Mr. Michael Rose reports

TOURMALINE DELIVERS RECORD PRODUCTION, INCREASES 2P RESERVES TO 5 BILLION BOE AND DECLARES AN INCREASED QUARTERLY BASE DIVIDEND AND A SPECIAL DIVIDEND

Tourmaline Oil Corp. has released financial and operating results for the full year and fourth quarter of 2023, has increased both 2023 reserves and the quarterly base dividend, and has declared a special dividend and a quarterly dividend.

Highlights:

• Full-year 2023 cash flow was $3.71-billion ($10.73 per diluted share). Fourth quarter 2023 CF was $918.0-million ($2.62 per diluted share).
• Tourmaline generated $1.69-billion of free cash flow in 2023 (2022: $3.21-billion).
• Full-year 2023 earnings were $1.74-billion ($5.03 per diluted share).
• Tourmaline closed the acquisition of Bonavista Energy Corp., adding over 60,000 barrels of oil equivalent per day of low-decline, long-life production.
• Tourmaline will pay a special dividend of 50 cents per share on March 21, 2024, to shareholders of record on March 14, 2024. Tourmaline intends to pay special dividends in all four quarters of 2024, inclusive of this first quarter 2024 special dividend. Tourmaline has also increased its quarterly base dividend by 7 per cent to 30 cents per share.
• Year-end 2023 proven, developed producing reserves of 1.20 billion boe were up 39.3 per cent after accounting for 2023 annual production of 189.9 million boe. Total proven reserves of 2.61 billion boe were up 20.8 per cent after accounting for 2023 production. Proven plus probable reserves of 5.01 billion boe were up 15.5 per cent after accounting for 2023 production.
• After 15 years of operation, Tourmaline now has 22.7 trillion cubic feet of economic 2P natural gas reserves, all of which are pipeline connected to markets across North America. At year-end 2023, 83.5 per cent of the current drilling inventory was not booked in the year-end 2023 reserve report.
• Year-end 2023 2P oil, condensate and natural gas liquids reserves of 1.22 billion barrels represent the second-largest conventional liquids reserve base in Canada, based on public disclosure.
• Given continuing weak natural gas prices, the company has elected to reduce the forecast 2024 capital expenditures from $2.35-billion to $2.13-billion including reduced 2024 forecast spending on exploratory drilling from $100.0-million down to $40.0-million and a reduction in exploration and production capital of $150.0-million. The budget reductions include a reduction in the rig count and deferral of select exploration drilling and facility projects. Tourmaline continues to focus on optimizing free cash flow and shareholder returns.
• Fourth quarter 2023 average production was 556,957 boe/d, up 9 per cent from Q4 2022. Full-year 2023 average production of 520,366 boe/d was up 4 per cent over full-year 2022 average production of 500,832 boe/d.
• Tourmaline has an average of 726 million cubic feet per day hedged in 2024 at a weighted-average fixed price of $5.34 per thousand cubic feet.
• Montney well performance in northeastern British Columbia continues to improve with 2023 wells outperforming wells from the previous three years. Both natural gas and, particularly, liquids production is exceeding the previous year's performance. As a result, despite the activity reduction, Tourmaline anticipates 2024 liquids production to be slightly higher than prior guidance.
• At current strip pricing, the company expects to generate 2024 CF of $3.32-billion ($9.34 per diluted share) and FCF of $1.19-billion ($3.35 per diluted share).
• The company expects to generate over $1-billion of FCF in every year of the company's five-year EP growth plan.
• Exit 2023 net debt was $1.78-billion (0.48 times Q4 2023 annualized cash flow). The net debt reflects cash paid of $651.0-million and net debt assumed in connection with the Bonavista acquisition, which closed on Nov. 17, 2023. The company intends to deleverage throughout 2024 and remains committed to a long-term net debt target of $1.2-billion to $1.4-billion.

