CALGARY, Jan. 10, 2018 /CNW/ – Tourmaline Oil Corp. (TSX:TOU) (“Tourmaline” or the “Company”) is pleased to provide a market update.
- Tourmaline achieved the 2017 exit target of 270,000-280,000 boepd, averaging approximately 274,000 boepd in December.
- The Company achieved year-over-year production growth of 30% in 2017, also on target. Q4 2017 average production was approximately 263,000 boepd.
- Total Q4 2017 liquids production (oil, condensate, NGLs) grew by approximately 60% over Q4 2016, and liquids production is anticipated to grow to 70,000-75,000 bpd by Q4 2019, ahead of the current 2019 forecast. Tourmaline expects to be a top ten Canadian liquids producer by 2019, as well as the second largest producer of Canadian natural gas.
- Current production is ranging between 270,000 and 275,000 boepd; current total liquids production is approximately 48,000 bpd. Production is expected to ramp up further during the first quarter via planned tie-ins in all three core areas. Full-year 2018 production growth of approximately 10% is currently forecast from a capital program that is expected to generate significant free cash flow(1).
- Although there is upside to both the 2018 and 2019 total production and liquids production estimates, the Company has elected to leave the five year plan guidance unchanged at this time.
“Free cash flow” is defined as cash flow less capital expenditures.
- Tourmaline is currently operating 14 drilling rigs and expects to drill approximately 67 new wells during the first quarter across all three core operated complexes. The Company continues to forecast an average 12 drilling rig fleet for the full year 2018 EP program.
- The Company will tie-in approximately 58 wells in the first quarter of 2018 including 18 new oil wells on the Peace River High.
- Tourmaline will have approximately 47 drilled uncompleted wells (DUCs) entering Q2 2018.
- The Company continues to drill the lowest cost-per-stage completed horizontals across all three complexes (Alberta Deep Basin, NEBC Montney and Peace River High Charlie Lake/Montney oil).
- Tourmaline entered 2018 with approximately 42,500 boepd of behind pipe production volumes awaiting facility access.
- The Lower Montney oil play on the Peace River High continues to outperform Company expectation. The most recent four wells have average IP 30 production rates of 1,450 boepd (662 bpd oil, 4.75 mmcfpd gas). Tourmaline is drilling and completing these horizontals for $3.1–$3.2 million on average, making this oil play one of the most profitable in North America. Tourmaline has the necessary infrastructure in place to accommodate growing Montney and Charlie Lake light oil volumes.
- The 1-30 Lambert Cardium horizontal Q4 2017 step-out to the 16-25 discovery well has a 30-day IP of 18.0 mmcfpd gas and 684 bpd condensate and liquids. Drill and complete costs are $3.5–$4.0 million per horizontal, making the Deep Basin Cardium gas/condensate play one of the most profitable liquid-rich gas plays in North America.
FINANCIAL AND MARKETING UPDATE
- The Company’s long term gas marketing and transportation strategy allowed Tourmaline to realize strong regional gas pricing at multiple hubs in late December and January (Dawn, Chicago, Ventura, San Francisco). For 2018, Tourmaline currently has 790 mmcfpd of daily gas production that is transported to NYMEX-based hubs or priced away from AECO and Station 2 day prices.
- The Company has also increased its oil hedges for 2018 to 8,663 bpd at an average fixed price of $53.87 US/bbl.
- Tourmaline has outperformed the annual AECO price every year for the last seven years. In Q3 2017, the average AECO index price was $1.45/mcf. Tourmaline’s overall realized gas price for the quarter was $2.52/mcf, a result of the overall marketing and transportation strategy implemented during the past five years.
- Approximately 34% of 2018 budgeted corporate revenue is generated by the Company’s rapidly-growing liquids portfolio.
- The Company expects to achieve top-tier growth and generate free cash flow in 2018. Over the next five years, Tourmaline expects to generate approximately $1.6 billion in free cash flow based on the current five-year plan.
- Net debt(2) is expected to drop from Q3 2017 levels sequentially both at year end 2017 and in Q1 2018. Exit 2018 debt-to-cash flow of 1.1 times is anticipated.
See “Non-GAAP Financial Measures” in the Company’s most recently filed Management’s Discussion and Analysis.