CALGARY,
AB, May 4, 2022 /CNW/ - Tourmaline Oil
Corp. (TSX: TOU) ("Tourmaline" or the "Company") is pleased to
release financial and operating results for the first quarter of
2022 and declare a special dividend.
HIGHLIGHTS
- Record quarterly cash flow(1)(2) of $1,076.0 million ($3.18 per diluted share(3)).
- Record quarterly free cash flow(4) ("FCF") of
$618.2 million ($1.82 per diluted share) enabling the Company to
declare a special dividend of $1.50
per common share to be paid May 19,
2022. Tourmaline's trailing 12 months of distributed
dividends now total $4.21 per share
(inclusive of this May 2022 special
dividend), an implied 7% trailing yield(5).
- Full-year 2022 free cash flow forecast of $3.9 billion(6) coupled with quarterly
special dividends for the balance of 2022.
- Gulf Coast Cheniere LNG arrangement of 140 mmcfpd begins
January 1, 2023. The 2023 JKM ("Japan
Korea Marker") strip price as of April 21,
2022 was $26.07 US/mmbtu.
- First quarter 2022 average production was a record 507,059
boepd, including liquids production of 113,569 bpd.
- March 31, 2022 net
debt(7) of $769.1 million
or 0.15 times 2022 full-year forecast cash flow of $5,215.0 million.
PRODUCTION UPDATE
- First quarter 2022 production average was a record 507,059
boepd, within the guidance range of 500,000-510,000 boepd and above
full-year guidance of 500,000 boepd. Record first quarter liquids
production was 113,569 bpd (oil, condensate, NGLs), up 23% from Q1
2021.
- The Company exited the first quarter of 2022 at average
production levels of 515,000-520,000 boepd, ahead of expectation,
driven by modestly higher activity levels during Q1 and strong well
performance in all three operated complexes. Record daily
production achieved to date was 526,500 boepd on April 7, 2022, well ahead of current 2023 average
production guidance of 515,000 boepd.
- Q2 2022 average production of 500,000-505,000 boepd is
anticipated after adjusting for storage injections at Dawn and
California and Q2 facility
turnarounds.
FINANCIAL RESULTS
- First quarter 2022 cash flow was a record $1.08 billion ($3.18 per diluted share).
- First quarter free cash flow was $618.2
million.
- Full-year 2022 cash flow of $5.22
billion is now anticipated ($15.34 per diluted share), up 29% from the
Company's previous forecast, and full-year 2022 FCF of $3.92 billion is now expected ($11.53 per diluted share).
- First quarter 2022 net earnings were $261.3 million ($0.77 per diluted share).
- Since achieving the long-term net debt target in Q4 2021, the
Company has committed to return the majority of free cash flow to
shareholders through base dividend increases, special dividends and
share buybacks. A component of free cash flow will also be used for
asset acquisition opportunities within existing core complexes and
select, margin-improving, infrastructure investments.
- Given the record FCF outlook in 2022, the Company is pleased to
announce quarterly special dividends for the remaining three
quarters of 2022. The Q2 2022 special dividend of $1.50 per common share will be paid May 19, 2022 to shareholders of record on
May 12, 2022. The magnitude of the
special dividends in the third and fourth quarters will be a
function of commodity prices and resultant available quarterly free
cash flow. Special dividends are designated as "eligible dividends"
for Canadian income tax purposes.
- Additional sustainable base dividend increases are also planned
in 2022, as well as tactical share buybacks.
CAPITAL SPENDING AND FINANCIAL OUTLOOK
- First quarter 2022 EP capital spending was $442.3 million. Total capital expenditures in the
quarter, including acquisitions, were $479.4
million. The acquisitions of property and land are funded by
available annual free cash flow and are not included in the
Company's base EP budget.
- The Company operated a larger proportion of the drilling rig
fleet and completion spreads through March, compared to previous
years, given the continued strong commodity price outlook. This
will allow for stronger Q2 production volumes than the typical
annual production profile. The incremental activity in March added
approximately $20.0 million to the
original Q1 EP capital estimates.
- Full-year 2022 EP capital spending of $1.225 billion is now anticipated, up from
$1.125 billion. The increase reflects
an incremental $75.0 million related
to a 6.7% full-year cost inflation provision as well as
$25.0 million to be allocated to the
Company's successful new zone/new pool exploration program.