Production update:

• Fourth quarter 2023 average production was 556,957 boe/d, up 9 per cent from Q4 2022. Full-year 2023 average production of 520,366 boe/d was up 4 per cent over full-year 2022 average production of 500,832 boe/d.
• With the announced significant 2024 capital budget reduction, 2024 average production of 580,000 to 590,000 boe/d is anticipated with first quarter average production of 590,000 to 595,000 boe/d expected.
• Two thousand twenty-three average liquids production (oil, condensate and NGLs) of 118,808 barrels per day was up 6 per cent over 2022 liquids production of 112,460 bbl/d.
• Forecast liquids production of approximately 144,000 bbl/d is ahead of the original forecast despite a reduction in 2024 forecast average production. Daily liquids production has eclipsed 150,000 bbl/d on several days thus far in Q1 2024.
• In addition to being Canada's largest and most active natural gas producer, Tourmaline is now the largest NGL producer in Canada and the second-largest condensate producer, based on public disclosure. Condensate and NGL production volumes are expected to increase significantly over the next four years with the company's Conroy North Montney, Doe South Montney and North Deep basin growth projects.

Financial highlights:

• Full-year 2023 CF was $3.71-billion ($10.73 per diluted share), and full-year FCF was $1.69-billion ($4.88 per diluted share).
• Fourth quarter 2023 CF was $918.0-million ($2.62 per diluted share on Q4 average production of 556,957 boe/d). Q4 2023 FCF was $282.0-million.
• Full-year 2023 earnings were $1.74-billion ($5.03 per diluted share).
• Tourmaline's board of directors has declared a special dividend of 50 cents per share to be paid on March 21, 2024, to shareholders of record on March 14, 2024. Tourmaline intends to pay special dividends in all four quarters of 2024, inclusive of this Q1 2024 special dividend.
• Tourmaline paid $6.55 per share in combined base and special dividends in 2023, a 10-per-cent trailing yield based on an average 2023 share price of $63.58 per share in 2023.
• Tourmaline increased the base dividend twice during 2023 and has elected to increase the base dividend by 7 per cent to 30 cents per share for the first quarter of 2024. Tourmaline has increased the base dividend a total of 13 times since the dividend was initiated in Q1 of 2018.
• Full-year 2023 capital expenditures were $2.07-billion, including Q4 2023 capital expenditures of $636.0-million. Q4 2023 capital spending included $22.2-million of spending associated with the Bonavista assets acquired in November, 2023.
• Exit 2023 net debt was $1.78-billion including cash paid of $651.0-million and net debt assumed relating to the acquisition of Bonavista. Tourmaline intends to reduce net debt throughout 2024 and remains committed to its long-term net debt target of $1.2-billion to $1.4-billion.

2023 reserves:

• Year-end 2023 proven developed producing reserves of 1.20 billion boe were up 39.3 per cent after accounting for 2023 annual production of 189.9 million boe. Total proven reserves of 2.61 billion boe were up 20.8 per cent after accounting for 2023 production. Proven plus probable reserves of 5.01 billion boe were up 15.5 per cent after accounting for 2023 production. The 2023 organic EP program had an increased emphasis on conversions to PDP rather than 2P reserve growth compared with previous years, hence the record PDP growth.
• After 15 years of operation, Tourmaline now has 22.7 trillion cubic feet of economic 2P natural gas reserves, all of which are pipeline connected to markets across North America. At year-end 2023, 83.5 per cent of the current drilling inventory was not booked in the year-end 2023 reserve report.
• Year-end 2023 oil, condensate and NGL 2P reserves of 1.22 billion barrels represent the second-largest conventional liquids reserve base in Canada, based on public disclosure.
• Tourmaline has only booked 3,903 gross locations of a total drilling inventory of 23,724 gross locations (16.5 per cent of the overall inventory) to achieve year-end 2023 2P reserves of 5.0 billion boe.
• Tourmaline replaced 368 per cent of its 2023 annual production of 189.9 million boe with 2P additions of 698 million boe including 2023 production.
• Tourmaline's 2023 PDP finding, development and acquisition costs were $8.94 per boe excluding changes in future development capital, yielding a PDP reserve recycle ratio of 2.2.
• TP FD&A costs in 2023 were $10.71 per boe, including changes in FDCs. Three-year TP FD&A costs are $8.56 per boe, including changes in FDC.
• 2P FD&A costs in 2023 were $9.80 per boe, including changes in FDC. Three-year 2P FD&A costs were $7.38 per boe, including changes in FDC. The higher 2023 2P FD&A costs reflect incremental inflation in the FDC account, as well as the increased focus on conversions to PDP. Approximately 69 per cent of the 266 net wells drilled in 2023 were conversions from undeveloped to PDP.
• Tourmaline's 2P reserve value (before taxes) equates to $117.48 per diluted share (after-tax reserve value of $90.37 per diluted share) using the Jan. 1, 2024, engineering price deck and a 10-per-cent discount rate. TP reserve value (before tax) is $76.70 per diluted share and $60.54 per diluted share (after tax). PDP reserve value is $44.85 per diluted share (before tax) and $37.46 per diluted share (after tax). Year-over-year reserve values were down due to a combination of lower commodity prices, drill and complete capital cost inflation (5-per-cent year over year), and a lower natural gas premium related to the company's marketing portfolio reflecting lower year-over-year forecast benchmark prices in the markets outside of Alberta where the company sells its natural gas.

