CALGARY,
AB, May 3, 2023 /CNW/ - Tourmaline Oil Corp.
(TSX: TOU) ("Tourmaline" or the "Company") is pleased to release
financial and operating results for the first quarter of 2023,
announce an increase to its quarterly base dividend and declare a
special dividend.
HIGHLIGHTS
- First quarter cash flow(1)(2) of $1.13 billion ($3.28 per diluted share(3)).
- Generated quarterly free cash flow(4) ("FCF") of
$525.4 million ($1.53 per diluted share) enabling the Company to
declare a special dividend of $1.50
per common share to be paid on May 19,
2023 to holders of record on May 11,
2023. Tourmaline has distributed total dividends of
$8.70 per share (inclusive of this
May 2023 special dividend) since
June 2022, an implied 14% trailing
yield(5).
- Record first quarter 2023 average production of 525,916
boepd.
- Full-year 2023 free cash flow forecast of $2.0 billion(6) coupled with quarterly
special dividends for the balance of 2023 (2022 free cash flow -
$3.2 billion).
- Commenced delivery in January
2023 to the Gulf Coast, under the Cheniere LNG agreement, of
140 mmcfpd of natural gas receiving a JKM ("Japan Korea Marker")
price. The 2023 JKM strip price for Q2 forward, as at April 14, 2023, was US$14.87/mcf.
- March 31, 2023 net
debt(7) of $709.0 million
or 0.2 times 2023 full-year forecast cash flow of $3.9 billion, based on commodity strip pricing at
April 14, 2023.
PRODUCTION UPDATE
- First quarter 2023 production averaged 525,916 boepd, including
liquids production of 114,291 bpd, which was impacted by the
Pembina NGL pipeline system interruption. Commencing January 17, 2023, a force majeure event on the
Pembina Pipeline Corporation Northern line reduced daily Tourmaline
NGL production volumes by approximately 8,000 boepd. The pipeline
became operational again on February 25,
2023, but continues to operate at a restricted rate. Current
total oil and liquids production has recovered to the 118,000 to
123,000 bpd range over the past month.
- Q2 2023 average production ranging between 500,000 to 515,000
boepd is currently expected as the Company starts injecting natural
gas into storage and accounts for Q2 planned maintenance, both of
which will impact Q2 volumes. Tourmaline holds 1.0 bcf of
storage capacity at the Dawn hub and has expanded its Wild Goose
California natural gas storage capacity from 3.0 to 5.0 bcf.
Tourmaline expects to inject 7,000 - 7,500 boepd into storage
during Q2. In Q1 2023, the Company realized incremental revenue of
US$26.5 million, after deducting
storage fees, by withdrawing gas from storage that was previously
injected at lower prices, when compared to selling at AECO.
- April 2023 average production was
approximately 531,000 boepd, prior to injections.
- Full year 2023 average production guidance ranging between
520,000 and 540,000 boepd remains unchanged.
FINANCIAL RESULTS
- First quarter 2023 cash flow was $1.13
billion ($3.28 per diluted
share) on total capital expenditures(8) of
$594.5 million (EP
spending(9) of $589.2
million in Q1), generating free cash flow of $525.4 million for the quarter ($1.53 per diluted share).
- Tourmaline realized Q1 2023 net earnings of $250.3 million ($0.73 per diluted share). Included in the Q1 2023
net earnings was an unrealized loss on financial instruments of
$1.03 billion related to the
accounting for the embedded derivative in the Cheniere LNG natural
gas supply agreement.
- Exit Q1 2023 net debt was $709.0
million, well below the Company's long term net debt target
of $1.0-1.2 billion. Tourmaline is in
a surplus position when including the value of its 45.1 million
shares of Topaz Energy Corp. (valued at $862.8 million using the closing price of the
Topaz common shares on March 31, 2023
of $19.11/share).