- First quarter 2022 exit net debt was $769.1 million, well below the long-term net debt
target of $1.0 billion. Net debt was
0.15 times 2022 forecast cash flow, an all-time low for the
Company. Including the Company's Topaz Energy Corp. investment of
$1,069.0 million(8), the
Company's net debt would decrease from $769.1 million to a surplus of $299.9 million.
MARKETING UPDATE
- Average realized natural gas price in Q1 2022 was $4.86/mcf as the Company continued to benefit
from rising natural gas prices.
- Tourmaline currently has 625 mmcfpd accessing US markets
through long-term firm transport agreements. This volume will grow
to 905 mmcfpd by exit 2023.
- The Company's 140 mmcfpd Gulf Coast LNG deal with Cheniere
commences January 1, 2023 and
provides exposure to JKM pricing over the 15-year term of the deal.
The 2023 JKM strip price was $26.07
US/mmbtu as of April 21, 2022.
- Approximately 60% of the current lower-priced hedges assumed by
Tourmaline when acquiring Jupiter Resources Ltd., Modern Resources
Inc., and Black Swan Energy Ltd., will roll off and these
production volumes will benefit from the much higher current strip
pricing for winter 2022/23. Furthermore, 82% of these current
lower-priced hedges will expire by the end of 2023.
- Tourmaline has an average of 922 mmcfpd hedged for 2022 at a
weighted average fixed price of CAD $3.55/mcf, an average of 137 mmcfpd hedged at a
basis to NYMEX of USD $(0.03)/mcf,
and an average of 613 mmcfpd of unhedged volumes exposed to export
markets in 2022, including Dawn, Iroquois, Empress/McNeil, Chicago, Ventura, Sumas, US Gulf Coast, Malin, and
PG&E.
- Realized NGL prices averaged $44.82/bbl in Q1 2022, up 63% from Q1 2021. The
Company expects further strengthening of realized NGL prices
through the balance of 2022. Tourmaline is the largest NGL producer
in Canada.
EP UPDATE
- Tourmaline drilled 66.4 net wells and completed 72.17 net wells
in Q1 2022.
- 84.7 new net wells were brought on production in the first
quarter of 2022.
- The Company anticipates 44.4 net wells to come on production in
Q2.
- The Company achieved new record horizontal well lengths with
associated record low drilling times in all three EP complexes
during the first quarter. Pacesetter wells include the Progress
13-09-77-08W6, a 3,509 metre Lower Charlie Lake horizontal well,
drilled to total depth ("TD") with completion assembly run in 11.7
days, the Nig D-B77-B/94-H-04, NEBC Montney 2,010 metre horizontal
well drilled to TD with assembly run in 4.9 days and the Leland
12-27-59-26W5, 1,951 metre horizontal well, in the Alberta Deep
Basin, drilled to TD with the completion assembly in place in 11.3
days. These continually improving drill times will help to reduce
the impact of inflationary pressures.
- Conducting EP operations well into spring breakup in 2022 will
allow the Company to bring approximately 25 net wells on production
in NEBC in the second quarter, as well as 16.4 (net) production
turnovers in the Alberta Deep Basin, and three additional wells on
production in the Peace River High. This will allow for continued
strong production volumes in Q2 and Q3 of 2022.
NORTH MONTNEY DEVELOPMENT
PROJECT
- Tourmaline continues to plan for the Conroy North Montney
development. This expected 100,000 boepd liquids-rich gas project
represents one of the largest upcoming single conventional
developments in the Western Canadian Sedimentary Basin.
- Current timing is in the 2025-2026 time frame, coinciding with
the startup of LNG Canada, which the Company expects to be
structurally positive for Western Canadian supply/demand dynamics
and natural gas pricing. This full development has not yet been
included in the Company's current five-year plan.
- The Company has drilled several delineation pads in the overall
Laprise-Conroy-Aitken areas over the past nine months to define
liquid content, well performance profiles and capital costs in
advance of full development.
