- Record average production of 143,725 boepd in the first quarter of 2015, up 40% over first quarter of 2014, and 10% over the prior quarter.
- Record average oil and condensate production of 10,805 bpd and 7,830 bpd of NGLs or 13% of total corporate production in Q1 2015. Liquids production exceeded 20,000 bpd in April 2015 (12,500 bpd oil and condensate, 7,800 bpd NGLs).
- Current production range of 152,000 – 157,000 boepd.
- Tourmaline remains on track to meet or exceed average production of 164,500 boepd in 2015, a 46% increase over 2014 average production.
- The Company produced first quarter after-tax earnings of $22.2 million on cash flow(1) of $207.7 million, underscoring the profitability of the Company’s assets, even in an extremely challenging commodity price environment.
- Total cash costs (operating costs, transportation, general and administrative and financing costs) for the first quarter of 2015 were $8.09/boe, amongst the lowest in the industry.
- The Company drilled 35.7 net wells and completed 57.0 net wells with record low capital costs.
- Highest 30-day IP NEBC Montney wells drilled by the Company to date at an average of 17.5 mmcfpd.
- Highest-deliverability gas wells at Columbia Harlech drilled by the Company to date in three separate Cretaceous formations setting up a very large future gas development and location inventory expansion.
Production averaged 143,725 boepd in the first quarter of 2015, a 40% increase over first quarter 2014 production and a 10% increase from the previous quarter. Current production is ranging between 152,000 and 157,000 boepd, and the Company remains on track to meet or exceed the average 2015 production target of 164,500 boepd. Unplanned production downtime related to restrictions on the TCPL, Spectra and Alliance systems averaged 4,500 boepd during the first quarter of 2015. Tourmaline currently has approximately 5,000 boepd shut-in due to these on-going transportation restrictions, and has an additional 12,500 boepd behind pipe awaiting tie-in or facility access.
(1) Cash flow is defined as cash provided by operations before changes in non-cash operating working capital. See “Non-GAAP Financial Measures” in the attached Management’s Discussion and Analysis.
- The Company is forecasting full-year 2015 cash flow of $1.06 billion and a preliminary 2016 cash flow of $1.36 billion.
- Forecast December 31, 2015 net debt of $1.21 billion results in debt to cash flow of 1.14 times.
- The Company’s credit facility of $1.60 billion along with the $250.0 million term debt facility results in unused credit capacity of approximately $640.0 million at December 31, 2015.
Tourmaline is currently operating one rig through break-up in NEBC. The Company has 15 additional rigs moved to their next locations throughout the three core areas and expects to resume EP operations in mid-June. Essentially all the drilling will focus on multi-well pads in identified high-deliverability ‘sweet spots’, which is expected to lead to very strong capital efficiencies.
ALBERTA DEEP BASIN
Tourmaline production in the Alberta Deep Basin reached the 100,000-boepd milestone in March. Strong drilling/completion results continued during the first quarter of 2015 with 30-day IP rates outperforming the base type curve by a factor of 2 (10 mmcfpd vs. 5 mmcfpd forecast). 2015 drilling will continue to focus on previously-identified high-deliverability Wilrich sweet spots at Kakwa, Smoky, Minehead and Edson. The Company drilled and completed 16 Wilrich horizontals during the winter season at Smoky-Horse with a combined 30-day average IP of 10.1 mmcfpd. This large new Wilrich sweet spot contains a drilling inventory of over 100 future Wilrich locations.
Tourmaline’s industry-leading well results are a combination of subsurface horizontal location identification and the application of continuously-improving completion technology. The Company acquired two additional 3D seismic programs in the first quarter to further high grade upcoming locations as well as expand the future drilling inventory through the identification of new prospective horizons. On the expansive Columbia-Harlech land block, the Company has drilled the highest deliverability Notikewin, Wilrich and Falher horizontals to date by industry, setting up an extensive 2016/17 development and associated drilling inventory expansion. The three horizontal wells tested at rates of 15 mmcfpd with associated condensate and NGL rates in excess of 30 bbls/mmcf. Follow-up locations to these wells are planned after break-up in advance of a new Tourmaline gas plant in 1H 2016 that will now be upsized.
The Company’s first Triassic Montney horizontal in the greater Smoky area had a 30-day IP of 8.4 mmcfpd; the gas is sweet with produced condensate rates of 12 – 15 bbls/mmcf. There are multiple follow-up locations on Tourmaline land.
