Tourmaline Delivers Strong Free Cash Flow in Q2 2024, Reduces Net Debt, Announces an Increase to Quarterly Base Dividend and Declares a Special Dividend

Press Release

JULY 31, 2024

Calgary, Alberta – Tourmaline Oil Corp. (TSX:TOU) (“Tourmaline” or the “Company”) is pleased to release financial and operating results for the second quarter of 2024, announce an increase to its quarterly base dividend and declare a special dividend.

HIGHLIGHTS

• Second quarter average production was 561,787 boepd, a 13% increase over second quarter 2023 average production of 495,918 boepd and within the second quarter 2024 average production guidance range of 560,000-570,000 boepd, announced on May 1, 2024.
• Second quarter cash flow(1)(2) (“CF”) of $755.1 million ($2.12 per diluted share(3)) on total cash capital expenditures(4) of $294.1 million (EP expenditures(5) of $306.6 million in Q2 2024), generating free cash flow (6) (“FCF”) of $433.5 million for the quarter ($1.22 per diluted share).
• In 2024, the Company expects to generate CF of $3.4 billion(7) ($9.62 per diluted share) and FCF of $1.3 billion ($3.63 per diluted share) on EP expenditures of $2.0 billion.
• Given the continued strong FCF generation in Q2 2024 and the full year financial outlook, the Company has elected to increase the quarterly base dividend effective Q3 2024 by 3% to $0.33/share ($1.32 per share on an annualized basis) from the current $0.32/share, as well as declare and pay a special
• 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”, “EP 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 “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 these measures.

• “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 and in the Q2 MD&A.

• “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 Q2 MD&A.

• “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 and in the Q2 MD&A.

• “EP expenditures” is defined as capital expenditures, excluding acquisitions, dispositions, and other corporate expenditures. See “Non-GAAP and Other Financial Measures” in this news release and in the Q2 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.

• Based on oil and gas commodity strip pricing at July 15, 2024.

dividend of $0.50/share on August 21, 2024 to shareholders of record on August 9, 2024. This special cash dividend is designated as an “eligible dividend” for Canadian income tax purposes.

• The Company reduced net debt(8) by $136.6 million during Q2 2024, while also returning $288.5 million in dividends to shareholders.

PRODUCTION UPDATE

• Second quarter 2024 average production was 561,787 boepd, a 13% increase over second quarter 2023 average production of 495,918 boepd and within the previously announced second quarter 2024 average production guidance range of 560,000-570,000 boepd.
• During this quarter of low natural gas prices, the Company completed multiple planned facility maintenance turnarounds and maximized injection into gas storage reservoirs in California and at Dawn, Ontario. These storage injections reduced Q2 average production volumes by 4,778 boepd and are expected to be withdrawn from storage during the fourth quarter of 2024 and first quarter of 2025.
• Second quarter average production was impacted by an unplanned outage on the Pembina Pipeline Corporation-operated liquids pipeline system (1,800 boepd reduction to the quarterly average) and at the Company-operated A-21 gas processing facility in Laprise, B.C. (1,700 boepd reduction to the quarterly average). Production has returned to normal levels in both cases.
• The full year 2024 average production guidance range has been revised to 575,000-585,000 from the previously announced range of 580,000- 590,000 boepd. This revision is to account for select Q3 frac deferrals into Q4, to ultimately shift production into an environment of stronger anticipated winter gas prices. This production (<1%) deferral is expected to have minimal impact on 2024 cash flow and a positive impact on 2025 cash flow and free cash flow, based on current strip prices. Third quarter 2024 average production of 550,000 – 560,000 boepd is currently anticipated.

FINANCIAL RESULTS

• Second quarter 2024 CF was $755.1 million ($2.12 per diluted share) on total cash capital expenditures of $294.1 million (EP expenditures of $306.6 million in Q2 2024), generating FCF of $433.5 million for the quarter ($1.22 per diluted share).
• Tourmaline realized Q2 2024 net earnings of $256.6 million ($0.72 per diluted share), underscoring the profitability of the business even in an extremely weak natural gas pricing environment.
• In 2024, using strip pricing on July 15, 2024, the Company expects to generate CF of $3.4 billion ($9.62 per diluted share) and FCF of $1.3 billion ($3.63 per diluted share) on EP expenditures of $2.0 billion and anticipates generating over $1.0 billion in FCF in every year of the five-year EP Plan.
• Exit Q2 2024 net debt was $1.6 billion. As previously announced, the Company remains committed to a long-term net debt target of $1.2-$1.4 billion and intends to continue to make progress toward that target throughout 2024. The Company reduced net debt by $136.6 million during Q2 2024. In addition,
• “Net debt” is a capital management measure. See “Non-GAAP and Other Financial Measures” in this news release and in the Q2 MD&A. as of June 30, 2024, Tourmaline’s 45.1 million shares of Topaz Energy Corp. had a market value of $1.1 billion(9).

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