- As part of the long term associated Conroy facilities plan, on
April 12, 2022, Tourmaline acquired
the remaining 50% non-operated interest in the two Aitken area gas
plants from AltaGas Ltd. for $224.0
million (net of closing adjustments). The first operated 50%
interest in these facilities was originally acquired through the
Black Swan Energy acquisition. The plants, including the deep cut
expansion, have a combined processing capacity of 290 mmcfpd and
are both operating at full capacity. Annual opex savings resulting
from this transaction are estimated at approximately $27 million.
- Tourmaline is also developing a comprehensive liquids
processing and transportation strategy as part of the overall
North Montney development and will
provide updates on this aspect of the project over the next several
months.
ENVIRONMENTAL PERFORMANCE IMPROVEMENT
- After achieving the net 25% methane emission 2023 reduction
target three years ahead of schedule, Tourmaline is actively
working on establishing new goals, which are expected to be
disclosed in the Company's next published sustainability report in
2H 2022. Technology initiatives currently being developed and
pursued include continued pneumatic pump retrofits and installation
of solar electric pumps, conversion of separators to full solar
electric and the pursuit of zero emission wellsite technology.
- Tourmaline has now successfully transitioned all of its
drilling rigs under contract from diesel to natural gas, achieving
both a material emissions reduction and a net cost savings. The
diesel displacement initiative has been extended into the Company's
stimulation operations as Tourmaline and Trican are trialing the
first Tier 4 natural gas-powered engines in Canada. To date, in aggregate, the Company has
displaced approximately 69 million litres of diesel, saving
approximately $57 million in
total.
- The Company continued to evolve several CCUS initiatives within
its three operated complexes and plans to implement these material
emission reduction opportunities at Tourmaline gas plants in the
2025-2030 time frame.
___________________________________________
|
(1)
|
This news release
contains certain specified financial measures consisting of
non-GAAP financial measures, non-GAAP financial ratios and capital
management measures. See "Non-GAAP and Other Financial Measures" in
this news release for information regarding the following non-GAAP
financial measures, non-GAAP financial ratios and capital
management 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 most recently filed Management's Discussion and
Analysis (the "Q1 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). See "Non-GAAP and Other Financial Measures" in
this news release.
|
(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 Q1 MD&A.
|
(4)
|
"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.
|
(5)
|
Calculated as the
dividend per common share for the 12 month period divided by the
closing stock price of $63.96 on April 14, 2022.
|
(6)
|
Based on oil and gas
commodity strip pricing at April 14, 2022.
|
(7)
|
"Net
debt" is a capital management measure. See "Non-GAAP and Other
Financial Measures" in this news release and in the Q1
MD&A.
|
(8)
|
Based on closing
stock price of Topaz Energy Corp. of $20.90 on March 31,
2022.
|
CORPORATE SUMMARY – FIRST QUARTER 2022
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2022
|
2021
|
Change
|
OPERATIONS
|
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
|
|
Natural
gas (mcf/d)
|
|
|
|
|
2,360,941
|
1,917,648
|
23%
|
Crude
oil, condensate and NGL (bbl/d)
|
|
|
|
|
113,569
|
91,971
|
23%
|
Oil
equivalent (boe/d)
|
|
|
|
|
507,059
|
411,579
|
23%
|
Product
prices(1)
|
|
|
|
|
|
|
|
Natural
gas ($/mcf)
|
|
|
|
|
$
4.86
|
$
3.86
|
26%
|
Crude
oil, condensate and NGL ($/bbl)
|
|
|
|
|
$
66.54
|
$
41.06
|
62%
|
Operating expenses
($/boe)
|
|
|
|
|
$
4.21
|
$
3.64
|
16%
|
Transportation costs
($/boe)
|
|
|
|
|
$
4.89
|
$
4.35
|
12%
|
Operating netback
($/boe)(2)
|
|
|
|
|
$
23.99
|
$
17.70
|
36%
|
Cash general and
administrative
expenses ($/boe)(3)
|
|
|
|
|
$
0.59
|
$
0.63
|
(6)%
|
FINANCIAL
($000, except share and per share)
|
|
|
|
|
|
|
|
Total revenue from
commodity sales and realized gains
|
|
|
|
|
1,713,684
|
1,005,264
|
70%
|
Royalties
|
|
|
|
|
203,734
|
53,776
|
279%
|
Cash flow
|
|
|
|
|
1,075,976
|
629,325
|
71%
|
Cash flow per share
(diluted)
|
|
|
|
|
$
3.18
|
$
2.11
|
51%
|
Net earnings
|
|
|
|
|
261,284
|
247,837
|
5%
|
Net earnings per share
(diluted)
|
|
|
|
|
$
0.77
|
$
0.83
|
(7)%
|
Capital expenditures
(net of dispositions)(2)
|
|
|
|
|
479,373
|
422,106
|
14%
|
Weighted average shares
outstanding (diluted)
|
|
|
|
|
338,842,592
|
298,394,813
|
14%
|
Net debt
|
|
|
|
|
(769,089)
|
(1,631,862)
|
(53)%
|
|
(1)
Product prices include realized gains and losses on risk
management activities and financial instrument
contracts.
