TOURMALINE ANNOUNCES ASSET SALES AND INCREASE IN OIL GROWTH PROGRAM
Calgary, Alberta – Tourmaline Oil Corp. (TSX:TOU) (“Tourmaline” or the “Company”) is pleased to provide details of minor asset sales and a Peace River High update.
- Tourmaline is pleased to announce that it has completed the sale of a series of primarily undeveloped assets across all three core-operated areas during the first quarter of 2018. Total proceeds of approximately $72.0 million were received with no impact on current production. Total disposed proved-plus-probable reserves were 2.2 mmboe valued at $18.6 million (net present value at December 31, 2017 discounted at 10% – before tax). The undeveloped assets were not scheduled for development within the next five years.
- Proceeds from the dispositions will be utilized to initially reduce existing corporate debt by $72.0 million.
- The Company has elected to accelerate a Peace River High facility project into 2H 2018 that will allow for incremental oil production in the Lower Montney and Charlie Lake. The $20.0 million (net) facility project will add approximately 3,000 bpd of oil production (net) and 5.0 mmcfpd of associated gas (net) prior to year-end 2018. Tourmaline will also drill an additional six Lower Montney horizontal oil wells during the second half of 2018, for an estimated net capital cost of $15.0 million. The accelerated Peace River High facility project and associated drilling program is anticipated to further increase the Company’s liquids production profile for 2019 up to an average production of 63,000 bpd from 60,000 bpd currently forecasted with liquids production anticipated to reach 75,000 bpd by Q4 2019. During the second quarter, the Company will decide if this project will be funded via a reallocation from the current gas development budget or if the 2018 capital
program will be increased by $35.0 million.
All amounts in this news release are stated in Canadian dollars unless otherwise specified.
The reserves data set forth above is based upon the reports of GLJ Petroleum Consultants Ltd. (“GLJ”) and Deloitte LLP, each dated effective December 31, 2017, which have been consolidated into one report by GLJ and adjusted to apply certain of GLJ’s assumptions and methodologies and pricing and cost assumptions. The consolidated report includes 100% of the reserves and future net revenue attributable to the properties of Exshaw Oil Corp., a subsidiary of the Company, without reduction to reflect the 9.4% third-party minority interest in Exshaw. The price forecast used in the reserve evaluations is an average of the January 1, 2018 price forecasts for GLJ, Sproule Associates Ltd. and McDaniel & Associates Consultants Ltd., each of which is available on their respective websites, www.gljpc.com, www.sproule.com and www.mcdan.com, and will be contained in the Company’s Annual Information Form for the year ended December 31, 2017, which will be filed on SEDAR (accessible at www.sedar.com) on or before March 31, 2018.
There are numerous uncertainties inherent in estimating quantities of crude oil, natural gas and NGL reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth above are estimates only. In general, estimates of economically recoverable crude oil, natural gas and NGL reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and natural gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially. For those reasons, estimates of the economically recoverable crude oil, NGL and natural gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues associated with reserves prepared by different engineers, or by the same engineers at different times, may vary.
The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to effects of aggregations. The estimated values of future net revenue disclosed in this news release do not represent fair market value. There is no assurance that the forecast prices and cost assumptions used in the reserve evaluations will be attained and variances could be material.
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; projected operating and drilling costs; the timing for facility expansions and facility start-up dates; the ability to generate, and the amount of anticipated net debt and net debt to cash flow levels; 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 rates; applicable royalty rates and tax laws; interest rates; future well production rates and reserve volumes; operating costs the timing of receipt of regulatory approvals; the performance of existing 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; the state of the economy and the exploration and production business; the availability and cost of financing, labour and services; and ability to market crude oil, natural gas and NGL successfully.
Statements relating to “reserves” are also deemed to be forward looking statements, 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 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; and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. 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.
NON-GAAP FINANCIAL MEASURES
This news release includes references to “cash flow” and “net debt” which are financial measures commonly used in the oil and gas industry and do not have a standardized meaning prescribed by International Financial Reporting Standards (“GAAP”). Accordingly, the Company’s use of these terms may not be comparable to similarly defined measures presented by other companies. Management uses the term “cash flow” and “net debt” for its own performance measures 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 a portion of its future growth expenditures or to repay debt. Investors are cautioned that these non-GAAP measures should not be construed as an alternative to net income or cash from operating activities determined in accordance with GAAP as an indication of the Company’s performance. See “Non-GAAP Financial Measures” in the November 8, 2017 Management’s Discussion and Analysis for the definition and description of these terms.
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.
- 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
- DUC – drilled but uncompleted wells
- EUR – estimated ultimate recovery
- FCP – final circulating pressure
- gj – gigajoule
- gjs/d – gigajoules per day
- mbbls – thousand barrels
- mmbbls – million barrels
- mboe – thousand barrels of oil equivalent
- 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
- mstboe – thousand stock tank barrels of oil equivalent
- NGL or NGLs – natural gas liquids
ABOUT TOURMALINE OIL CORP.
Tourmaline is a Canadian senior crude oil and natural gas exploration and production company focused on longterm growth through an aggressive exploration, development, production and acquisition program in the Western Canadian Sedimentary Basin.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Tourmaline Oil Corp.
Chairman, President and Chief Executive Officer
Tourmaline Oil Corp.
Vice President, Finance and Chief Financial Officer
(403) 767-3587; firstname.lastname@example.org
Tourmaline Oil Corp.
Secretary and General Counsel
(403) 767-3593; email@example.com
Tourmaline Oil Corp.
Suite 3700, 250 – 6th Avenue S.W.
Calgary, Alberta T2P 3H7
Phone: (403) 266-5992
Facsimile: (403) 266-5952