These results, coupled with first quarter crown sale additions and the previously-announced Edson consolidation will lead to a significant increase of the existing Deep Basin future drilling inventory. Thus far in 2015, the Company has added 63.5 sections of new land in the Deep Basin, primarily in identified Wilrich and Notikewin high-deliverability sweet spots.
NEBC MONTNEY GAS CONDENSATE
Current production from the Company’s NEBC Montney complex has reached 44,000 boepd, and will remain at those levels through 2015 until facilities are further expanded in 2016. The Company plans to operate two drilling rigs in the complex through year-end. Tourmaline drilled its highest-deliverability Montney wells to date during the first quarter; 30-day IP’s from the Upper and Middle Montney wells on the most recent 2015 pads have averaged a record 17.5 mmcfpd. Tourmaline continued to systematically reduce EP capital well costs; drill, complete and stimulate costs have been reduced to $3.8 million for Sunrise-Dawson Montney horizontals, a 20% reduction over average 2014 costs.
The Company will continue to operate three drilling rigs in the Peace River High complex after break-up for the balance of 2015. The ongoing construction of the 24,000 bpd Mulligan battery is expected to be completed early in the third quarter of 2015, which will significantly reduce overall complex operating costs (estimated to be $10.00 – $11.00/boe, amongst the lowest costs for North American oil plays). Horizontal well costs have also been significantly reduced over the past six months; horizontal drill, complete and stimulate costs have been reduced by approximately 25% to $3.5 million. During the first quarter of 2015, Tourmaline acquired an additional 132 sections on the regional Charlie Lake pool, adding approximately 220 locations to the existing development drilling inventory.
2015 CAPITAL PROGRAM
Q1 2015 capital expenditures were $497.4 million (including $277.3 million on drilling and completions, $184.6 million on pipelines and facilities, $25.1 million on land and seismic). Estimated Q2 2015 capital expenditures are $110.0 million ($75.0 million on drilling and completions, $35.0 million on pipelines and facilities) and significantly less than anticipated Q2 2015 cash flow. The Company remains on track to execute a $1.2 billion EP capital program in 2015. The impact of reduced EP service costs in 2015 has not been factored into the current 2015 budget estimate. The Company continues to maintain a very strong balance sheet; the current debt to 2015 forecast cash flow ratio is 1.3 times and an exit 2015 debt to cash flow ratio of 1.1 times is anticipated.
CORPORATE SUMMARY – FIRST QUARTER 2015
|Three Months Ended March 31,|
|Natural gas (mcf/d)||750,542||525,999||43||%|
|Crude oil and NGL (bbl/d)||18,635||14,897||25||%|
|Oil equivalent (boe/d)||143,725||102,563||40||%|
|Natural gas ($/mcf)||$||3.69||$||5.38||31||%|
|Crude oil and NGL ($/bbl)||$||43.13||$||70.49||39||%|
|Operating expenses ($/boe)||$||4.69||$||4.93||(5||)%|
|Transportation costs ($/boe)||$||2.24||$||1.66||35||%|
|Cash general and administrative expenses ($/boe)(2)||$||0.48||$||0.58||(17||)%|
|FINANCIAL($000, except share and per share)|
|Cash flow per share (diluted)(3)||$||1.01||$||1.28||(21||)%|
|Net earnings per share (diluted)||$||0.11||$||0.45||(76||)%|
|Capital expenditures (net of dispositions)||497,382||466,396||7||%|
|Weighted average shares outstanding (diluted)||205,530,914||197,932,293||4||%|
(1) Product prices include realized gains and losses on financial instrument contracts.
(2) Excluding interest and financing charges.
(3) See “Non-GAAP Financial Measures” in the attached Management’s Discussion and Analysis.
Conference Call Tomorrow at 9:00 a.m. MT (11:00 a.m. ET)
Tourmaline will host a conference call tomorrow, April 30, 2015 starting at 9:00 a.m. MDT (11:00 a.m. EDT). To participate, please dial 1-800-355-4959 (toll-free in North America), or local dial-in 416-340-8527, a few minutes prior to the conference call.
The conference call ID number is 4215049.
All amounts in this news release are stated in Canadian dollars unless otherwise specified.
