CALGARY, ALBERTA – (May 24, 2011)

Tourmaline Oil Corp. (TSX: TOU) (“Tourmaline”) is pleased to announce that it has entered into an agreement with Cinch Energy Corp. (TSX: CNH) (“Cinch”) pursuant to which Tourmaline will acquire all of the issued outstanding common shares of Cinch on the basis of 0.06366 of a Tourmaline common share for each Cinch common share. The acquisition will be effected by statutory plan of arrangement (the “Arrangement”).

Based on the five day volume weighted average trading price of the Tourmaline common shares on the TSX on May 20, 2011, the deemed acquisition price is approximately $205 million, comprised of the issuance of approximately 6.32 million Tourmaline common shares and the assumption of an estimated $22 million of net debt at closing.

Based on the five day volume weighted average trading price of the Tourmaline common shares on the TSX on May 20, 2011, the exchange ratio represents a 39.4% premium to the closing market price of the Cinch common shares on May 24, 2011 and a 47.1% premium to the volume weighted average trading price of the Cinch common shares for the 20 trading days ending May 24, 2011. The Arrangement will provide Cinch shareholders enhanced liquidity and ownership in a growth oriented intermediate crude oil and natural gas exploration and production company with a strong track record of growth and the ability to significantly accelerate the development of Cinch’s asset base.

Completion of the Arrangement, which is anticipated to occur in early July 2011, is subject to, among other things, the approval of at least 66⅔ percent of the Cinch shareholders voting at a special meeting to be held in early July 2011, the receipt of all necessary court, regulatory and stock exchange approvals, and other customary closing conditions.

The board of directors of Cinch has unanimously approved the Arrangement and, based in part on a fairness opinion from Cinch’s financial advisor, determined that the Arrangement is in the best interests of Cinch and the holders of its common shares and is fair to such shareholders. The Cinch board of directors has also resolved to recommend that Cinch shareholders vote their common shares in favour of the Arrangement. All of the directors and officers of Cinch have entered into support agreements pursuant to which they have agreed to vote their Cinch common shares in favour of the Arrangement.

Cinch has agreed not to solicit or initiate any discussion regarding any other business combination or sale of material assets. Cinch has also granted Tourmaline a right to match any superior proposal and has agreed to pay a termination fee of $7.5 million to Tourmaline in certain events, including if Cinch recommends, approves or enters into an agreement with respect to a superior proposal.



  • Consolidates certain Tourmaline highly profitable operated assets in the Dawson and Musreau-Kakwa areas
  • Significant increase in land and production in Tourmaline’s designated growth areas where it plans additional plant capacity growth in the second half of 2011
  • Current production of approximately 3,740 boepd
  • Proved reserves of 9.4 mmboe(1) and proved plus probable reserves of 13.5 mmboe(1)
  • Low operating costs consistent with Tourmaline’s low cost model
  • 87,580 net acres of undeveloped land, the majority of which is jointly owned with Tourmaline
(1) Reserves evaluated by GLJ Petroleum Consultants Ltd. as at December 31, 2010.
(2) All Cinch data is after giving effect to pending minor non-core property dispositions.



After adjusting for the estimated value of undeveloped land, seismic and other assets of approximately $43.8 million, the acquisition metrics are as follows:

  • Production: $43,048 per boepd of current production
  • Proved Reserves(1)(2): $17.05 / boe
  • Proved plus Probable Reserves(1)(2): $11.94 / boe
(1) Reserves evaluated by GLJ Petroleum Consultants Ltd. as at December 31, 2010.
(2) All Cinch data is after giving effect to pending minor non-core property dispositions.



The Cinch property portfolio has excellent synergy with Tourmaline’s EP focus areas. Cinch’s two largest properties, Dawson and Musreau-Kakwa, are jointly owned with, and operated by, Tourmaline. In the second half of 2011 and in 2012, Tourmaline intends to drill up to 35 wells on these two properties as the liquid-rich gas targets in both areas are amongst the most profitable EP targets in Tourmaline’s overall extensive EP inventory. Facility expansions are also planned in both areas for the second half of 2011 allowing Tourmaline to rapidly realize the upside opportunity in Cinch by accelerating Tourmaline’s existing EP programs.

The Cinch acquisition is accretive on all key metrics for 2011 and, in particular, 2012 when the full magnitude of the increased drilling programs will be realized. Production growth through the acquisition is estimated at approximately 7% in 2011 and 16% in 2012. The acquisition, coupled with Tourmaline’s increased capital program at Dawson and Musreau-Kakwa, is expected to add approximately 4,000 boepd to second half 2011 Tourmaline production volumes and approximately 6,400 boepd to 2012 production volumes. Cinch’s current operating costs are top quartile in industry and hence consistent with Tourmaline’s low cost model. Significant G&A cost savings on the Cinch asset portfolio are also expected to be realized by Tourmaline.