- In 2023, at strip pricing on April 14,
2023, the Company continues to expect to generate cash flow
of $3.9 billion ($11.22 per diluted share) and free cash flow of
$2.0 billion ($5.80 per diluted share) on EP spending of
$1.7 billion. Forecast 2023 cash flow
remains unchanged from previous forecast despite 2023 NYMEX gas
prices declining 12% since the last update. This is a reflection of
Tourmaline's strong and continuously improving natural gas market
diversification portfolio. Similarly, 2024 forecast cash flow has
improved 3% since the last forecast update.
- Given the strong FCF generation outlook for 2023, the Company
has elected to increase the quarterly base dividend effective Q2
2023 to $1.04/share, on an annualized
basis, from the current annualized $1.00/share, as well as declare and pay a special
dividend of $1.50/share on
May 19, 2023, to shareholders of
record on May 11, 2023. This special
cash dividend is designated as an "eligible dividend" for Canadian
income tax purposes. The Company intends to return up to 100% of
FCF to shareholders in 2023 through base dividends, special
dividends, and share buybacks.
MARKETING UPDATE
- Average realized natural gas price was CA$6.18/mcf in Q1 2023,
significantly higher than AECO 5A benchmark price of CA$3.28/mcf
over the period, as the Company benefited from its multi-year
market diversification strategy.
- Tourmaline has an average of 801 mmcfpd hedged at a weighted
average fixed price of CA$5.58/mcf, an average of 137 mmcfpd hedged
at a basis to Nymex of US$0.46/mcf
and an average of 731 mmcfpd of unhedged volumes exposed to export
markets in 2023. Of this 731 mmcfpd, 71% is exposed to premium
markets such as the US Gulf Coast, JKM, Malin, PGE, and Sumas.
- Tourmaline commenced delivery of 140 mmcfpd to the Cheniere
Sabine Pass LNG facility where the Company's average Q1 realized
price before liquefaction and shipping fees was US$19.44/mcf. The 2023 JKM strip price for Q2
forward, as at April 14, 2023, was
US$14.87/mcf, Tourmaline has 31
mmcfpd hedged at a weighted average fixed JKM price of US$31.26/mcf in 2023.
- Tourmaline has 56% of its summer 2023 AECO exposure hedged at a
weighted average fixed price of CA$3.88/mcf.
- On April 1, 2023, Tourmaline
increased natural gas volumes exported to Western US markets by 100
mmcfpd up to 445 mmcfpd through the completion of the Westgate
expansion project.
EP UPDATE
- Tourmaline operated 15 drilling rigs during Q1 2023. The
Company is currently operating 5 drilling rigs in Q2 2023. The
Company currently has no active frac spreads.
- Tourmaline drilled a total of 71.37 net wells during Q1,
completed 67.65 net wells in the quarter and has an inventory of
38.33 net DUCs entering Q2 2023.
- The Company expects to drill and complete a total of
approximately 300 wells (gross) during 2023.
- Tourmaline now has 388 valid drilling permits in NEBC having
received 82 incremental permits thus far in 2023.
EXPLORATION UPDATE
- As of year-end 2022, Tourmaline has made 15 new pool/new zone
discoveries since starting the exploration program, yielding 1.26
TCFe of booked 2P reserves in the 2022 independent GLJ reserve
report.
- Current mapping of these new pools indicates the potential for
a further 3.2 TCF of raw natural gas that the Company will
delineate with follow up drilling.
- The Company has made an additional three new pool discoveries
thus far in 2023.
- All of the production from the new pools will ultimately access
current Tourmaline owned and operated infrastructure.
- As of year-end 2022, the exploration program has added an
estimated 749 Tier 1 and 2 drilling locations (including 616
unbooked locations) to existing inventories.
ENVIRONMENTAL PERFORMANCE IMPROVEMENT
- Tourmaline continues to systematically replace diesel in EP
operations with natural gas, significantly reducing emissions and
fuel costs. Between July 2017 and the
end of Q1 2023, Tourmaline has displaced 106.5 million litres of
diesel resulting in a net cost savings of $103.0 million including the cost of the
replacement natural gas. This initiative has resulted in a net
CO2 reduction of 67,258 tonnes over the same time
period.