This press release contains forward-looking information within the meaning of applicable securities laws. The use of any of the words “forecast”, “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 plans and other aspects of its anticipated future operations, management focus, objectives, strategies, financial, operating and production results and business opportunities, including anticipated petroleum and natural gas production for various periods, cash flows, capital spending, projected operating and drilling costs, the timing for facility expansions and facility start-up dates, as well as Tourmaline’s future drilling prospects and plans, business strategy, future development and growth opportunities and prospects and asset base. 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; interest rates; future well production rates and reserve volumes; operating costs the timing of receipt of regulatory approvals; the performance of existing wells; the success obtained in drilling new wells; anticipated timing and results of capital expenditures; the sufficiency of budgeted capital expenditures in carrying out planned activities; the timing, location and extent of future drilling operations; the successful completion of acquisitions and dispositions; the availability and cost of labour and services; the state of the economy and the exploration and production business; the availability and cost of financing, labor and services; and ability to market oil and natural gas successfully.
Statements relating to “reserves” are also deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future.
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; interest rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to complete or realize the anticipated benefits of acquisitions or dispositions; 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. Readers are cautioned that the foregoing list of factors is not exhaustive.
Also included in this press release are estimates of Tourmaline’s 2015 annual cash flow, capital spending and year-end debt and debt to cash flow levels as well as, preliminary guidance on 2016 anticipated cash flows, which are based on the various assumptions as to production levels, including estimated average production of 164,500 boepd for 2015 and 205,000 boepd for 2016, capital expenditures, and other assumptions disclosed in this press release and including commodity price assumptions for natural gas (AECO – $3.50 /mcf for 2015 and $3.75/mcf for 2016), and crude oil (WTI (US) – $57.69/bbl for 2015 and $69.58/bbl for 2016) and an exchange rate assumption of (US/CAD) $0.83 for 2015 and $0.84 for 2016. To the extent any such estimate constitutes a financial outlook, it was approved by management and the Board of Directors of Tourmaline on April 29, 2015 and is included to provide readers with an understanding of Tourmaline’s anticipated cash flows based on the capital expenditure and other assumptions described herein and readers are cautioned that the information may not be appropriate for other purposes.
Additional information on these and other factors that could affect Tourmaline, or its operations or financial results, are included in the Company’s most recently filed Management’s Discussion and Analysis (See “Forward-Looking Statements” therein) , Annual Information Form (See “Risk Factors” and “Forward-Looking Statements” therein) and other reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or Tourmaline’s website (www.tourmalineoil.com).
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.
See also “Forward-Looking Statements” in the attached Management’s Discussion and Analysis.
Additional Reader Advisories
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. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a 6:1 conversion basis may be misleading as an indication of value.
Any references in this release to IP rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue to produce and decline thereafter and are not necessarily indicative of long-term performance or ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company. Such rates are based on field estimates and may be based on limited data available at this time.
NON-GAAP FINANCIAL MEASURES
This press release includes references to financial measures commonly used in the oil and gas industry, “cash flow”, “operating netback” and “net debt”, which do not have standardized meanings prescribed by International Financial Reporting Standards (“GAAP”). Accordingly, the Company’s use of these terms may not be comparable to similarly defined measures presented by other companies. Management uses the terms “cash flow”, “operating netback”, and “net debt”, for its own performance measures and to provide shareholders and potential investors with a measurement of the Company’s efficiency and its ability to generate the cash necessary to fund a portion of its future growth expenditures or to repay debt. Investors are cautioned that the non-GAAP measures should not be construed as an alternative to net income determined in accordance with GAAP as an indication of the Company’s performance. See “Non-GAAP Financial Measures” in the attached Management’s Discussion and Analysis for the definition and description of these terms.
ESTIMATED DRILLING INVENTORY
This press release includes a reference to estimated drilling inventory. These are locations specifically identified by management as an estimation of Tourmaline’s multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves data on contiguous acreage and geologic formations. The availability of local infrastructure, drilling support assets and other factors as management may deem relevant, such as spacing requirements, easement restrictions and regulations, are considered in determining such locations or inventory. The estimated drilling inventory and the locations on which the Company actually drills wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results and other factors.
|bcf||billion cubic feet|
|bpd or bbl/d||barrels per day|
|boe||barrel of oil equivalent|
|boepd or boe/d||barrel of oil equivalent per day|
|bopd or bbl/d||barrel of oil, condensate or liquids per day|
|gjs/d||gigajoules per day|
|mboe||thousand barrels of oil equivalent|
|mcf||thousand cubic feet|
|mcfpd or mcf/d||thousand cubic feet per day|
|mcfe||thousand cubic feet equivalent|
|mmboe||million barrels of oil equivalent|
|mmbtu||million British thermal units|
|mmbtu/d||million British thermal units per day|
|mmcf||million cubic feet|
|mmcfpd or mmcf/d||million cubic feet per day|
|mstboe||thousand stock tank barrels of oil equivalent|
|NGL||natural gas liquids|