Tourmaline Delivers Strong Free Cash Flow in Q2 2025, Updates EP Plan, Announces New Long-Term LNG Feed Gas Supply Agreement and Declares Special Dividend
Press Release
Calgary, Alberta – Tourmaline Oil Corp. (TSX:TOU) (“Tourmaline” or the “Company”) is pleased to release financial and operating results for the second quarter of 2025 and an updated multi-year EP growth plan (the “EP Plan”), announce a new long-term LNG feed gas supply agreement and declare a special dividend.
HIGHLIGHTS
⦁ Second quarter average production was 620,757 boepd, at the mid-point of the guidance range provided on May 7, 2025 and up 10% from the second quarter of 2024.
⦁ Second quarter cash flow(1)(2) (“CF”) of $822.8 million ($2.16 per diluted share(3)) on total cash capital expenditures(4) of $505.2 million (EP expenditures(5) of $489.8 million), generating free cash flow(6) (“FCF”) of $316.9 million for the quarter ($0.83 per diluted share).
⦁ The Company has entered into a long-term LNG feed gas supply agreement with Uniper to supply 80,000 mmbtu per day of natural gas in the US Gulf Coast for an 8-year term beginning November 2028, with international price exposure to Dutch Title Transfer Facility (“TTF”).
⦁ Tourmaline has released an updated EP Plan(7) that outlines growth from current production levels of approximately 650,000 boepd to 850,000 boepd early next decade. This build out is fully funded by
(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”, “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.
(1) “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 taxes. See “Non-GAAP and Other Financial Measures” in this news release and in the Q2 MD&A.
(1) “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.
(1) “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.
(1) “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.
(1) “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.
(1) The EP Plan is available on Tourmaline’s website (www.tourmalineoil.com).
cash flow and results in $2.5 to $3.0 billion of annual FCF at flat pricing(8) on a maintenance budget by the end of the EP Plan.
⦁ Given the continued strong FCF generation in Q2 2025, the Company has elected to declare and pay a special dividend of $0.35/share on August 20, 2025 to shareholders of record on August 8, 2025.
FINANCIAL RESULTS
⦁ Second quarter 2025 CF was $822.8 million ($2.16 per diluted share) and FCF was $316.9 million ($0.83 per diluted share).
⦁ Second quarter 2025 earnings were $514.6 million ($1.35 per diluted share).
⦁ Second quarter EP expenditures were $489.8 million. The full year 2025 EP capital budget remains unchanged at $2.60 to $2.85 billion. The Company anticipates commodity prices to improve over current strip in 2H 2025 with the start-up of the LNG Canada facility on the West Coast, resulting in higher FCF in 2H 2025 relative to 1H 2025.
⦁ Tourmaline continues to maintain a very strong balance sheet. Net debt( 9) at June 30, 2025 was $1.9 billion, approximately 0.5 times net debt to 2025 forecast cash flow.
PRODUCTION UPDATE
⦁ Second quarter average production was 620,757 boepd, at the mid-point of the guidance range and up 10% from the second quarter of 2024.
⦁ Strong second quarter 2025 production was achieved despite reductions related to wildfires in the PRH complex, low commodity price related shut-ins in NEBC, and several frac activity deferrals into the second half of 2025.
⦁ Full year 2025 average production of 635,000 to 650,000 boepd is now expected given the EP activity deferrals from Q2 and Q3 2025 to the fourth quarter. 2025 exit average production of 680,000 to 690,000 boepd and a preliminary 2026 average production range of 690,000 to 710,000 boepd is currently anticipated. Tourmaline is incorporating the low end of the 2026 average production range, 690,000 boepd, into the EP Plan to provide an early conservative estimate subject to 2026 project timing. Tourmaline will formally guide 2026 capital and production along with the release of its third quarter 2025 financial results.
2025 CAPITAL PROGRAM
⦁ Q2 EP capital spending was $70 million less than forecast primarily due to activity deferrals.
⦁ The Company will continue to monitor local natural gas prices and defer capital from Q3 into Q4 2025 or Q1 2026, as required, in order to optimize 2H 2025 FCF.
(8) The EP Plan utilizes current strip pricing (as at June 30, 2025) for 2025 and 2026 and a flat price deck for the remaining years (US$65.00/bbl WTI, US$4.00/mmbtu NYMEX and an AECO basis differential of US$1.00/mcf, which results in C$4.08/mcf AECO).
(8) “Net debt” is a capital management measure. See “Non-GAAP and Other Financial Measures” in this news release and in the Q2 2025 MD&A.
MARKETING UPDATE
⦁ Tourmaline’s average realized natural gas price in the second quarter of 2025 was CAD $3.34/mcf, 94% (CAD $1.62/mcf) above the AECO 5A benchmark price of CAD $1.72/mcf over the same time period, as the Company continues to benefit from its diversified marketing portfolio and strategic hedging program.