|
(2)
See "Non-GAAP and Other Financial Measures" in this news release
and in the Q1 MD&A.
|
(3)
Excluding interest and financing charges.
|
Conference Call Tomorrow at 9:00 a.m.
MT (11:00 a.m. ET)
Tourmaline will host a conference call tomorrow, May 5, 2022 starting at 9:00 a.m. MT (11:00 a.m.
ET). To participate, please dial 1-888-664-6383
(toll-free in North America), or
international dial-in 1-416-764-8650, a few minutes prior to the
conference call.
Conference ID is 97230562.
REPLAY DETAILS
If you are unable to dial into the live conference call on
May 5th, a replay will be available
(usually by that afternoon) by dialing 1-888-390-0541
(international 1-416-764-8677), referencing Encore Replay Code
230562. The recording will expire on May 19, 2022.
Reader Advisories
CURRENCY
All amounts in this news release are stated in Canadian dollars
unless otherwise specified.
FORWARD-LOOKING INFORMATION
This news release contains forward-looking information and
statements (collectively, "forward-looking information") within the
meaning of applicable securities laws. The use of any of the words
"forecast", "expect", "anticipate", "continue", "estimate",
"objective", "ongoing", "on track", "may", "will", "project",
"should", "believe", "plans", "intends" and similar expressions are
intended to identify forward-looking information. More particularly
and without limitation, this news release contains forward-looking
information concerning Tourmaline's plans and other aspects of its
anticipated future operations, management focus, objectives,
strategies, financial, operating and production results and
business opportunities, including the following: anticipated
petroleum and natural gas production and production growth for
various periods including estimated production levels for Q2 2022
and full-year 2022 and 2023; expected free cash flow and cash flow
levels for 2022 and 2023; the future declaration and payment of
base and special dividends and the timing and amount thereof
including any future increase; that the Company will return the
majority free cash flow to shareholders through base dividend
increases, special dividends and share buybacks; capital
expenditures over various periods; cost reduction initiatives;
improvements in capital efficiency; projected operating and
drilling costs and drilling times; the timing for facility
expansions and facility start-up dates; sustainability and
environmental improvement initiatives; anticipated future commodity
prices; the ability to generate, and the amount of, anticipated
cash flow and free cash flow including in 2022, 2023 and over the
five year development plan; expectations that in 2023 Tourmaline
will have exposure to JKM pricing; as well as Tourmaline's future
drilling prospects and plans, business strategy, future development
and growth opportunities, prospects and asset base. The
forward-looking information is based on certain key expectations
and assumptions made by Tourmaline, including expectations and
assumptions concerning the following: prevailing and future
commodity prices and currency exchange and interest rates;
applicable royalty rates and tax laws; future well production rates
and reserve volumes; operating costs, the timing of receipt of
regulatory approvals; the performance of existing and future wells;
the success obtained in drilling new wells; anticipated timing and
results of capital expenditures; the sufficiency of budgeted
capital expenditures in carrying out planned activities; the
timing, location and extent of future drilling operations; the
successful completion of acquisitions and dispositions and the
benefits to be derived therefrom; the state of the economy and the
exploration and production business; the availability and cost of
financing, labour and services; ability to maintain its investment
grade credit rating; and ability to market crude oil, natural gas
and NGL successfully. Without limitation of the foregoing, future
dividend payments, if any, and the level thereof is uncertain, as
the Company's dividend policy and the funds available for the
payment of dividends from time to time is dependent upon, among
other things, free cash flow, financial requirements for the
Company's operations and the execution of its growth strategy,
fluctuations in working capital and the timing and amount of
capital expenditures, debt service requirements and other
factors beyond the Company's control. Further, the ability of
Tourmaline to pay dividends is subject to applicable laws
(including the satisfaction of the solvency test contained in
applicable corporate legislation) and contractual restrictions
contained in the instruments governing its indebtedness, including
its credit facility.
