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Tamarack Valley Energy Announces Q1 2024 Financial Results, Provides Operational Update and Announces Investor Day

Press Release

Calgary, Alberta – May 8, 2024 – Tamarack Valley Energy Ltd. (“Tamarack” or the “Company”) (TSX: TVE) is pleased to announce its unaudited financial and operating results for the three months ended March 31, 2024. Selected financial and operating information should be read with Tamarack’s unaudited consolidated financial statements and related management’s discussion and analysis (“MD&A”) for the three months ended March 31, 2024 and 2023 and December 31, 2023, which are available on SEDAR+ at www.sedarplus.ca and on Tamarack’s website at www.tamarackvalley.ca.

Q1 2024 Financial and Operational Highlights

  • Increasing Funds Flow(1) – Delivered Adjusted Funds Flow(1) of $181.6MM, representing a 15% YoY increase, and Free Funds Flow(1) of $53.3MM, which was directed to base dividends, enhanced returns and reinforcing our balance sheet strength.
  • Delivering Enhanced Returns – Tamarack delivered on its return of capital commitment to shareholders. During Q1/24 the Company purchased and cancelled 7.6MM common shares, representing ~1.4% of the outstanding shares, for a total repurchase of $25.6MM. Total shareholder return for the quarter, including base dividends and enhanced returns was $46.4MM, or ~$0.08/share.
  • Increased Oil Production Weighting – Delivered quarterly production of 62,022 boe/d(2), inline with Tamarack’s oil and liquids weighting as a percent of total production increased to 86% in Q1/24 compared to 82% in Q1/23.
  • Realizing Higher Pricing Margins – The Company’s heavy oil price differential, including transportation expenses(1) relative to the Hardisty Heavy benchmark price, improved by 53% over Q1/23. The average realized price of $69.34/boe was 13% higher than Q1/23, owing to improved market access and lower wellhead deductions, having >90% of production focused in the Clearwater and Charlie Lake.
  • Improved Net Production Expenses – Production expense of $9.43/boe in Q1/24 reflected a 10% improvement over Q1/23 and is expected to benefit from further cost efficiencies through the year. This demonstrates the benefits of new gas gathering facilities, increased volumes delivered to Tamarack’s

Wembley gas plant at Charlie Lake, Clearwater asset area synergies at Nipisi and Marten Hills and the impact of non-core dispositions.

  • DAP and Term Facility Repaid; Bank Facility Updated – During the quarter the Company fully repaid the Deferred Acquisition Payment notes (“DAP”) and term facility associated with the prior Deltastream Energy Corporation acquisition that closed in Q4/22. Subsequent to the quarter Tamarack extended its $875.0MM revolving SLL Facility, of which $228.0MM is unutilized, and added an uncommitted accordion feature providing the ability to access an incremental $125.0MM of secured debt.
  • Optimized Capital Spending – Total capital expenditures in Q1/24 of $128.2MM reflected the drilling of 32.9 net Clearwater heavy and 5.4 net Charlie Lake light oil wells. Spending included $7.3MM of gas conservation projects sanctioned with the Clearwater Infrastructure Limited Partnership (the “CIP”). Annual capital expenditure guidance for 2024 is maintained at $390 – $440MM.
  • Significant ARO Reduction – Tamarack divested its producing Redwater assets, including ~400 boe/d(3) of production for a nominal cash price, with the purchaser assuming approximately $30MM of the Alberta Energy Regulator (“AER”) deemed liability.