- On April 18, 2023, Tourmaline
announced the next step in its diesel displacement initiative.
Tourmaline and Clean Energy Fuels Corp. announced an initiative to
jointly build and operate a network of up to 20 compressed natural
gas (CNG) stations along key highway corridors across Western Canada. The initiative allows for the
use of readily available natural gas to significantly lower
emissions from heavy-duty trucks and other commercial
transportation fleets.
_______________________________
|
(1)
|
This news release
contains certain specified financial measures consisting of
non-GAAP financial measures, non-GAAP financial ratios, capital
management measures and supplementary financial measures. See
"Non-GAAP and Other Financial Measures" in this news release for
information regarding the following specified financial measures:
"cash flow", "capital expenditures", "free cash flow", "operating
netback", "operating netback per boe", "cash flow per diluted
share", "free cash flow per diluted share", "adjusted working
capital" and "net debt". Since these specified financial measures
do not have standardized meanings under International
Financial Reporting Standards ("GAAP"), securities regulations
require that, among other things, they 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 "Q1
MD&A"), which information is incorporated by reference into
this news release, for further information on the composition of
and, where required, reconciliation of these
measures.
|
(2)
|
"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 this news release.
|
(3)
|
"Cash flow per
diluted share" is a non-GAAP financial ratio. Cash flow, a
non-GAAP financial measure, is used as a component of the non-GAAP
financial ratio. See "Non-GAAP and Other Financial Measures"
in this news release and in the Q1 MD&A.
|
(4)
|
"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 this news release.
|
(5)
|
Calculated as the
dividend per common share for the stated period divided by the
closing stock price of $60.49 on April 14, 2023.
|
(6)
|
Based on oil and gas
commodity strip pricing at April 14, 2023.
|
(7)
|
"Net
debt" is a capital management measure. See "Non-GAAP and Other
Financial Measures" in this news release and in the Q1
MD&A.
|
(8)
|
"Capital Expenditures" is a non-GAAP financial
measure defined as Cash flow used in investing activities adjusted
for the change in non-cash working capital (deficit). See
"Non-GAAP and Other Financial Measures" in this news
release.
|
(9)
|
"EP spending" is defined as Capital Expenditures,
excluding acquisitions, dispositions, exploration capital and other
corporate expenditures.
|
CORPORATE SUMMARY – FIRST QUARTER 2023
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2023
|
2022
|
Change
|
OPERATIONS
|
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
|
|
Natural gas
(mcf/d)
|
|
|
|
|
2,469,747
|
2,360,941
|
5 %
|
Crude oil, condensate
and NGL (bbl/d)
|
|
|
|
|
114,291
|
113,569
|
1 %
|
Oil equivalent
(boe/d)
|
|
|
|
|
525,916
|
507,059
|
4 %
|
Product
prices(1)
|
|
|
|
|
|
|
|
Natural gas
($/mcf)
|
|
|
|
|
$
6.18
|
$
4.86
|
27 %
|
Crude oil, condensate
and NGL ($/bbl)
|
|
|
|
|
$
63.16
|
$
66.54
|
(5) %
|
Operating expenses
($/boe)
|
|
|
|
|
$
4.63
|
$
4.21
|
10 %
|
Transportation costs
($/boe)
|
|
|
|
|
$
5.37
|
$
4.89
|
10 %
|
Operating netback
($/boe)(2)
|
|
|
|
|
$
28.08
|
$
23.99
|
17 %
|
Cash general and
administrative
expenses ($/boe)(3)
|
|
|
|
|
$
0.67
|
$
0.59
|
14 %
|
FINANCIAL
($000, except share and per share)
|
|
|
|
|
|
|
|
Commodity sales from
production
|
|
|
|
|
1,515,280
|
1,895,171
|
(20) %
|
Total revenue from
commodity sales and realized gains
|
|
|
|
|
2,023,584
|
1,713,684
|
18 %
|
Royalties
|
|
|
|
|
221,212
|
203,734
|
9 %
|
Cash flow
|
|
|
|
|
1,127,135
|
1,075,976
|
5 %
|
Cash flow per share
(diluted)
|
|
|
|
|
$
3.28
|
$
3.18
|
3 %
|
Net earnings
|
|
|
|
|
250,320
|
675,939
|
(63) %
|
Net earnings per share
(diluted)
|
|
|
|
|
$
0.73
|
$
1.99
|
(63) %
|
Capital expenditures
(net of dispositions)(2)
|
|
|
|
|
594,497
|
479,373
|
24 %
|
Weighted average shares
outstanding (diluted)
|
|
|
|
|
343,514,860
|
338,842,592
|
1 %
|
Net debt
|
|
|
|
|
(709,003)
|
(769,089)
|
(8) %
|
(1)
Product prices include realized gains and losses on risk
management activities and financial instrument
contracts.
