Tourmaline Reports 167% Reserve Growth in 2010 and Provides Operations Update
Calgary, Alberta – Tourmaline Oil Corp. (Tourmaline) (TOU: TSX) is pleased to report 2010 year end reserve information highlights and update Q1 2011 EP activities.
Tourmaline has generated very strong growth in all reserve categories in 2010. Proved Developed Producing reserves grew to 38.9 mmboe in 2010, a 126% increase over year end 2009 (65% per share year over year), Total Proved reserves grew to 93.0 mmboe in 2010, a 167% increase over 2009 (95% per share) and Proved Plus Probable reserves grew to 158.2 mmboe in 2010, a 166% increase over 2009 (94% per share)
Tourmaline’s total 2P reserves after two years of operation is now larger than Duvernay Oil Corp.’s 2P reserves in its final 2008 reserve report.
Finding, Development and Acquisition costs were $9.58/boe for Proved Plus Probable reserves in 2010 ($15.55/boe with changes in future development capital (FDC)), and $15.61/boe for Total Proved Reserves in 2010 ($21.50/boe with FDC). These costs include $339.4 million for land and facilities ($5.25/boe of the $21.50/boe Proved costs including FDC) as the Company completed several large land focused acquisitions and embarked upon several major facilities projects in 2010 as it assembled its extensive EP portfolios.
Finding and Development costs were $11.02/boe for Proved Plus Probable reserves ($14.19/boe with FDC) and a $14.78/boe for Total Proved reserves ($19.48/boe with FDC).
The 2010 independent reserve report includes 263 future locations, approximately 5% of the 5,000 locations currently in the Company’s drilling inventory.
Oil and natural gas liquids 2P reserves grew to 20.0 mmboe at year end 2010.
Current production is approximately 24,000 boepd, consisting of 128.4 mmcfpd of natural gas and 2,600
bopd oil, condensate and liquids.
The two major ongoing facility projects, the Minehead AB gas plant and the Dawson BC pipeline interconnect to the Tourmaline Sunrise plant, will grow total production to 28,500 boepd or greater by early April, in excess of originally projected levels for second quarter 2011. These two projects will bring 25 completed, shut-in gas wells on-stream. Fourth quarter 2010 production averaged 22,953 boepd, a 217% increase over fourth quarter 2009 average production of 7,248 boepd. The Company is expecting full year average production of 27,675 boepd for 2011, which will represent 55% growth over 2010 average production of 17,856 boepd.
The Company continues to make progress on further reducing already top decile operating costs. Fourth quarter 2010 operating costs were $5.51/boe, down 12% from third quarter 2010 costs of $6.24/boe and 31% from fourth quarter 2009 costs of $7.94/boe. Tourmaline has numerous projects underway throughout the EP portfolio to further reduce operating costs for 2011.
Tourmaline is currently operating 6 drilling rigs and will maintain those levels until Spring break-up in March. A total of 14 gas wells and 2 oil wells have been drilled thus far in 2011.
Alberta Deep Basin
A total of 10 vertical gas wells and 3 horizontal gas wells have been drilled to date in the first quarter of 2011. The Company is operating 5 drilling rigs in the Deep Basin. The Company expects to have a total of 14 horizontal wells drilled by break-up with the Phase 1 horizontal assessment program including 6 Cardium, 2 Wilrich, 2 Falher, 2 Notikewan and 2 Cadomin horizontals drilled, completed and tested by April 1. Initial results have been very strong with a 750 boepd Cardium horizontal in greater Wild River and a 2200 boepd Falher horizontal at Musreau amongst the high deliverability, liquids rich gas wells tested thus far. An additional 18-20 Deep Basin horizontals are planned throughout the Deep Basin complex in the second half of 2011. The Company is now estimating an inventory of up to 1500 horizontal locations on its extensive Deep Basin EP portfolio, complementing the 3100 vertical drilling locations already in inventory.
The main Deep Basin facilities project in Q1 is the Minehead gas plant and associated gathering system. The project remains on schedule, with all components of the plant on-site and first production expected by the beginning of April. The Minehead plant will bring approximately 30-35 mmcfpd of net shut-in gas volumes on-stream.
Peace River High
Tourmaline expects to drill and complete up to 20 horizontals in the greater Dawson Sunrise liquids rich Montney complex during 2011. The Company will operate one drilling rig on a continuous basis through the balance of the year. Average per well drill times are now down to 12-13 days. The Sunrise 5-14-80-16W6M well tested at a stable rate of 14.2 mmcfpd in February, the highest deliverability well in the Company’s Dawson-Sunrise program thus far.
