Mr. Michael Rose reports

TOURMALINE DELIVERS STRONG FREE CASH FLOW IN THE THIRD QUARTER, UPDATES FIVE YEAR EP PLAN WITH SIGNIFICANTLY INCREASED FREE CASH FLOW

Tourmaline Oil Corp. has released financial and operating results for the third quarter of 2023.

Highlights:

• Third quarter cash flow of $878.5-million ($2.55 per diluted share);
• Generated Q3 free cash flow of $332.3-million (96 cents per diluted share), enabling the company to declare a special dividend of $1 per common share paid on Nov. 1, 2023, to holders of record on Oct. 24, 2023; Tourmaline has distributed total dividends of $6.52 per share (inclusive of this Nov. 1, 2023, special dividend) since Dec. 1, 2022, an implied 9-per-cent trailing yield;
• Full-year 2023 free cash flow forecast of $1.9-billion (2022 free cash flow: $3.2-billion);
• Sept. 30, 2023, net debt of $879.8-million or 0.3 times Q3 2023 annualized cash flow of $3.5-billion;
• Tourmaline Q3 2023 net earnings of $274.7-million (80 cents per diluted share);
• In October, 2023, the company entered into an agreement to acquire all of the shares of Bonavista Energy Corp. for $1.45-billion, consisting of $725-million in Tourmaline common shares and $725-million of cash, less Bonavista's net debt at closing; the closing of the transaction is expected to occur in the second half of November, 2023, subject to customary regulatory and stock exchange approvals.

Production update:

• Q3 2023 average production of 502,524 barrels of oil equivalent per day was at the higher end of the guidance range of 495,000 to 505,000 boe/d. Q3 production was reduced by planned turnarounds (16,000 boe/d for the quarter) and planned storage injections in California and Dawn, Ont. (3,440 boe/d).
• It 2023 average production guidance of 520,000 boe/d is maintained, the company expects exit 2023 production of over 600,000 boe/d, including the acquired Bonavista volumes.
• Inclusive of the Bonavista assets at a maintenance-only, conservative capital budget, Tourmaline anticipates 2024 average annual production to range between 600,000 and 610,000 boe/d (formal guidance based on 600,000 boe/d). Tourmaline plans to increase production from the Bonavista assets in 2025 into an anticipated higher gas price environment.
• Two thousand twenty-four average liquids production (oil, condensate and natural gas liquids) of over 140,000 barrels per day is forecasted as the company also grows into one of the largest Canadian liquids producers.
• Tourmaline is Canada's largest natural gas producer with forecast production of over 2.7 billion cubic feet per day in 2024.

Financial results:

• Third quarter 2023 cash flow was $878.5-million ($2.55 per diluted share) on total capital expenditures of $565.4-million (EP spending of $533.4-million in Q3), generating free cash flow of $332.3-million for the quarter (96 cents per diluted share).
• Tourmaline generated Q3 2023 net earnings of $274.7-million (80 cents per diluted share) and first-nine-month 2023 earnings of $1,035.7-million ($3.01 per diluted share).
• Exit Q3 2023 net debt was $879.8-million, well below the company's long-term net debt target of $1.2-billion to $1.4-billion. This net debt target will provide for a long-term net debt to cash flow ratio of approximately 0.25 to 0.35 times in 2024 and throughout the company's five-year plan. The company currently has $3.1-billion of total credit capacity.
• At Sept. 30, 2023, Tourmaline is in a surplus position when including the value of its 45.1 million shares of Topaz Energy Corp. (valued at $967.6-million using the closing price of $21.43 per Topaz common shares on Sept. 29, 2023).
• The continued strong free cash flow generated during the third quarter of 2023, as well as the forecast free cash flow for fourth quarter 2023, has allowed the company to pay the previously announced special dividend of $1 per share paid on Nov. 1, 2023, as well as increase the base dividend from $1.04 to $1.12 per share on an annualized basis, effective as of the December, 2023, quarterly base dividend payment.

Capital budget and financial outlook:

• With Q3 2023 EP capital spending of $533.4-million, forecast full-year 2023 EP capital spending is anticipated to be approximately $1,825-million, up from the prior $1,675-million. The increase includes the incorporation of anticipated Bonavista-related capital expenditures postclosing in Q4, incremental inflation of 5.0 per cent over forecast levels as the company locked in services during second quarter and third quarter for the second half 2023 to first half 2024 EP season, and the acceleration of fracking of two pads into 2023 from first quarter 2024 due to faster realized drilling times.
• Tourmaline's board of directors has approved a full-year 2024 EP capital budget of $2.15-billion, reflecting a 14- to 15-rig program and including $225-million associated with the Bonavista assets.
• The 2024 EP program is expected to deliver cash flow at strip pricing of $4.5-billion and FCF of $2.2-billion. As in previous years, the company is strongly committed to returning the majority of free cash flow to shareholders and plans to continue its practice of quarterly special dividends in 2024.
• The updated five-year plan incorporates modest growth from the Bonavista assets commencing in 2025, as well as a deferral of the North Montney phase 2 Conroy development by one year. The deferral allows the company to spread out facility capital spending and evaluate potential phase 2 facility electrification options and results in a significant increase in FCF in 2026 to 2028. The current five-year plan does not currently include any capital for the phase 2 project.
• Between 2022 and 2028, Tourmaline anticipates organically increasing the northeastern B.C. Montney gas condensate complex volumes by over 125,000 boe/d, with further growth to be realized with the North Montney phase 2 Conroy project.

Board update:

• Tourmaline is pleased to announce that Christopher Lee has been appointed to the board of directors. Mr. Lee recently retired from the board of directors of Deloitte Canada, and serves on the boards of Mount Royal University and Alberta Blue Cross.

Conference call tomorrow at 9 a.m. MT (11 a.m. ET)

Tourmaline will host a conference call tomorrow, Nov. 2, 2023, starting at 9 a.m. MT (11 a.m. ET).

To participate without operator assistance, you may register and enter your phone number to receive an instant automated callback.

To participate using an operator, please dial 1-888-664-6383 (toll-free in North America) or 1-416-764-8650 (international dial-in) a few minutes prior to the conference call.

Conference ID is 36835289.

Replay details

If you are unable to dial into the live conference call on Nov. 3, a replay will be available by dialling 1-888-390-0541 (international 1-416-764-8677), referencing encore replay code 835289. The recording will expire on Nov. 16, 2023.

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 Sept. 30, 2023, and 2022, please refer to SEDAR+ or Tourmaline's website.

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. It is an investment-grade exploration and production company, providing strong and predictable operating and financial performance through the development of its three core areas in the Western Canadian sedimentary basin. With its existing large reserve base, decades-long drilling inventory, relentless focus on execution and cost management, and industry-leading environmental performance, it is excited to provide shareholders an excellent return on capital and an attractive source of income through its base dividend and surplus free cash flow distribution strategies.

We seek Safe Harbor.