|
(2) See
"Non-GAAP and Other Financial Measures" in this news release and in
the Q1 MD&A.
|
(3)
Excluding interest and financing charges.
|
Conference Call Tomorrow at 9:00 a.m.
MT (11:00 a.m. ET)
Tourmaline will host a conference call tomorrow, May 4, 2023 starting at 9:00 a.m. MT (11:00 a.m.
ET).
To participate without operator assistance, you may register and
enter your phone number at https://emportal.ink/3ZV77fa to
receive an instant automated call back.
To participate using an operator, please dial 1-888-664-6383
(toll-free in North America), or
1-416-764-8650 (international dial-in), a few minutes prior to the
conference call.
Conference ID is 93772473.
REPLAY DETAILS
If you are unable to dial into the live conference call on
May 4th, a replay will be
available by dialing 1-888-390-0541 (international 1-416-764-8677),
referencing Encore Replay Code 772473. The recording will expire on
May 18, 2023.
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: anticipated
petroleum and natural gas production and production growth for
various periods including estimated production levels for Q2 2023
and full-year 2023; expected free cash flow and cash flow levels
for 2023 and expected cash flow level for 2024; the future
declaration and payment of base and special dividends and the
timing and amount thereof including any future increase; that the
Company will return up to all of its free cash flow to shareholders
through base dividend increases, special dividends and share
buybacks; the number of wells to be drilled and completed in 2023;
capital expenditures over various periods; cost reduction
initiatives; projected operating and drilling costs and drilling
times; sustainability and environmental improvement initiatives;
Tourmaline's expectations regarding the construction and operation
of CNG stations in Western Canada
and the location of such stations, anticipated future commodity
prices; the ability to generate, and the amount of, anticipated
cash flow and free cash flow including in 2023 and 2024; as well as
Tourmaline's future drilling locations, prospects and plans,
business strategy, future development and growth opportunities,
prospects and asset base. 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 and
interest rates; applicable royalty rates and tax laws; future well
production rates and reserve volumes; operating costs, the timing
of receipt of regulatory approvals; the performance of existing and
future 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; ability to
maintain its investment grade credit rating; 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 is 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.
Statements relating to "reserves" are also deemed to be forward
looking information, as they involve the implied assessment, based
on certain estimates and assumptions, that the reserves described
exist in the quantities predicted or estimated and that the
reserves can be profitably produced in the future.
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; climate change
risks; inflation; supply chain risks; the impact of wars or other
hostilities (including the current war in Ukraine) and pandemics (including COVID-19);
and changes in legislation, including but not limited to tax laws,
royalties and environmental regulations.
