Tourmaline Delivers Strong Free Cash Flow in the Third Quarter, Updates Five-Year EP Plan and Declares a 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 third quarter of 2024 and declare a special dividend.

HIGHLIGHTS

• Third quarter cash flow(1)(2) of $741.9 million ($2.09 per diluted share(3)), underpinned by Tourmaline’s average realized natural gas price of $3.19/mcf.
• Q3 2024 net earnings of $355.2 million ($1.00 per diluted share).
• The Company is declaring a special dividend of $0.50 per November 26, 2024 to holders of record on November 15, 2024. dividends of $3.25 per share (inclusive of this November December 1, 2023, an implied 5% trailing yield(4).common  share  to  be  paid  on Tourmaline has distributed total 2024  special  dividend)  since

• Closed the previously announced transaction with Topaz Energy Corp. (“Topaz”) on November 1, 2024, whereby the Company received consideration of $278.2 million.
• Closed the corporate acquisition of Crew Energy Inc. (“Crew”) on October 1, 2024, and anticipates 2024 exit volumes of over 30,000 boepd from the acquired assets.
• Deep Basin well productivity in 2024 has improved by 20% on raw gas (IP90) and 40% on condensate/C5+ (IP90) compared to 2020-2023. This excellent overall Deep Basin well performance can be attributed to multiple Tier 1 plays across several of Tourmaline’s strike areas.
• 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 “Q3 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 and in the Q3 MD&A.
(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 Q3 MD&A.
(4)	Calculated as the dividend per common share for the stated period divided by the closing stock price of $63.26 on October 15, 2024.

PRODUCTION UPDATE

• Q3 2024 average production was 557,365 boepd, an 11% increase over third quarter 2023 average production of 502,524 boepd and at the high end of the previously announced average production guidance range of 550,000-560,000 boepd.
• Third quarter production was reduced by unplanned third-party outages (~5,200 boepd) as well as low gas price-related frac and production startup deferrals. Third quarter average production also reflects reduced natural gas volumes resulting from planned storage injections (2,566 boepd) which are expected to be withdrawn from storage and subsequently sold in the winter months.
• A fourth quarter average production range of 600,000 to 620,000 boepd is currently anticipated. Given low western Canadian natural gas prices, the Company scheduled an extensive turnaround of both phases of the Gundy c-60-A plant complex in October 2024 and has also concentrated frac activity in the latter half of the quarter to deliver incremental unhedged gas volumes into Q1 2025, a period of expected higher pricing.
• Tourmaline expects to exit 2024 with production of 630,000 to 640,000 boepd, inclusive of the acquired Crew volumes.
• The Company currently anticipates a 2025 average production range between 635,000 and 665,000 boepd (650,000 boepd at the midpoint). The broad range allows for both price-related EP activity deferrals and/or shut-ins in the event of lower than anticipated 2025 natural gas prices or increased EP activity in a more robust pricing environment.
• 2025 forecast average liquids production (oil, condensate, and NGLs) of 162,000 bpd is expected as the Company grows liquids production towards the 200,000 bpd level by the end of the decade.

FINANCIAL RESULTS

• Third quarter 2024 cash flow was $741.9 million ($2.09 per diluted share) on total capital expenditures(5) of $590.9 million (EP expenditures(6) of $574.7million in Q3), generating free cash flow(7) (“FCF”) of $152.5 million for the quarter ($0.43 per diluted share).
• Tourmaline generated Q3 2024 net earnings of $355.2 million ($1.00 per diluted share), underscoring the profitability of the business even in an extremely weak natural gas pricing environment.
• Exit Q3 2024 net debt(8) was $1.7 billion. The Company has adjusted the long-term net debt target to $1.5 billion (0.3 to 0.4 times net debt to 2025 cash flow), given the material growth in the underlying business over the past year. In addition, as of September 30, 2024, Tourmaline’s 45.1 million shares of Topaz had a market value of $1.2 billion(9).
• “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 Q3 MD&A.
• ^“EP expenditures” is defined as Capital Expenditures, excluding acquisitions, dispositions, and other corporate expenditures.
• “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.

• “Net debt” is a capital management measure. See “Non-GAAP and Other Financial Measures” in this news release and in the Q3 MD&A.
• Based on the Topaz closing share price at September 30, 2024 of $25.85/share.
• Tourmaline closed the previously announced transaction with Topaz on November 1, 2024, whereby the Company received consideration of $278.2 million in exchange for a gross overriding royalty on lands primarily acquired over the past year, including the acquired Crew and Bonavista Energy Corporation lands.