Statements relating to "reserves" are also deemed to be forward
looking information, as they involve the implied assessment, based
on certain estimates and assumptions, that the reserves described
exist in the quantities predicted or estimated and that the
reserves can be profitably produced in the future.
Although Tourmaline believes that the expectations and
assumptions on which such forward-looking information is based are
reasonable, undue reliance should not be placed on the
forward-looking information because Tourmaline can give no
assurances that it will prove to be correct. Since forward-looking
information addresses future events and conditions, by its very
nature it involves inherent risks and uncertainties. Actual results
could differ materially from those currently anticipated due to a
number of factors and risks. These include, but are not limited to:
the risks associated with the oil and natural gas industry in
general such as operational risks in development, exploration and
production; delays or changes in plans with respect to exploration
or development projects or capital expenditures; the uncertainty of
estimates and projections relating to reserves, production,
revenues, costs and expenses; health, safety and environmental
risks; commodity price and exchange rate fluctuations; interest
rate fluctuations; marketing and transportation; loss of markets;
environmental risks; competition; incorrect assessment of the value
of acquisitions; failure to complete or realize the anticipated
benefits of acquisitions or dispositions; ability to access
sufficient capital from internal and external sources; failure to
obtain required regulatory and other approvals; climate change
risks; inflation; supply chain risks and changes in legislation,
including but not limited to tax laws, royalties and environmental
regulations.
In addition, wars (including the war in Ukraine), hostilities, civil insurrections,
pandemics, epidemics or outbreaks of an infectious disease in
Canada or worldwide, including
COVID-19 or other illnesses could have an adverse impact on the
Company's results, business, financial condition or liquidity.
Ongoing military actions between Russia and Ukraine have the potential to threaten the
supply of oil and gas from the region. The long-term impacts of the
actions between these nations remains uncertain. If the
pandemic is further prolonged, including through subsequent waves,
or if additional variants of COVID-19 emerge which are more
transmissible or cause more severe disease, or if other diseases
emerge with similar effects, the adverse impact on the economy
could worsen. It remains uncertain how the macroeconomic
environment, and societal and business norms will be impacted
following the COVID-19 pandemic.
Readers are cautioned that the foregoing list of factors is not
exhaustive.
Additional information on these and other factors that could
affect Tourmaline, or its operations or financial results, are
included in the Company's most recently filed Management's
Discussion and Analysis (See "Forward-Looking Statements" therein),
Annual Information Form (See "Risk Factors" and "Forward-Looking
Statements" therein) and other reports on file with applicable
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com) or Tourmaline's website
(www.tourmalineoil.com).
The forward-looking information contained in this news release
is made as of the date hereof and Tourmaline undertakes no
obligation to update publicly or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, unless expressly required by applicable securities
laws.
BOE EQUIVALENCY
In this news release, production and reserves information may be
presented on a "barrel of oil equivalent" or "BOE" basis. BOEs may
be misleading, particularly if used in isolation. A BOE
conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. In
addition, as the value ratio between natural gas and crude oil
based on the current prices of natural gas and crude oil is
significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
FINANCIAL OUTLOOKS
Also included in this news release are estimates of Tourmaline's
2022 cash flow and free cash flow, which are based on, among other
things, the various assumptions as to production levels, capital
expenditures, annual cash flows and other assumptions disclosed in
this news release and including Tourmaline's estimated average 2022
production of 500,000 boepd, 2022 commodity price assumptions for
natural gas (NYMEX (US) - $6.68/mcf;
AECO - $6.56/mcf) crude oil (WTI (US)
- $100.14/bbl) and an exchange rate
assumption of $0.79 (US/CAD). To the
extent such estimates constitute financial outlooks, they were
approved by management and the Board of Directors of Tourmaline on
May 4, 2022 and are included to
provide readers with an understanding of Tourmaline's anticipated
cash flow and free cash flow based on the capital expenditure,
production and other assumptions described herein and readers are
cautioned that the information may not be appropriate for other
purposes.
