Tourmaline Delivers Record Production, Increases 2P Reserves to 5 Billion BOE and Declares an Increased Quarterly Base Dividend and a Special Dividend
MARCH 6, 2024
Calgary, Alberta – Tourmaline Oil Corp. (TSX:TOU) (“Tourmaline” or the “Company”) is pleased to release financial and operating results for the full year and fourth quarter of 2023, announce an increase in both 2023 reserves and the quarterly base dividend, as well as declare a special dividend and a quarterly dividend.
HIGHLIGHTS
Full-year 2023 cash flow(1) (“CF”) was $3.71 billion ($10.73 per diluted share(2)). Fourth quarter 2023 CF was $918.0 million ($2.62 per diluted share).
Tourmaline generated $1.69 billion of free cash flow(3) (“FCF”) in 2023 (2022 – $3.21 billion).
Full year 2023 earnings were $1.74 billion ($5.03 per diluted share).
Successfully closed the acquisition of Bonavista Energy Corporation (“Bonavista”), adding over 60,000 boepd of low-decline, long-life production.
Tourmaline will pay a special dividend of $0.50/share on March 21, 2024, to shareholders of record on March 14, 2024. Tourmaline intends to pay special dividends in all four quarters of 2024, inclusive of this Q1 2024 special dividend. Tourmaline has also increased its quarterly base dividend by 7% to $0.30/share.
This news release contains certain specified financial measures consisting of non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures. See “Non-GAAP and Other Financial Measures” in this news release for information regarding the following non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures used in this news release: “cash flow”, “capital expenditures”, “free cash flow”, “operating netback”, “operating netback per boe”, “cash flow 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 Management’s Discussion and Analysis for the year ended December 31, 2023 (the “Annual 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.
“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 Annual MD&A.
“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.
Year-end 2023 proved, developed producing (“PDP”) reserves of 1.20 billion boe were up 39.3% after accounting for 2023 annual production of 189.9 million boe. Total proved (“TP”) reserves of 2.61 billion boe were up 20.8% after accounting for 2023 production. Proved plus probable (“2P”) reserves of 5.01 billion boe were up 15.5% after accounting for 2023 production.
After 15 years of operation, Tourmaline now has 22.7 TCF of economic 2P natural gas reserves, all of which is pipeline connected to markets across North America. At year-end 2023, 83.5% of the current drilling inventory was not booked in the 2023 year-end reserve report.
Year-end 2023 2P oil, condensate, and natural gas liquids (“NGL”) reserves of 1.22 billion barrels represent the second largest conventional liquids reserve base in Canada, based on public disclosure.
Given continuing weak natural gas prices, the Company has elected to reduce the forecast 2024 capital expenditures from $2.35 billion to $2.13 billion including reduced 2024 forecast spending on exploratory drilling from $100.0 million down to $40.0 million and a reduction in EP capital of $150.0 million. The budget reductions include a reduction in the rig count and deferral of select exploration drilling and facility projects. Tourmaline continues to focus on optimizing free cash flow and shareholder returns.
Fourth quarter 2023 average production was 556,957 boepd, up 9% from Q4 2022. Full year 2023 average production of 520,366 boepd was up 4% over full year 2022 average production of 500,832 boepd.
Tourmaline has an average of 726 mmcfpd hedged in 2024 at a weighted average fixed price of $5.34/mcf.
Montney well performance in NEBC continues to improve with 2023 wells outperforming wells from the previous three years. Both natural gas, and particularly liquids production, are exceeding previous year’s performance. As a result, despite the activity reduction, Tourmaline anticipates 2024 liquids production to be slightly higher than prior guidance.
At current strip pricing(4), the Company expects to generate 2024 CF of $3.32 billion ($9.34 per diluted share) and FCF of $1.19 billion ($3.35 per diluted share(5)).
The Company expects to generate over $1 billion(6) of FCF in every year of the Company’s five year EP growth plan.
Exit 2023 net debt(7) was $1.78 billion (0.48 times Q4 2023 annualized cash flow). The net debt reflects cash paid of $651.0 million and net debt assumed in connection with the Bonavista acquisition, which closed on November 17, 2023. The Company intends to deleverage throughout 2024 and remains committed to a long-term net debt target of $1.2-1.4 billion.
IBF4