⦁ Tourmaline has an average of 1.1 bcfpd hedged for the remainder of 2025 at a weighted average fixed price of CAD $4.48/mcf. This includes 68 mmcfpd hedged at a weighted average price of CAD $19.75/mcf in international markets and 144 mmcfpd at a weighted average price of CAD $6.43/mcf in Western US markets.
LONG-TERM LNG FEED GAS SUPPLY AGREEMENT WITH UNIPER
⦁ Tourmaline is pleased to announce it has entered into a long-term LNG feed gas supply agreement with Uniper. Uniper is a German-based European energy company with global reach and operations in more than 40 countries and is a flexible power producer and leading gas trader focused on secure, affordable, and sustainable energy.
⦁ Tourmaline will supply 80,000 mmbtu per day of natural gas in the US Gulf Coast for an 8-year term beginning November 2028.
⦁ The LNG feed gas supply agreement provides international price exposure to TTF for Tourmaline.
⦁ Tourmaline has secured long-term firm transportation to the US Gulf Coast with TC Energy Corporation, which will allow Tourmaline’s natural gas from the Company’s Alberta Deep Basin and/or BC Montney complexes to access European natural gas markets. The firm transportation begins November 2025, giving Tourmaline the flexibility to sell locally in the Gulf or enter into a short-term LNG feed gas supply deal prior to the start of the Uniper agreement.
NEBC MONTNEY INFRASTRUCTURE AND DEVELOPMENT PROJECT UPDATE
⦁ Tourmaline is pleased to provide more details regarding its multi-year NEBC Montney development project, one of the largest EP projects in the Western Canadian Sedimentary Basin. The Company has been systematically consolidating and delineating the NEBC Montney gas/condensate complex for over five years and is now entering the next phase wherein the significant financial benefits of those activities are expected to be fully realized.
⦁ Tourmaline expects to add 1.1 bcf/d of new gas production and over 50,000 bpd of condensate and NGLs over the next six years.
⦁ The two-phase NEBC Montney development project will systematically develop Tourmaline’s most profitable inventory (lowest capital cost, lowest operating cost, most liquid rich, highest margin), resulting in Tourmaline’s operating metrics improving as production from this new development project becomes a larger proportion of the corporate production base.
⦁ The infrastructure build out consists of two new gas processing complexes with C3+ deep cut recoveries, expansion of four existing gas processing complexes, three new hydrocarbon liquids hubs (including the evaluation of an LPG terminal at Groundbirch), five water recycling facilities,
electrification of four gas processing plants (two of which are existing plants), and several pipeline corridors connecting Tourmaline’s large resource base to its existing and new gas processing complexes.
⦁ The NEBC Montney development project has a strong focus on liquids growth and margin improvement. Tourmaline is already the largest liquids producer in NEBC and will continue to grow these volumes.
⦁ The infrastructure build-out commenced in 2024 with one of the liquids storage hubs, one of the connector pipeline projects, a water facility, the compression expansion at Birch and one of the electrification projects, all expected to be completed by the end of 2025 on approximately $350 million of aggregate capital spending.
⦁ The first significant production addition is expected to occur in Q4 2026 with the Aitken C-38-C plant expansion that delivers NGLs to the existing AltaGas North Pine complex in NEBC, and the next production addition is Phase 1 of the Groundbirch 15-25 deep cut gas plant planned for 2H 2027. Both projects have all necessary permits and long-lead procurement is underway.
⦁ Tourmaline expects production growth of 30% to 850,000 boepd by 2031, cash flow growth of over 40% and free cash flow improvement of over 2.5 times at flat pricing ($2.5 to $3.0 billion FCF per annum) once the overall project is completed and the EP program trends towards maintenance capital levels.
MULTI-YEAR EP GROWTH PLAN UPDATE AND OUTLOOK
⦁ Tourmaline has released an updated multi-year EP Plan that outlines growth from current average production levels of 650,000 boepd to 850,000 boepd early next decade. The majority of the growth is provided by the NEBC Montney Phase 1 and 2 development project.
⦁ The EP Plan utilizes current strip pricing (as at June 30, 2025) for 2025 and 2026 and a flat price deck for the remaining years (US$65.00/bbl WTI, US$4.00/mmbtu NYMEX and an AECO basis differential of US$1.00/mcf), allowing for a clearer picture of the long-term EP Plan investment benefits and improving margins. By 2031, corporate operating and transportation costs are anticipated to fall by approximately $1/boe and liquids realizations are anticipated to improve by approximately $1/bbl through larger proportional production of higher value products.
⦁ Once the NEBC infrastructure build-out is completed early next decade, the production growth rate is expected to drop, and the Company intends to migrate towards a maintenance capital level of approximately $2.5 billion per annum. Associated free cash flow is expected to grow to $2.5 to $3.0 billion per annum at this flat price deck, underscoring the significant overall improvements accomplished by the NEBC Montney development project.
⦁ Tourmaline will continue to prioritize FCF on an annual basis as the new EP Plan is executed and will adjust the pace of capital spending accordingly.
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