NON-GAAP AND OTHER FINANCIAL MEASURES
This news release contains the terms cash flow, capital
expenditures, free cash flow, and operating netback which are
considered "non-GAAP financial measures" and cash flow per diluted
share, free cash flow per diluted share, operating netback per boe,
and cash flow per boe, which are considered "non-GAAP financial
ratios". These terms do not have a standardized meaning prescribed
by GAAP. In addition, this news release contains the terms adjusted
working capital and net debt, which are considered "capital
management measures" and do not have standardized meanings
prescribed by GAAP. Accordingly, the Company's use of
these terms may not be comparable to similarly defined measures
presented by other companies. Investors are cautioned that these
measures should not be construed as an alternative to net income
determined in accordance with GAAP and these measures should not be
considered to be more meaningful than GAAP measures in evaluating
the Company's performance.
Non-GAAP Financial
Measures
Cash Flow
Management uses the term "cash flow" for its own performance
measure and to provide shareholders and potential investors with a
measurement of the Company's efficiency and its ability to generate
the cash necessary to fund its future growth expenditures, to repay
debt or to pay dividends. The most directly comparable GAAP
measure for cash flow is cash flow from operating activities.
A summary of the reconciliation of cash flow from operating
activities to cash flow, is set forth below:
|
|
Three Months
Ended
March 31,
|
(000s)
|
|
|
2022
|
2021
|
Cash flow from
operating activities (per GAAP)
|
|
|
$
1,113,649
|
$
750,129
|
Change in non-cash
working capital (deficit)
|
|
|
(37,673)
|
(120,804)
|
Cash flow
|
|
|
$
1,075,976
|
$
629,325
|
Capital Expenditures
Management uses the term "capital expenditures" as a measure of
capital investment in exploration and production activity, as well
as property acquisitions and divestitures, and such spending is
compared to the Company's annual budgeted capital
expenditures. The most directly comparable GAAP measure for
capital expenditures is cash flow used in investing
activities. A summary of the reconciliation of cash flow used
in investing activities to capital expenditures, is set forth
below:
|
|
Three Months Ended
March 31,
|
(000s)
|
|
|
2022
|
2021
|
Cash flow used in
investing activities (per GAAP)
|
|
|
$ 459,447
|
$
370,371
|
Change in non-cash
working capital (deficit)
|
|
|
19,926
|
51,735
|
Capital
expenditures
|
|
|
$ 479,373
|
$
422,106
|
Free Cash Flow
Management uses the term "free cash flow" for its own
performance measure and to provide shareholders and potential
investors with a measurement of the Company's efficiency and its
ability to generate the cash necessary to fund its future growth
expenditures, to repay debt and provide shareholder returns.
Free cash flow is defined as cash flow less capital expenditures,
excluding acquisitions and dispositions. Free cash flow is
prior to dividend payment. The most directly comparable GAAP
measure for cash flow is cash flow from operating activities.
See "Non-GAAP Financial Measures – Cash Flow" and " Non-GAAP
Financial Measures – Capital Expenditures" above.
Operating Netback
Management uses the term "operating netback" as a key
performance indicator and one that is commonly presented by other
oil and natural gas producers. Operating netback is defined
as the sum of commodity sales from production, premium (loss) on
risk management activities and realized gains (loss) on financial
instruments less the sum of royalties, transportation costs and
operating expenses. A summary of the reconciliation of
operating netback from commodity sales from production, which is a
GAAP measure, is set forth below:
|
|
Three Months
Ended
March 31,
|
(000s)
|
|
|
2022
|
2021
|
Commodity sales from
production
|
|
|
$
1,895,171
|
$
996,035
|
Premium (loss) on risk
management activities
|
|
|
(22,964)
|
37,061
|
Realized (loss) on
financial instruments
|
|
|
(158,523)
|
(27,832)
|
Royalties
|
|
|
(203,734)
|
(53,776)
|
Transportation
costs
|
|
|
(223,168)
|
(161,099)
|
Operating
expenses
|
|
|
(191,918)
|
(134,840)
|
Operating
netback
|
|
|
$
1,094,864
|
$
655,549
|
Non-GAAP Financial
Ratios
Operating Netback per-boe
Management calculates "operating netback per-boe" as operating
netback divided by total production for the period. Netback
per-boe is a key performance indicator and measure of operational
efficiency and one that is commonly presented by other oil and
natural gas producers. A summary of the calculation of
operating netback per boe, is set forth below:
|
|
Three Months
Ended
March 31,
|
($/boe)
|
|
|
2022
|
2021
|
Revenue, excluding
processing income
|
|
|
$
37.55
|
$
27.14
|
Royalties
|
|
|
(4.46)
|
(1.45)
|
Transportation
costs
|
|
|
(4.89)
|
(4.35)
|
Operating
expenses
|
|
|
(4.21)
|
(3.64)
|
Operating
netback
|
|
|
$
23.99
|
$
17.70
|
Cash Flow per-boe
Management uses cash flow per boe to highlight how much cash
flow is generated by each boe produced. The ratio is
calculated by dividing cash flow by total production for the
period. See "Non-GAAP Financial Measures – Cash
Flow".
