CALGARY, AB–(Marketwired – February 02, 2016) – Tourmaline Oil Corp. (TSX: TOU) (“Tourmaline” or the “Company”) is pleased to announce that it has acquired assets for approximately $183 million CDN in the Minehead-Edson-Ansell area of the Alberta Deep Basin, immediately adjacent to one of the Company’s largest-producing complexes. The acquired assets are within one of the large Cretaceous Wilrich ‘sweet spots’ that the Company has identified through the 2014/15 drilling programs in the Deep Basin; the assets also have multiple additional development opportunities in the Notikewin and Falher C formations.
Current production from the assets is ranging between 4,500 and 5,000 boepd. Tourmaline plans to grow this production to the 7,500 boepd level in the second half of 2016 with significant further anticipated growth in 2017. The Company estimates it will add approximately 48 mmboe in new 2P reserves in 2016 through this acquisition with the currently-planned 2016 development program. Fully developed, the acquired assets are anticipated to add an estimated 66 mboe to the Company’s 2P reserves over the next two years. Tourmaline is delivering some of its best Deep Basin results from this area; the Company has identified 117 top tier or sweet spot locations on the new lands. A Notikewin horizontal on immediately-adjacent Tourmaline lands, completed in December 2015, flowed at an average of 48 mmcfpd at a casing pressure of 3,300 psi on the first 12 days of in-line testing. The Company has identified multiple, seismically-defined follow-up Notikewin locations on the acquisition lands.
The production from the assets currently flows to the Hinton-Robb processing plant. Tourmaline plans to redirect this gas to the Company’s three gas plants at Banshee-Edson-Ansell during the first half of 2016 through an existing gathering system associated with the assets. Redirecting the gas will reduce the operating costs of the new assets from approximately $6.25/boe to $3.25/boe.
To accommodate the acquisition, Tourmaline will reduce the current $1.1 billion 2016 EP Capital program by $175 million to $925 million. 2016 cash flow from the acquisition is estimated at between $30 and $35 million. The currently-planned 2016 Deep Basin drilling program will be modified to accommodate drilling of the highest potential subsurface targets on the acquired assets. The acquisition of the associated gathering system provides Tourmaline with additional infrastructure in the area saving a previously budgeted $12.0-15.0 million capital expenditure. Thus, in aggregate, the acquisition will not increase the overall 2016 capital program, exit debt levels, or the anticipated corporate debt to cash flow level. The acquisition provides upside to the current 2016 production forecast, particularly during the second half of the year. The Company will revisit the 2016 production and cash flow forecast during the second quarter and make appropriate adjustments at that time.