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 and free cash flow and 2024 cash flow, 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 2023 production of 530,000 boepd and 2024 estimated average
production of 550,000 boepd, 2023 commodity price assumptions for
natural gas ($2.80/mcf NYMEX US;
$2.56/mcf AECO; $16.43/mcf JKM US), crude oil ($79.33/bbl WTI US) and an exchange rate
assumption of $0.75 (US/CAD) and 2024
commodity price assumptions for natural gas ($3.46/mcf NYMEX US; $3.21/mcf AECO; $17.01/mcf JKM US), crude oil ($74.60/bbl WTI US) and an exchange rate
assumption of $0.75 (US/CAD). To the
extent such estimates constitute financial outlooks, they were
approved by management and the Board of Directors of Tourmaline on
May 3, 2023 and are included to
provide readers with an understanding of Tourmaline's anticipated
cash flow and free 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 terms "cash flow", "capital
expenditures", "free cash flow", and "operating
netback", which are considered "non-GAAP financial measures"
and the terms "cash flow per diluted share", "free cash flow per
diluted share", and "operating netback per boe", which are
considered "non-GAAP financial ratios". These terms do not have a
standardized meaning prescribed by GAAP. In addition, this news
release contains the terms "adjusted working capital" and "net
debt", which are considered "capital management measures" and do
not have standardized meanings prescribed by GAAP. Accordingly, the
Company's use of these terms may not be comparable to similarly
defined measures presented by other companies. Investors are
cautioned that these measures should not be construed as an
alternative to or more meaningful than the most directly comparable
GAAP measures in evaluating the Company's performance. See
"Non-GAAP and Other Financial Measures" in the most recent
Management's Discussion and Analysis for more information on the
definition and description of these terms.
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, is set forth below:
|
|
Three Months Ended
March 31,
|
(000s)
|
|
|
2023
|
2022
|
Cash flow from
operating activities (per GAAP)
|
|
|
$
1,538,075
|
$ 1,113,649
|
Current income
taxes
|
|
|
(198,358)
|
-
|
Current income taxes
paid
|
|
|
25,029
|
-
|
Change in non-cash
working capital
|
|
|
(237,611)
|
(37,673)
|
Cash flow
|
|
|
$
1,127,135
|
$ 1,075,976
|
Capital Expenditures
Management uses the term "capital expenditures" as a measure of
capital investment in exploration and production activity, as well
as property acquisitions and divestitures, and such spending is
compared to the Company's annual budgeted capital
expenditures. The most directly comparable GAAP measure for
capital expenditures is cash flow used in investing
activities. A summary of the reconciliation of cash flow used
in investing activities to capital expenditures, is set forth
below:
|
|
Three Months Ended
March 31,
|
(000s)
|
|
|
2023
|
2022
|
Cash flow used in
investing activities (per GAAP)
|
|
|
$
501,598
|
$
459,447
|
Change in non-cash
working capital
|
|
|
92,899
|
19,926
|
Capital
expenditures
|
|
|
$
594,497
|
$
479,373
|
Free Cash Flow
Management uses the term "free 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 and provide shareholder returns.
Free cash flow is defined as cash flow less capital expenditures,
excluding acquisitions and dispositions. Free cash flow is
prior to dividend payment. The most directly comparable GAAP
measure for cash flow is cash flow from operating activities.
See "Non-GAAP Financial Measures – Cash Flow" and " Non-GAAP
Financial Measures – Capital Expenditures" above.