Cash Flow per diluted share
Management uses cash flow per diluted share as a measurement of
the Company's efficiency and its ability to generate the cash
necessary to fund its future growth expenditures, to repay debt or
to pay dividends on a per diluted share basis. Cash flow per
diluted share is calculated using cash flow divided by the weighted
average diluted shares outstanding.
Free Cash Flow per diluted share
Management uses free cash flow per diluted share as a measure of
the Company's efficiency and its ability to generate the cash
necessary to fund its future growth expenditures, to repay debt and
provide shareholder returns on a per diluted share basis. Free cash
flow per diluted share is calculated using free cash flow divided
by the weighted average diluted shares outstanding.
Capital Management
Measures
Adjusted Working Capital
Management uses the term "adjusted working capital" for its own
performance measures and to provide shareholders and potential
investors with a measurement of the Company's liquidity. A
summary of the reconciliation of working capital (deficit) to
adjusted working capital (deficit), is set forth below:
(000s)
|
As at
March 31,
2022
|
As at
December 31,
2021
|
Working capital
(deficit)
|
$
(764,301)
|
$
(361,034)
|
Fair value of financial
instruments – short-term liability
|
582,683
|
240,970
|
Lease liabilities –
short-term
|
2,948
|
2,997
|
Decommissioning
obligations – short-term
|
25,000
|
20,103
|
Unrealized foreign
exchange in working capital - liability
|
(893)
|
(6,441)
|
Adjusted working
capital (deficit)
|
$
(154,563)
|
$
(103,405)
|
Net Debt
Management uses the term "net debt", as a key measure for
evaluating its capital structure and to provide shareholders and
potential investors with a measurement of the Company's total
indebtedness. A summary of the reconciliation of bank debt
and senior unsecured notes to net debt, is set forth below:
(000s)
|
As at
March 31,
2022
|
As at
December 31,
2021
|
Bank debt
|
$
(166,415)
|
$
(421,539)
|
Senior unsecured
notes
|
(448,111)
|
(448,035)
|
Adjusted working
capital (deficit)
|
(154,563)
|
(103,405)
|
Net debt
|
$
(769,089)
|
$
(972,979)
|
OIL AND GAS METRICS
This news release contains certain oil and gas metrics which do
not have standardized meanings or standard methods of calculation
and therefore such measures may not be comparable to similar
measures used by other companies and should not be used to make
comparisons. Such metrics have been included in this document to
provide readers with additional measures to evaluate the Company's
performance; however, such measures are not reliable indicators of
the Company's future performance and future performance may not
compare to the Company's performance in previous periods and
therefore such metrics should not be unduly relied upon.
