvernay assets; and the belief in a strong
North American natural gas outlook for the 2025–2030 time frame and
plans to match planned growth with improving pricing. 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; the degree to which
Tourmaline's operations and production may be disrupted or by
circumstances attributable to supply chain disruptions; applicable
royalty rates and tax laws; interest rates; inflation; 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
benefits to be derived from acquisitions; 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 natural gas liquids 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 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;
uncertainties associated with counterparty credit risk; failure to
obtain required regulatory and other approvals; risks relating to
Indigenous land claims and duty to consult; climate change risks;
severe weather (including wildfires); inflation; supply chain
risks; the impact of wars or other hostilities (including the war
in Ukraine and the Israel-Hamas
war) and pandemics (including COVID-19); data breaches and cyber
attacks; risks relating to the use of artificial intelligence; and
changes in legislation, including but not limited to tax laws,
royalties and environmental regulations (including greenhouse gas
emission reduction requirements and other decarbonization or social
policies). 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.sedarplus.ca) 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
year-end 2024 net debt to cash flow target levels,
which are based on, among other things, the various assumptions as
to production levels, capital expenditures and other assumptions
disclosed in this news release and including Tourmaline's estimated
average 2024 production of 600,000 boepd, commodity price
assumptions for natural gas ($3.62/mcf 2024 NYMEX US; $3.12/mcf 2024 AECO 5A; $17.83/mcf 2024 JKM US), crude oil ($80.11/bbl 2024 WTI US) and an exchange rate
assumption of $0.73 (US/CAD) for
2024. To the extent such estimates constitute financial outlooks,
they were approved by management and the Board of Directors of
Tourmaline on January 15, 2024, and
are included to provide readers with an understanding of
Tourmaline's anticipated net debt to cash flow target levels 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.
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 exit 2023 average daily
production. The following table is intended to provide supplemental
information about the product type composition for the production
figure that is provided in this news release:
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Light and Medium
Crude Oil(1)
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Conventional
Natural Gas
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Shale Natural
Gas
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Natural Gas
Liquids(1)
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Oil Equivalent
Total
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Company Gross
(bbls)
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Company Gross
(mcf)
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Company Gross
(mcf)
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Company Gross
(bbls)
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Company Gross
(boe)
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Exit 2023 Average
Daily
Production..........
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52,500
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1,495,000
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1,205,000
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97,500
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600,000
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(1)
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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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CERTAIN DEFINITIONS:
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1H
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first half
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2H
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second half
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AB-NIT
|
NOVA Inventory
Transfer
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bbl
|
barrel
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bbls/day
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barrels per
day
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bbl/mmcf
|
barrels per million
cubic feet
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bcf
|
billion cubic
feet
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bcfe
|
billion cubic feet
equivalent
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bpd or
bbl/d
|
barrels per
day
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boe
|
barrel of oil
equivalent
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boepd or
boe/d
|
barrel of oil
equivalent per day
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bopd or
bbl/d
|
barrel of oil,
condensate or liquids per day
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DUC
|
drilled but uncompleted
wells
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Dutch
TTF
|
Dutch Title Transfer
Facility, a natural gas pricing location within the
Netherlands
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EP
|
exploration and
production
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gj
|
gigajoule
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gjs/d
|
gigajoules per
day
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JKM
|
Japan Korea
Marker
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LNG
|
liquefied natural
gas
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mbbls
|
thousand
barrels
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mmbbls
|
million
barrels
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mboe
|
thousand barrels of oil
equivalent
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mboepd
|
thousand barrels of oil
equivalent per day
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mcf
|
thousand cubic
feet
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mcfpd or
mcf/d
|
thousand cubic feet per
day
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mcfe
|
thousand cubic feet
equivalent
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mmboe
|
million barrels of oil
equivalent
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mmbtu
|
million British thermal
units
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mmbtu/d
|
million British thermal
units per day
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mmcf
|
million cubic
feet
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mmcfpd or
mmcf/d
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million cubic feet per
day
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MPa
|
megapascal
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mstb
|
thousand stock tank
barrels
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mtpa
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million tonnes per
year
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natural
gas
|
conventional natural
gas and shale gas
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NCIB
|
normal course issuer
bid
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NGL or
NGLs
|
natural gas
liquids
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PGE
|
Pacific Gas &
Electric
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tcf
|
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.