|
|
Three Months Ended
March 31,
|
(000s)
|
|
|
2023
|
2022
|
Cash flow
|
|
|
$
1,127,135
|
$ 1,075,976
|
Capital
expenditures
|
|
|
(594,497)
|
(479,373)
|
Property
acquisitions
|
|
|
15
|
24,921
|
Proceeds from
divestitures
|
|
|
(7,291)
|
(3,297)
|
Free Cash
Flow
|
|
|
$
525,362
|
$
618,227
|
Operating Netback
Management uses the term "operating netback" as a key
performance indicator and one that is commonly presented by other
oil and natural gas producers. Operating netback is defined
as the sum of commodity sales from production, premium (loss) on
risk management activities and realized gains (loss) on financial
instruments less the sum of royalties, transportation costs and
operating expenses. A summary of the reconciliation of
operating netback from commodity sales from production, which is a
GAAP measure, is set forth below:
|
|
Three Months Ended
March 31,
|
(000s)
|
|
|
2023
|
2022
|
Commodity sales from
production
|
|
|
$
1,515,280
|
$ 1,895,171
|
Premium (loss) on risk
management activities
|
|
|
398,348
|
(22,964)
|
Realized (loss) on
financial instruments
|
|
|
109,956
|
(158,523)
|
Royalties
|
|
|
(221,212)
|
(203,734)
|
Transportation
costs
|
|
|
(254,070)
|
(223,168)
|
Operating
expenses
|
|
|
(219,002)
|
(191,918)
|
Operating
netback
|
|
|
$
1,329,300
|
$ 1,094,864
|
Non-GAAP Financial Ratios
Operating Netback per-boe
Management calculates "operating netback per-boe" as operating
netback divided by total production for the period. Netback
per-boe is a key performance indicator and measure of operational
efficiency and one that is commonly presented by other oil and
natural gas producers. A summary of the calculation of
operating netback per boe, is set forth below:
|
|
Three Months Ended
March 31,
|
($/boe)
|
|
|
2023
|
2022
|
Revenue, excluding
processing income
|
|
|
$
42.75
|
$
37.55
|
Royalties
|
|
|
(4.67)
|
(4.46)
|
Transportation
costs
|
|
|
(5.37)
|
(4.89)
|
Operating
expenses
|
|
|
(4.63)
|
(4.21)
|
Operating
netback
|
|
|
$
28.08
|
$
23.99
|
Capital Management Measures
Adjusted Working Capital
Management uses the term "adjusted working capital" for its own
performance measures and to provide shareholders and potential
investors with a measurement of the Company's liquidity. A
summary of the reconciliation of working capital (deficit) to
adjusted working capital (deficit), is set forth below:
(000s)
|
As at
March 31,
2023
|
As at
December 31,
2022
|
Working capital
(deficit)
|
$
161,663
|
$
809,449
|
Fair value of financial
instruments – short-term liability
|
(457,416)
|
(709,286)
|
Lease liabilities –
short-term
|
3,994
|
3,109
|
Decommissioning
obligations – short-term
|
30,000
|
30,000
|
Unrealized foreign
exchange in working capital – liability (asset)
|
810
|
(8,605)
|
Adjusted working
capital (deficit)
|
$
(260,949)
|
$
124,667
|
Net Debt
Management uses the term "net debt", as a key measure for
evaluating its capital structure and to provide shareholders and
potential investors with a measurement of the Company's total
indebtedness. A summary of the reconciliation of bank debt
and senior unsecured notes to net debt, is set forth below:
(000s)
|
As at
March 31,
2023
|
As at
December 31,
2022
|
Bank debt
|
$
-
|
$ (170,767)
|
Senior unsecured
notes
|
(448,054)
|
(448,342)
|
Adjusted working
capital (deficit)
|
(260,949)
|
124,667
|
Net debt
|
$
(709,003)
|
$ (494,442)
|
Supplementary Financial Measures
The following measures are supplementary financial measures:
cash flow per diluted share, free cash flow per diluted share,
operating expenses ($/boe), cash general and administrative
expenses ($/boe) and transportation costs ($/boe). These measures
are calculated by dividing the numerator by a diluted share count
or by total production for the period, depending on the financial
measure discussed.
