Mr. Michael Rose reports

TOURMALINE DELIVERS RECORD PRODUCTION IN Q1 2024, ANNOUNCES AN INCREASE TO QUARTERLY BASE DIVIDEND AND DECLARES A SPECIAL DIVIDEND

Tourmaline Oil Corp. has released financial and operating results for the first quarter of 2024, and has increased its quarterly base dividend and has declared a special dividend.

Highlights

• First quarter 2024 average production was 592,077 boepd (barrels of oil equivalent per day), a 13-per-cent increase over first quarter 2023 average production of 525,916 boepd and within the 590,000 to 595,000 boepd first quarter 2024 range announced on March 6, 2024.
• First quarter cash flow (CF) was $871.1-million ($2.45 per diluted share) on total capital expenditures of $556.2-million (EP spending of $548.7-million in Q1 2024) generating free cash flow (FCF) of $309.8-million for the quarter (87 cents per diluted share).
• In 2024, at strip pricing on April 15, 2024, the company expects to generate CF of $3.52-billion ($9.92 per diluted share) and FCF of $1.40-billion ($3.93 per diluted share) on EP spending of $2.0-billion.
• As a result of improved strip pricing, Tourmaline's cash flow forecasts, compared with the five-year EP plan released on March 6, 2024, have improved by $200-million to $500-million in every year of the company's updated five-year EP plan. Over the next five years, Tourmaline forecasts that it will generate $8.6-billion in FCF (approximately 37 per cent of the company's current market capitalization) while growing average production approximately 22 per cent.
• Given the strong FCF generation in Q1 2024 and the full year financial outlook, the company has elected to increase the quarterly base dividend effective Q2 2024 by 7 per cent to 32 cents/share ($1.28/share on an annualized basis) from the current 30 cents/share, as well as declare and pay a special dividend of 50 cents/share on May 16, 2024, to shareholders of record on May 9, 2024. This special cash dividend is designated as an eligible dividend for Canadian income tax purposes.
• The company reduced net debt by approximately $85.0-million during Q1 2024.

Production update

• First quarter 2024 average production was 592,077 boepd, a 13-per-cent increase over first quarter 2023 average production of 525,916 boepd and within the 590,000 to 595,000 boepd first quarter 2024 range announced on March 6, 2024.
• First quarter 2024 average liquids production (oil, condensate, NGLs (natural gas liquids)) was a record 145,016 bpd, up 27 per cent over first quarter 2023 average liquids production of 114,291 bpd.
• Full year 2024 average production guidance remains at 580,000 to 590,000 boepd with the capital budget reduction announced on March 6, 2024. Second quarter 2024 average production of 560,000 to 570,000 boepd is currently anticipated, including the impacts of planned plant maintenance and approximately 7,000 boepd of planned natural gas injections to take advantage of the large difference between current and winter pricing for natural gas.

Financial results

• First quarter 2024 CF was $871.1-million ($2.45 per diluted share) on total capital expenditures of $556.2-million (EP spending of $548.7-million in Q1 2024), generating FCF of $309.8-million for the quarter (87 cents per diluted share).
• Tourmaline realized Q1 2024 net earnings of $244.9-million (69 cents per diluted share), underscoring the profitability of the business even in an extremely weak natural gas pricing environment.
• In 2024, using strip pricing on April 15, 2024, the company expects to generate CF of $3.52-billion ($9.92 per diluted share) and FCF of $1.40-billion ($3.93 per diluted share) on EP spending of $2.0-billion.
• Exit Q1 2024 net debt was $1.69-billion. As previously announced, the company remains committed to a long-term net debt target of $1.2-billion to $1.4-billion and intends to progress toward that target throughout 2024. The company reduced net debt by approximately $85.0-million during Q1 2024. In addition, Tourmaline's 45.1 million shares of Topaz Energy Corp. had a market value of approximately $1.0-billion as at March 31, 2024.
• As a result of improved strip pricing, Tourmaline's cash flow forecasts, compared with the five-year EP plan released on March 6, 2024, have improved by $200-million to $500-million in every year of the company's updated five-year EP plan. Over the next five years, Tourmaline forecasts that it will generate approximately $8.6-billion in free cash flow (37 per cent of current market cap) while growing average production approximately 22 per cent.