2025 CAPITAL BUDGET

• Tourmaline’s Board of Directors has approved a full year 2025 EP capital budget range of $2.60 billion to $2.85 billion. The range provides flexibility in the current volatile and uncertain commodity price environment. The Company expects steadily improving natural gas prices in 2025; should the recovery materialize in the second half of 2025, the capital program will be sequenced accordingly. Optimizing annual free cash flow remains the Company’s top priority and the Company anticipates generating over $1.1 billion in FCF in every year of the five-year EP Plan at current strip pricing(10).
• The Company plans to drill approximately 365 net wells in 2025 across all three core EP complexes. The DUC inventory may be increased in the first half of the year contingent upon commodity prices.
• Facility and pipeline expenditures of $295.0 million are included in the total 2025 EP capital budget. The ongoing NEBC North Montney Phase 1 infrastructure buildout will continue in 2025, as well as electrification pre-builds for the Groundbirch and West Doe gas plant projects.
• The North Montney Phase 1 project is the only development project fully included in the updated five-year EP Plan and is expected to add approximately 50,000 boepd over the next three years. The Groundbirch, West Doe, and North Montney Phase 2 development projects are expected to be fully integrated into the five-year EP Plan during 2025.

MARKETING UPDATE

• Tourmaline’s average realized natural gas price was C$3.19/mcf in Q3 2024, significantly higher than the AECO 5A benchmark price of C$0.70/mcf over the same period, as the Company benefited from its multi-year diversification portfolio and hedging strategy.
• Tourmaline expects to exit 2024 with a total of 1.27 bcfpd of natural gas going to export markets.
• For November 2024 – December 2024, Tourmaline has an average of 1,014 mmcfpd hedged at a weighted average fixed price of CAD $4.01/mcf, and an average of 145 mmcfpd hedged at a basis to NYMEX of USD -$0.15/mcf.
• Tourmaline has an average of 1,085 mmcfpd of unhedged volumes exposed to export markets in November 2024 – December 2024, of which 60% is exposed to premium export markets (US Gulf Coast, Sumas, Malin, PGE and JKM).
• For 2025, Tourmaline has an average of 947 mmcfpd hedged at a weighted average price of CAD $4.58/mcf. Tourmaline also has an average of 1,036 mmcfpd of unhedged volumes exposed to export markets, of which 61% is exposed to premium export markets.

(10)  Based on oil and gas commodity strip pricing at October 15, 2024.

EP UPDATE

• Tourmaline drilled a total of 76.8 net wells and completed 75.9 net wells during Q3 2024 and had an inventory of 38.5 net DUCs entering Q4 2024.
• Tourmaline is currently operating 16 drilling rigs across its three core EP complexes and anticipates full year 2024 EP spending of $2.1 billion.
• Deep Basin well productivity in 2024 has improved by 20% on raw gas (IP90) and 40% on condensate/C5+ (IP90) compared to 2020-2023. This excellent overall Deep Basin well performance can be attributed to multiple Tier 1 plays across several of Tourmaline’s strike areas, including liquids rich Garrington Glauconite and Resthaven Dunvegan, as well as Ansell Wilrich/Notikewin and the Kakwa-Smoky-Resthaven Falher/Wilrich development.
• As of September 30, 2024, Tourmaline’s exploration program has added an estimated 986 Tier 1 and Tier 2 drilling locations to an existing drilling inventory of over 23,000 locations. Due to the ongoing success of the exploration program, Tourmaline plans to allocate up to $150 million of free cash flow to exploration activities in 2025.

ENVIRONMENTAL PERFORMANCE IMPROVEMENT

• As part of Tourmaline’s ongoing joint venture with Clean Energy Fuels, new compressed natural gas (“CNG”) fueling stations for long haul trucks were recently opened in Calgary and Grande Prairie, Alberta. The partnership expects to have seven CNG fueling stations operational by the end of 2025. The joint venture is a continuation of the Company’s multi-year diesel displacement initiative utilizing abundant, lower emission natural gas.
• Tourmaline plans to construct 3 new water facilities across the three operated complexes in 2025-2026 as the Company strives to systematically eliminate fresh water in well stimulation operations. The 2025-2026 projects will bring the total number of Company-operated water facilities to nine. Similar to the diesel displacement initiative, the Company-built and operated water infrastructure improves both environmental performance and reduces costs.

SPECIAL DIVIDEND

• The Board of Directors of Tourmaline are pleased to announce a special dividend of $0.50/share payable on November 26, 2024, to shareholders of record at the close of business on November 15, 2024. The special dividend is designated as an eligible dividend for Canadian income tax purposes. Tourmaline’s ability to continue to pay special dividends, as well as increase its base dividend three times this year, reflects the ongoing financial strength and profitability of the Company, even through the bottom of the gas price cycle.

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