2024 capital program:

• As previously disclosed in January, 2024, the company's focus in 2024 is on optimizing FCF and shareholder returns. As such, the company has elected to reduce the forecast 2024 capital expenditures from $2.35-billion to $2.13-billion. The budget reductions include a reduction in the rig count and deferral of select exploration drilling and facility projects. Although the company's extensive Tier 1 drilling inventory (approximately 17 years of Tier 1 inventory alone) is profitable at Alberta Energy Company gas prices of $1.50 per thousand cubic feet, Tourmaline does not believe that selling incremental gas volumes into a weak gas market is the best decision or return proposition for shareholders. The company's base gas production is protected by a strong 2024 natural gas hedge book, as well as a diversified export portfolio, for premium-priced North American markets.
• Full-year 2024 average production guidance is 580,000 to 590,000 boe/d, a 2.5-per-cent decrease, despite the 9.4-per-cent reduction of the 2024 forecast capital expenditures. Forecast average 2024 natural gas production has been reduced by approximately 100 million cubic feet per day from previous guidance, and average liquids production has been increased by approximately 1,000 barrels per day.
• Should natural gas pricing recover on a sustained basis during the second half of 2024, the company can pivot and materially increase production toward the 2024 exit. The company anticipates accumulating approximately 50 DUCs, during the balance of the year, under the revised plan.

Marketing update:

• Tourmaline's average realized natural gas price in 2023 was $4.83 per thousand cubic feet, 80 per cent above the average 2023 AECO 5A index price of $2.68 per Mcf. The company's marketing diversification portfolio and strategic hedging program allow Tourmaline to consistently outperform local hub pricing.
• Tourmaline expects to exit 2024 with 1.21 billion cubic feet per day in exports to targeted markets including 754 million British thermal units per day delivered to Japan Korea Marker, western U.S. and Pacific Northwest premium markets. In these premium markets, Tourmaline has an average of 139 MMBtu/d hedged in 2024 at a fixed price of $9.04 (U.S.) per MMBtu.
• In January, 2024, Tourmaline completed its second liquified natural gas agreement, increasing its exposure to JKM, by entering into a netback agreement with Trafigura Pte. Ltd. based on 62,500 MMBtu/d for a seven-year term, starting January, 2027, with the potential for extension to December, 2039. This agreement is not dependent upon incremental Federal Energy Regulatory Commission approvals.
• The company's first LNG deal with Cheniere Energy at the Sabine Pass facility commenced in January, 2023, and, with the inclusion of financial hedges, generated approximately $600-million, above the AECO 5A index price, to Tourmaline in the first year of a 15-year contract.
• Tourmaline has an average of 726 MMcf/d hedged in 2024 at a weighted-average fixed price of $5.34 per Mcf.