SUPPLEMENTAL INFORMATION REGARDING PRODUCT TYPES
This news release includes references to Q1 2022 average daily
production, forecast 2022 average daily production, forecast 2023
average daily production and forecast Q2 2022 average daily
production. The following table is intended to provide supplemental
information about the product type composition for each of the
production figures that are provided in this news release:
|
Light and Medium
Crude Oil(1)
|
|
Conventional
Natural Gas
|
|
Shale Natural
Gas
|
|
Natural Gas
Liquids(1)
|
|
Oil Equivalent
Total
|
|
Company Gross
(Bbls)
|
|
Company Gross
(Mcf)
|
|
Company Gross
(Mcf)
|
|
Company Gross
(Bbls)
|
|
Company Gross
(Boe)
|
Q1 2022 Average Daily
Production
|
44,045
|
|
1,312,095
|
|
1,048,845
|
|
69,525
|
|
507,059
|
2022 Average Daily
Production
|
42,600
|
|
1,225,000
|
|
1,084,000
|
|
72,600
|
|
500,000
|
2023 Average Daily
Production
|
44,000
|
|
1,250,000
|
|
1,119,000
|
|
76,200
|
|
515,000
|
Q2 2022 Average Daily
Production
|
43,000
|
|
1,275,000
|
|
1,040,000
|
|
73,670
|
|
502,500
|
|
(1)
For the purposes of this disclosure, condensate has been
combined with Light and Medium Crude Oil as the associated revenues
and certain costs of condensate are similar to Light and Medium
Crude Oil. Accordingly, NGLs in this disclosure exclude
condensate.
|
INITIAL PRODUCTION RATES
Any references in this news release to initial production rates
are useful in confirming the presence of hydrocarbons; however,
such rates are not determinative of the rates at which such wells
will continue production and decline thereafter and are not
necessarily indicative of long-term performance or ultimate
recovery. While encouraging, readers are cautioned not to place
reliance on such rates in calculating the aggregate production for
the Company. Such rates are based on field estimates and may be
based on limited data available at this time.
GENERAL
See also "Forward-Looking Statements" and "Non-GAAP and Other
Financial Measures" in the most recently filed Management's
Discussion and Analysis.
CERTAIN DEFINITIONS:
1H
|
first half
|
2H
|
second half
|
bbl
|
barrel
|
bbls/day
|
barrels per
day
|
bbl/mmcf
|
barrels per million
cubic feet
|
bcf
|
billion cubic
feet
|
bcfe
|
billion cubic feet
equivalent
|
bpd or
bbl/d
|
barrels per
day
|
boe
|
barrel of oil
equivalent
|
boepd or
boe/d
|
barrel of oil
equivalent per day
|
bopd or
bbl/d
|
barrel of oil,
condensate or liquids per day
|
CCUS
|
carbon capture, usage
and storage
|
DUC
|
drilled but uncompleted
wells
|
EP
|
exploration and
production
|
gj
|
gigajoule
|
gjs/d
|
gigajoules per
day
|
mbbls
|
thousand
barrels
|
mmbbls
|
million
barrels
|
mboe
|
thousand barrels of oil
equivalent
|
mboepd
|
thousand barrels of oil
equivalent per day
|
mcf
|
thousand cubic
feet
|
mcfpd or
mcf/d
|
thousand cubic feet per
day
|
mcfe
|
thousand cubic feet
equivalent
|
mmboe
|
million barrels of oil
equivalent
|
mmbtu
|
million British thermal
units
|
mmbtu/d
|
million British thermal
units per day
|
mmcf
|
million cubic
feet
|
mmcfpd or
mmcf/d
|
million cubic feet per
day
|
MPa
|
megapascal
|
mstb
|
thousand stock tank
barrels
|
natural
gas
|
conventional natural
gas and shale gas
|
NCIB
|
normal course issuer
bid
|
NGL or NGLs
|
natural gas
liquids
|
tcf
|
trillion cubic
feet
|
MANAGEMENT'S DISCUSSION AND ANALYSIS
AND CONSOLIDATED FINANCIAL STATEMENTS
To view Tourmaline's Management's Discussion and Analysis and
Interim Condensed Consolidated Financial Statements for the periods
ended March 31, 2022 and 2021, please
refer to SEDAR (www.sedar.com) or Tourmaline's website at
www.tourmalineoil.com.
ABOUT TOURMALINE OIL CORP.
Tourmaline is Canada's largest
and most active natural gas producer dedicated to producing the
lowest-emission and lowest-cost natural gas in North America. We are an investment grade
exploration and production company providing strong and predictable
operating and financial performance through the development of our
three core areas in the Western Canadian Sedimentary Basin. With
our existing large reserve base, decades-long drilling inventory,
relentless focus on execution and cost management, and
industry-leading environmental performance, we are excited to
provide shareholders an excellent return on capital, and an
attractive source of income through our base dividend and surplus
free cash flow distribution strategies.
SOURCE Tourmaline Oil Corp.