Marketing update

• Tourmaline's average realized natural gas price in Q1 2024 was $3.77/mcf (thousand cubic feet), significantly higher than the AECO 5A index price of $2.55/mcf over the period, as the company benefited from its multiyear diversification portfolio.
• Tourmaline expects to exit 2024 with a total of 1.22 bcfpd of natural gas going to export markets.
• For 2024, Tourmaline has an average of 737 mmcfpd (million cubic feet per day) hedged at a weighted average fixed price of $5.43/mcf, including an average of 135 mmcfpd in premium markets at a fixed price of $9.47 (U.S.)/mcf. Tourmaline also has an average of 196 mmcfpd hedged at a basis to NYMEX of negative 33 U.S. cents/mcf and an average of 980 mmcfpd of unhedged volumes exposed to export markets in 2024. Of this 980 mmcfpd, 59 per cent is exposed to premium markets such as the United States Gulf Coast, JKM (Japan Korea Marker), Dutch TTF, Malin, PGE and Sumas.
• As of March 31, 2024, Tourmaline's realized value above AECO (including financial hedges and less associated deductions) on its first liquified natural gas (LNG) deal with Cheniere Energy was $648.4-million since Jan. 1, 2023. Tourmaline has 37 mmcfpd hedged at a weighted average fixed JKM price of $20.34 (U.S.)/mcf in 2024 and 22 mmcfpd hedged at a weighted average fixed JKM price of $17.53 (U.S.)/mcf in 2025.
• In Q1 2024, Tourmaline completed its second LNG agreement, increasing its exposure to JKM, by entering into a netback agreement with Trafigura Pte. Ltd. based on 62,500 mmbtu/d (million British thermal units per day) for a seven-year term starting January, 2027, with the potential for extension to December, 2039. The agreement is not dependent upon incremental FERC approvals.
• In March, 2024, Tourmaline commenced its third LNG agreement, delivering 50,000 mmbtu/d indexed to Dutch TTF (less associated deductions).
• The company has now entered into four natural gas-to-power agreements providing exposure to the AESO power market. In 2023, the first agreement realized a natural gas equivalent price of $7.57/mcf, which represents a $4.89/mcf premium to the AECO index for the year, generating $16.7-million in realized revenue above the AECO 5A index.

EP update

• Tourmaline operated, on average, between 13 and 15 drilling rigs during Q1 2024. The company is currently operating five rigs.
• Tourmaline drilled a total of 59.3 net wells during Q1 2024, completed 71.6 net wells in the quarter and has an inventory of 27 DUCs (net) entering Q2 2024.
• Strong well performance on the Glauconite trend continues in the southern Deep Basin with all the recent down-dip wells significantly outperforming historical trends.
• Tourmaline continues to systematically grow the Deep Basin complex through small acquisitions and Crown land sales. During the first four months of 2024, the company has added 35.6 net sections of land through 17 separate transactions or land sales. This has added an estimated 49.1 Tier 1 drilling locations (net) and 600 boepd of average production associated with one of the transactions, for total cash expenditures of $18.9-million.
• The company has completed the sale of the Duvernay assets in the Westerose area, which were acquired pursuant to the acquisition of Bonavista Energy Corp. completed by the company in November, 2023, for $53.1-million. Current average production from the assets is ranging between 1,600 to 1,800 boepd. Proceeds from the sale will be used to reduce bank debt.
• Improving EP execution continues in the B.C. North Montney sub complex. The company drilled the eight-well C-54-H North Montney/Laprise pad in 44.5 days, 12 days ahead of schedule. The eight wells, with average horizontal length of 1,930 m, were drilled for a total pad cost of $13.4-million, 19 per cent under the anticipated total pad budget.

Dividend

• In addition to the announced special dividend of 50 cents/share payable on May 16, 2024, to shareholders of record at the close of business on May 9, 2024, the company's board of directors has approved an increase to the quarterly base dividend effective Q2 2024 to 32 cents/share ($1.28/share on an annualized basis), representing an increase of 7 per cent over the previous quarterly base dividend. The increased base dividend reflects the ongoing financial strength and profitability of the company. The quarterly dividend is expected to be declared in early June and payable on June 28, 2024, to shareholders of record at the close of business on June 14, 2024. The special dividend is, and the quarterly base dividend will be, designated as an eligible dividend for Canadian income tax purposes.

Conference call tomorrow at 11 a.m. MT (1 p.m. ET)

Tourmaline will host a conference call tomorrow, May 2, 2024, starting at 11 a.m. MT (1 p.m. ET).

To participate without operator assistance, you may register and enter your phone number on-line to receive an instant automated call back.

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. The company 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, the company 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.