The principal facilities project in Dawson-Sunrise in the first quarter is the Dawson interconnect pipeline and compressor project. This project will bring 20 mmcfpd of shut-in gas and associated liquids to the Tourmaline operated gas plant at Sunrise. A late March start-up for this pipeline is currently anticipated. At Spirit River, a total of 5 horizontals have now been drilled in the Triassic Charlie Lake formation.
Three of these wells are on production at average initial rates of 275 bopd and 0.75 mmcfpd, the fourth and fifth wells are currently being completed. The Spirit River battery expansion was completed in late January to accommodate these rapidly increasing production volumes.
Summary Reserve Information
The following tables provide summary reserve and future net revenue information based on forecast
prices and costs.
All future net revenues are stated prior to provision for interest, general and administrative expenses and after deduction of royalties and estimated future capital expenditures. Estimated values of future net revenue do not represent fair market value. There is no assurance that the forecast price and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of Tourmaline’ crude oil, natural gas liquids and natural gas reserves are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquid reserves may be greater than or less than the estimates provided herein.
Oil and Gas and Financial Information Advisories
The reserve data provided in this news release is based on independent reserve evaluations conducted by GLJ Petroleum Consultants Ltd. and AJM Petroleum Consultants, effective December 31, 2010. The full GLJ January 1, 2011 price forecast used in the reserve evaluations is available on their website at www.gljpc.com. The reserve data provided in this news release presents only a portion of the disclosure required under National Instrument 51-101. All of the required information will be contained in the Company’s Annual Information Form for the year ended December 31, 2010, which will be filed on SEDAR (accessible at www.sedar.com) on or before March 31, 2011.
Unless otherwise indicated, the reserves information set forth in this news release are “company interest” reserves. “Company interest” means, in relation to Tourmaline’s interest in reserves, its working interest (operating or non-operating) share before deduction of royalties. Investors are cautioned that “company interest” reserves should not be construed as an alternative to “gross” or“net” reserves calculated in accordance with NI 51-101 and does not have a standardized meaning under this instrument.
Certain financial and operating results included in this news release such as finding, development and acquisition costs, production information and operating costs are based on unaudited estimated results. These estimated results are subject to change upon completion of the audited financial statements for the year ended December 31, 2010, and changes could be material. Tourmaline anticipates filing its audited financial statements and related management’s discussion and analysis for the year ended December 31, 2010 on SEDAR on or about March 24, 2011.
Per share reserve information is based on the total common shares outstanding at year end 2010 and 2009, respectively.
Certain natural gas volumes have been converted to boes on the basis of 6 mcf of natural gas to one barrel (“bbl”) of crude oil. 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.
The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year.
- 2P – Proved Plus Probable
- boe – barrel of oil equivalent
- boepd – barrel of oil equivalent per day
- bopd – barrel of oil, condensate or liquids per day
- mbbls – thousand barrels
- mcf – thousand cubic feet
- mmbtu – millions of British thermal units
- mmboe – millions of barrel of oil equivalent
- mmcfpd – million cubic feet per day
ABOUT TOURMALINE OIL CORP.
Tourmaline is a Canadian intermediate crude oil and natural gas exploration and production company focused on long-term growth through an aggressive exploration, development, production and acquisition program in the Western Canadian Sedimentary Basin.
This news release contains forward-looking information that involves known and unknown risks and uncertainties, most of which are beyond the control of Tourmaline, including, without limitation, those listed under “Risk Factors” and “Forward-Looking Statements” in Tourmaline’s final prospectus dated November 15, 2010, a copy of which is available on the SEDAR website at www.sedar.com. All information other than information of historical fact is forward-looking information. The use of any of the words “anticipate”, “plan”, “contemplate”, “continue”, “estimate”, “expect”, “intend”, “propose”, “might”, “may”, “will”, “shall”, “project”, “should”, “could”, “would”, “believe”, “predict”, “forecast”, “pursue”,”potential” and “capable” and similar expressions are intended to identify forward-looking information. In addition, information relating to reserves is deemed to be forward looking information, as it involves the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future. Forward-looking information in this news release includes, but is not limited to, information concerning the proposed use of proceeds from the Company’s initial public offering and concurrent and subsequent private placements, Tourmaline’s 2011 capital exploration and development program and the Company’s anticipated production levels in 2011. With respect to forward-looking information contained in this news release, Tourmaline has made assumptions regarding: future commodity prices and exchange rates; timing, amount and sufficiency of planned capital expenditures; the impact of competition; general economic and financial market conditions; availability and cost of skilled labour and services; effects of regulation; royalty regimes; operating costs; future well production rates; reserve and resource volumes; the performance of existing wells; the success obtained in drilling new wells; and the receipt, in a timely manner, of regulatory and other approvals. Should one or more of the forgoing risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking information. Accordingly, prospective investors should not place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this release and, other than as required by applicable securities laws, Tourmaline does not assume any obligation to update or revise them to reflect new events or circumstances.
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