The 2011 capital program expansion and recent equity financing, as well as the Cinch acquisition, are all part of Tourmaline’s ongoing plan to more rapidly develop its expansive, well-defined future drilling inventories and accelerate its five-year development outlook. Tourmaline’s execution of its EP plan is on track to achieve 2011 full year-over-year production growth in excess of 55% before the Cinch acquisition. The capital program expansion and Cinch acquisition will also allow Tourmaline to realize significantly higher 2012 production growth rates. On a preliminary basis, Tourmaline estimates that 2012 production will average between 44,500 and 46,500 boepd.

The following table summarizes Tourmaline’s revised guidance for 2011 both before and on a pro forma basis after giving effect to the Cinch acquisition.




Peters & Co. Limited is acting as exclusive financial advisor to Tourmaline with respect to the Arrangement.



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.



Non-IFRS Measures
This news release includes references to financial measures commonly used in the oil and gas industry such as “cash flow” and “net debt”, which do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”). Management believes that in addition to net income, cash flow and net debt are useful supplemental measures as they are a measure of a company’s ability to generate the cash necessary to repay debt or fund future growth through capital investment. However, investors are cautioned that these measures should not be construed as an alternative to net income determined in accordance with IFRS as an indication of the Tourmaline or Cinch’s performance. The method of calculating these measures may differ from other companies and, accordingly, they may not be comparable to similar measures used by other companies. For these purposes, “cash flow” is defined as cash provided by operations before changes in non-cash working capital and “net debt” is defined as long-term bank debt plus working capital (adjusted for the fair value of financial instruments and future taxes).

Forward-looking Information
This press release contains forward-looking information within the meaning of applicable securities laws. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “project”, “should”, “believe”, “plans”, “intends” and similar expressions are intended to identify forward-looking information. More particularly and without limitation, this press release contains forward looking information concerning Tourmaline’s anticipated petroleum and natural gas production, cash flows, debt levels, capital efficiency and capital spending both before and after giving effect to the Arrangement, as well as Tourmaline’s future drilling prospects, business strategy, future development and growth opportunities, prospects, asset base and anticipated benefits from the Arrangement, including accretion to Tourmaline on certain operational and financial measures and operating efficiencies. The forward-looking information is based on certain key expectations and assumptions made by Tourmaline, including expectations and assumptions concerning: prevailing commodity prices and exchange rates; applicable royalty rates and tax laws; future well production rates and reserve volumes; the timing of receipt of regulatory and shareholder approvals; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services. 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 they 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, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions including the Arrangement; failure to realize the anticipated benefits of acquisitions including the Arrangement; 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. There are risks also inherent in the nature of the proposed Arrangement, including failure to realize anticipated production increases and anticipated cost savings and other synergies; risks regarding the integration of Cinch into Tourmaline; incorrect assessment by Tourmaline of the value of Cinch; and failure to obtain the required shareholder, court, regulatory and other third party approvals.

This press release also contains forward-looking information concerning the anticipated completion of the Arrangement and the anticipated timing thereof. Tourmaline has provided these anticipated times in reliance on certain assumptions that it believes are reasonable, including assumptions as to the time required to prepare meeting materials for mailing, the timing of receipt of the necessary regulatory and court approvals and the satisfaction of and time necessary to satisfy the conditions to the closing of the Arrangement. These dates may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary regulatory or court approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the Arrangement. In addition, there are no assurances the Arrangement will be completed. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release concerning these times.

Also included in this press release are estimates of Tourmaline’s 2011 cash flow and cash flow per share which are based on the various assumptions as to production levels, commodity prices, capital expenditures, capital efficiency, drilling inventories and other assumptions disclosed in this press release. To the extent such estimates constitute a financial outlook, they were approved by management of Tourmaline on May 24, 2011 and are included to provide readers with an understanding of Tourmaline’s anticipated cash flow based on the capital expenditures and other assumptions described herein and readers are cautioned that the information may not be appropriate for other purposes.

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 reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website ( or Tourmaline’s website (

The forward-looking information contained in this press 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 Equivalent
Disclosure provided in respect of barrels of oil equivalent (boe) 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.



Tourmaline Oil Corp.
Michael Rose
Chairman, President and Chief Executive Officer
(403) 266-5992


Tourmaline Oil Corp.
Brian Robinson
Vice President, Finance and Chief Financial Officer
(403) 767-3587;


Tourmaline Oil Corp.
Scott Kirker
Secretary and General Counsel
(403) 767-3593;


Tourmaline Oil Corp.
Suite 3700, 250 – 6th Avenue S.W.
Calgary, Alberta T2P 3H7
Phone: (403) 266-5992
Facsimile: (403) 266-5952