Q1 2024 Financial & Operating Results

Three months ended Three months ended
March 31, December 31,
2024 2023 % 2023 %
change change
($ thousands, except per share)
Total oil, natural gas revenue $ 393,336 $ 378,546 4 $ 418,864 (6)
Cash flow from operating activities 165,201 59,624 177 215,981 (24)
Per share – basic 0.30 0.11 173 0.39 (23)
Per share – diluted 0.30 0.11 173 0.39 (23)
Adjusted funds flow (1) 181,556 157,271 15 194,771 (7)
Per share – basic (1) 0.33 0.28 18 0.35 (6)
Per share – diluted (1) 0.33 0.28 18 0.35 (6)
Free funds flow (1) 53,335 9,109 486 67,067 (20)
Per share – basic (1) 0.10 0.02 490 0.12 (20)
Per share – diluted (1) 0.10 0.02 491 0.12 (20)
Net income (32,744) 2,505 nm 57,322 nm
Per share – basic (0.06) nm 0.10 nm
Per share – diluted (0.06) nm 0.10 nm
Net debt (1) 984,768 1,374,068 (28) 983,585 0
Capital expenditures 128,221 148,162 (13) 127,704 0
Weighted average shares outstanding (thousands)
Basic 552,345 556,548 (1) 556,699 (1)
Diluted 555,595 560,503 (1) 560,008 (1)
Average daily production
Heavy oil (bbls/d) 36,255 34,399 5 37,447 (3)
Light oil (bbls/d) 15,270 17,035 (10) 14,928 2
NGL (bbls/d) 1,925 4,122 (53) 2,769 (30)
Natural gas (mcf/d) 51,431 74,293 (31) 58,419 (12)
Total (boe/d) 62,022 67,938 (9) 64,881 (4)
Average sale prices
Heavy oil, net of blending expense(1) ($/bbl) $ 75.75 $ 61.60 23 $ 74.09 2
Light oil ($/bbl) 86.52 94.97 (9) 99.79 (13)
NGL ($/bbl) 42.54 45.91 (7) 42.31 1
Natural gas ($/mcf) 2.93 3.50 (16) 2.82 4
Total ($/boe) 69.34 61.61 13 70.07 (1)
Benchmark pricing
West Texas Intermediate (US$/bbl) 76.96 76.13 1 78.32 (2)
Western Canadian Select (WCS/Hardisty Heavy) (Cdn$/bbl) 77.77 69.30 12 76.96 1
WCS differential (US$/bbl) 19.31 24.88 (22) 21.89 (12)
Edmonton Par (Cdn$/bbl) 92.15 99.01 (7) 99.69 (8)
Edmonton Par differential (Cdn$/bbl) 8.65 2.88 200 5.19 67
Foreign Exchange (USD to CAD) 1.35 1.35 (0) 1.36 (1)
Operating netback ($/Boe)
Average realized sales, net of blending expense (1) 69.34 61.61 13 70.07 (1)
Royalty expenses (13.46) (11.99) 12 (13.81) (3)
Net production expenses (1) (9.43) (10.49) (10) (8.89) 6
Transportation expenses (4.18) (3.90) 7 (3.56) 17
Carbon tax (0.62) nm (2.53) nm
Operating field netback ($/Boe) (1) 41.65 35.23 18 41.28 1
Realized commodity hedging loss 0.37 (1.06) (135) 0.80 (54)
Operating netback ($/Boe) (1) $ 42.02 $ 34.17 23 $ 42.08 (0)
Adjusted funds flow ($/Boe) (1) $ 32.17 $ 25.72 25 $ 32.63 (1)

 

Achieving Success: Tamarack’s Transformation and Promising Future

Brian Schmidt, President and CEO of Tamarack stated:

“During the first quarter of 2024, Tamarack demonstrated its unwavering commitment to execution. After a strategic shift that began three years ago, high grading our asset quality and reconstructing the company with best-in-class resources, we delivered impressive results. Notably, during the quarter, Tamarack brought on-stream two of the best Charlie Lake oil wells ever drilled in the play. Our organic drilling success, combined with strict capital discipline, allowed us to deliver on our commitment to investors. During the quarter we returned $46.4MM to investors in the form of declared dividends and share buybacks. Looking ahead, we will remain focused on our core assets. Our strategy includes continuing to increase oil weighting, reduce sustaining capital requirements, improve pricing margins, and implement projects with multiple payouts. Anticipating strong free funds flow(1) in 2024, the Company is positioned for a promising year. Tamarack’s transformational journey continues, and we’re excited about the future.”

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