Tourmaline Oil Corp First Quarter 2021 Update

Tourmaline update Summary

Tourmaline First Quarter 2021 drilled 67.75 net wells, cash flow was a record $629.3, operated 12 drilling rigs and averaged 411,579 boepd

• First quarter cash flow(1) was a record $629.3 million ($2.11/fully diluted share).
• Tourmaline generated record free cash flow(2) of $233.5 million in the first quarter of 2021, which was utilized to fund the dividend increase announced in the March 10, 2021 year-end press release and to reduce net debt(3) by $153.1 million in the quarter.
• First quarter 2021 average production of 411,579 boepd, ahead of the upper range of the full-year guidance of 390,000 – 410,000 boepd.
• First quarter liquids production (crude oil, condensate and NGLs) averaged a record 91,971 bpd, also ahead of guidance.

Tourmaline EP UPDATE

• Tourmaline drilled 67.75 net wells during the first quarter and expects to drill and complete approximately 220 net wells during full year 2021.
• Tourmaline operated 12 drilling rigs during the first quarter of 2021 and is currently operating four rigs during spring break up.
• Well performance in all three complexes has on average exceeded expectations, driving the stronger production performance realized in March and April.
• Tourmaline drilled one Montney pad this winter in the Laprise-Conroy area in NEBC on the lands acquired in the 2020 Polar Star transaction. The Laprise b-34-L five well pad tested at a combined final total productive capacity of 46 mmcfpd of natural gas and 3,970 bpd of condensate after three day per well flow tests, significantly ahead of expectations.  Average completed well costs for this initial remote pad were $3.9 million/well.  The Company expects future drill/complete capital costs of $3.5 million/well or less with further drilling time optimization and stimulated well cost reduction via centralized frac water management facilities.
• Deep Basin production reached a record in early April at 261,400 boepd (1,252 bcf/day of natural gas and 52,664 bpd of liquids) driven by stronger than forecast performance on the acquired Jupiter/Modern assets.  The 11-7-60-1W6 three-well pad on the Jupiter lands acquired has a combined 30-day IP of 6,090 boepd (22.7 mmcfpd, 2,263 bbl/d liquids).  The 6-3-60-1W6 two-well pad has a combined 30-day IP of 5,137 boepd (24.1 mmcfpd, 1,131 bbl/d liquids).  Drilling costs on the Jupiter lands acquired have averaged 43% less since December 2020; completion costs have averaged 50% less and equipping costs have averaged 70% less.

Tourmaline Well & Facility Permits Download

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Tourmaline PRODUCTION UPDATE

• First quarter 2021 production averaged 411,579 boepd, ahead of the upper range of full-year guidance of 390,000 – 410,000 boepd.
• Driven by stronger than anticipated well performance, March production averaged 417,841 boepd.  There were no storage withdrawal volumes in the March production totals.
• First quarter average liquid production was 91,971 bpd (crude oil, condensate and NGLs), ahead of original full-year 2021 guidance of 87,000 bpd.
• Given stronger production performance in all three operated complexes, second quarter 2021 production of 400,000 – 405,000 boepd is anticipated, an increase from previous expectations of approximately 395,000 boepd.  Second quarter 2021 production will continue to be impacted by planned pipeline maintenance and Company plant turnarounds which has been incorporated into current guidance estimates.
• Second quarter production estimates also include the impact of the Company’s storage injection programs in California and Dawn, which is expected to reduce quarterly production volumes by 4,500 boepd.

Tourmaline FINANCIAL UPDATE

• First quarter 2021 cash flow was a record $629.3 million ($2.11/fully diluted share), a 122% increase over first quarter 2020 cash flow of $283.7 million ($1.05/fully diluted share) and a 59% increase over the previous quarter’s cash flow of $396.9 million.
• First quarter 2021 after tax net earnings were $247.8 million ($0.83/fully diluted share), compared to a net loss of $35.8 million in the first quarter of 2020 ($(0.13)/share).
• The Company generated record free cash flow of $233.5 million during the first quarter which was utilized to fund the dividend increase announced on March 10, 2021 and to reduce net debt by $153.1 million in the quarter.  Tourmaline expects comparable free cash flow generation in Q2 2021.
• The full year 2021 forecast cash flow remains at $2.2 billion⁽⁴⁾, yielding approximately $1.1 billion of free cash flow for the full year.
• Operating costs in Q1 2021 were $3.64/boe. Tourmaline is focused on further dropping operating costs by continuing to integrate the acquired Jupiter/Modern assets into the Company as well as reducing gas volumes going to third party processing in the greater Gundy complex when the Phase 2 plant expansion is complete.

Oil & Gas News

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Tourmaline Well Permits & Wells Spud

The oil and gas industry is highly regulated by Government agencies. One of the responsibilities is to approve well permits. A well permit is the intent of an oil & gas operator to drill a new well. Well permits include oil wells, gas wells, water wells and more..

Spudding is the process of beginning to drill a well in the oil and gas industry. … After the surface hole is completed, the main drill bit—which performs the task of drilling to the total depth—is inserted and this process can also be referred to as “spudding in.” Source Tourmaline First Quarter 2021 Update

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Tourmaline Drilling Locations Q1 2021

Montney Formation is a major shale gas and tight oil resource. … This estimate makes it one of the largest known gas resources in the world and equivalent to 145 years of Canada’s 2012 consumption. Gas is produced from the Montney Formation in both British Columbia and Alberta.

Spirit River Formation contains important gas reservoirs in Alberta’s Deep Basin. The productive Falher Member consists of non-marine clastics and coals south of the Elmworth field.  The Spirit River Formation is a stratigraphical unit of middle Albian age in the Western Canadian Sedimentary Basin. It takes the name from the Spirit River, and was first described in Imperial Oil Spirit River No. 1 well by Badgley in 1952.

Charlie Lake Formation is a hydrocarbon bearing formation found predominantly in northeastern British Columbia, Canada. Aeolian sand bodies are present in both the subsurface and outcrop occurrences, and in fields like Brassey, are the primary hydrocarbon reservoir.

Source Tourmaline First Quarter 2021 Update

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About Tourmaline

Tourmaline, through a series of strategic acquisitions, farm-ins and land acquisitions combined with its active capital exploration and development program, has assembled an extensive undeveloped land position with a large, multi-year drilling inventory and operating control of important natural gas processing and transportation infrastructure in two core long-term growth areas – the Alberta Deep Basin and the Greater Peace River High. Tourmaline is executing a large-scale, repeatable capital exploration and development program in these two core long-term growth areas.