EP update:

• Tourmaline drilled 266.3 net wells in 2023, and the company expects to drill approximately 271 net wells in 2024.
• Montney well performance in NEBC continues to improve with 2023 wells outperforming wells from the previous three years. Both natural gas and, particularly, liquids production is exceeding previous years performance. The company continues to lengthen horizontals and develop Montney completion techniques in advance of the significant North Montney development project scheduled for the second half of the five-year plan, when stronger intrabasin gas pricing is anticipated.
• Tourmaline has received 252 new drilling permits in British Columbia since January, 2023, as well as permits related to the North Montney infrastructure projects.
• The 2024 program has delivered several Alberta Deep basin pads above performance curve expectations at Smoky, at Kakwa and along the Bonavista Glauconite trend. The Horse 10-26 three-well Wilrich C pad tested at average per well rates of 29.3 MMcf/d of natural gas over a 70-hour test during January. The Kakwa 10-2 three-well Wilrich pad tested at average per well rates of 19.9 MMcf/d of natural gas over a 112-hour test and was turned over to production in February. The Caroline 16-35 two-well Glauconite pad had an average per well IP30 of 5.1 MMcf/d of natural gas and 166 barrels per day of condensate. The most recent two downdip Glauconite trend wells have significantly outperformed expectations. The first tested at an average gas rate of 7.7 MMcf/d and 946 bbl/d of condensate on a 134-hour flow test, and was turned over to production on Feb. 16, 2024, and the second well has averaged eight MMcf/d of natural gas, 850 bbl/d of condensate and 1,170 bbl/d of NGLs over the first seven days of production. The company also drilled the first monobore design for the Glauconite, which is expected to ultimately reduce drilling costs by 15 to 20 per cent.
• Capital efficiencies of approximately $10,000 per flowing barrel are expected with the 2024 EP program.

Environmental performance improvement:

• Tourmaline's cleantech engineering team continues to develop and implement new proprietary emission reduction technologies, execute expanded water management initiatives, explore industry-leading methane mitigation technologies, and manage related third party environmental research.
• Since embarking on the diesel displacement initiative for drilling rigs and frack spreads over six years ago, the company has displaced 135.7 million litres of diesel since June, 2017, providing an emission reduction of 87,419 tonnes of carbon dioxide and saving approximately $129.3-million (including the cost of the replacement natural gas).
• The compressed natural gas in long-haul trucking joint development with Clean Energy Fuels Corp., announced in April, 2023, continues to progress with the first fuelling station in Edmonton operational and the second and third locations in Calgary and Grande Prairie expected to start up in second half 2024.
• Tourmaline continues to strive to have the lowest freshwater intensity in the industry (lowest in 2022 at 0.11 bbl per boe, 12 months after fracturing, based on public data for Alberta producers producing over 20 million boe per year of hydrocarbons). The company's extensive water storage and recycling facilities could prove highly beneficial in the event of drought-related water restrictions later in the year.

Dividend:

• In addition to the announced special dividend payable on March 21, 2024, to shareholders of record at the close of business on March 14, 2024, the company's board of directors has declared a quarterly base dividend on its common shares in the amount of 30 cents per common share, representing an increase of 7 per cent over the previous quarterly dividend. The increased base dividend reflects the continuing financial strength and profitability of the company. The dividend will be payable on March 28, 2024, to shareholders of record at the close of business on March 15, 2024. Both the special dividend and the quarterly base dividend are designated as an eligible dividend for Canadian income tax purposes.

Board of directors:

• The company sadly reports the passing of Ronald C. Wigham, director, business colleague and great friend, on Jan. 18, 2024. Mr. Wigham became a director of Tourmaline on March 7, 2016. Prior to that, in his capital market position at Peters & Co., Mr. Wigham played a major role in the initial capitalization and initial public offerings of both Tourmaline and Duvernay Oil Corp.

2023 reserve summary

Attached tables herein summarize the company's gross reserves defined as the working interest share of reserves prior to the deduction of interest owned by others (burdens). Royalty interest reserves are not included in company gross reserves. Company net reserves are defined as the working net carried and royalty interest reserves after deduction of all applicable burdens.

Reserves performance ratios

Attached tables herein highlight Tourmaline's reserves, and F&D and FD&A costs, as well as the associated recycle ratios.

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

Tourmaline will host a conference call tomorrow, March 7, 2024, 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.

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.