ESTIMATES OF DRILLING LOCATIONS
Unbooked drilling locations are the internal estimates of
Tourmaline based on Tourmaline's prospective acreage and an
assumption as to the number of wells that can be drilled per
section based on industry practice and internal review. Unbooked
locations do not have attributed reserves or resources (including
contingent and prospective). Unbooked locations have been
identified by Tourmaline's management as an estimation of
Tourmaline's multi-year drilling activities based on evaluation of
applicable geologic, seismic, engineering, production and reserves
information. There is no certainty that Tourmaline will drill
all unbooked drilling locations and if drilled there is no
certainty that such locations will result in additional oil and
natural gas reserves, resources or production. The drilling
locations on which Tourmaline will actually drill wells, including
the number and timing thereof is ultimately dependent upon the
availability of funding, regulatory approvals, seasonal
restrictions, oil and natural gas prices, costs, actual drilling
results, additional reservoir information that is obtained and
other factors. While a certain number of the unbooked drilling
locations have been de-risked by Tourmaline drilling existing wells
in relative close proximity to such unbooked drilling locations,
the majority of other unbooked drilling locations are farther away
from existing wells where management of Tourmaline has less
information about the characteristics of the reservoir and
therefore there is more uncertainty whether wells will be drilled
in such locations and if drilled there is more uncertainty that
such wells will result in additional oil and gas reserves,
resources or production.
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 Q1 2023 average daily
production, April 2023 average daily
production, forecast Q2 2023 average daily production and forecast
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)
|
Q1 2023 Average Daily
Production
|
44,685
|
|
1,322,639
|
|
1,147,108
|
|
69,606
|
|
525,916
|
April 2023 Average
Daily Production
|
46,195
|
|
1,318,000
|
|
1,144,000
|
|
74,470
|
|
531,000
|
Q2 2023 Forecast
Average Daily Production
|
44,600
|
|
1,246,000
|
|
1,105,000
|
|
71,065
|
|
507,500
|
2023 Forecast Average
Daily Production
|
48,300
|
|
1,336,100
|
|
1,118,500
|
|
72,600
|
|
530,000
|
(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.
|
GENERAL
See also "Forward-Looking Statements" and "Non-GAAP and Other
Financial Measures" in the most recently filed Management's
Discussion and Analysis.
Certain Definitions:
1H
|
first half
|
2H
|
second half
|
bbl
|
barrel
|
bbls/day
|
barrels per
day
|
bbl/mmcf
|
barrels per million
cubic feet
|
bcf
|
billion cubic
feet
|
bcfe
|
billion cubic feet
equivalent
|
bpd or
bbl/d
|
barrels per
day
|
boe
|
barrel of oil
equivalent
|
boepd or
boe/d
|
barrel of oil
equivalent per day
|
bopd or
bbl/d
|
barrel of oil,
condensate or liquids per day
|
CNG
|
compressed natural
gas
|
DUC
|
drilled but uncompleted
wells
|
EP
|
exploration and
production
|
gj
|
gigajoule
|
gjs/d
|
gigajoules per
day
|
JKM
|
Japan Korea
Marker
|
mbbls
|
thousand
barrels
|
mmbbls
|
million
barrels
|
mboe
|
thousand barrels of oil
equivalent
|
mboepd
|
thousand barrels of oil
equivalent per day
|
mcf
|
thousand cubic
feet
|
mcfpd or
mcf/d
|
thousand cubic feet per
day
|
mcfe
|
thousand cubic feet
equivalent
|
mmboe
|
million barrels of oil
equivalent
|
mmbtu
|
million British thermal
units
|
mmbtu/d
|
million British thermal
units per day
|
mmcf
|
million cubic
feet
|
mmcfpd or
mmcf/d
|
million cubic feet per
day
|
MPa
|
megapascal
|
mstb
|
thousand stock tank
barrels
|
natural
gas
|
conventional natural
gas and shale gas
|
NCIB
|
normal course issuer
bid
|
NGL or NGLs
|
natural gas
liquids
|
TCF
|
trillion cubic
feet
|
TCFe
|
trillion cubic feet
equivalent
|
MANAGEMENT'S DISCUSSION AND ANALYSIS AND CONSOLIDATED FINANCIAL
STATEMENTS
To view Tourmaline's Management's Discussion and Analysis and
Interim Condensed Consolidated Financial Statements for the periods
ended March 31, 2023 and 2022, please
refer to SEDAR (www.sedar.com) or Tourmaline's website at
www.tourmalineoil.com.
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.