CALGARY, May 29, 2019 /CNW/ – Tourmaline Oil Corp. (TSX:TOU) (“Tourmaline” or the “Company”) is pleased to provide details of an enhanced five-year development plan.
FREE CASH FLOW ACCELERATION PLAN: SUMMARY OF PLAN CHANGES
- Aggregate free cash flow increases by approximately $840 million to a total of approximately $3.05 billion over the five years. Annual production and cash flow(2) are essentially unchanged from the previous plan.
- Growth capital directed primarily to Gundy BC Montney development. Tourmaline will proceed with the Gundy Phase 2 deep cut expansion to 400 mmcfpd with a Q4 2021 projected completion. The incremental gas volumes will be delivered into what the Company believes will be a period of improved natural gas prices.
- Alberta Deep Basin and Peace River High complexes will progress to maintenance capital mode with no incremental facility investments in the plan.
- Capital efficiencies improve overall given reduced facility expenditures; improved operating netbacks(3) and annual production decline is reduced in the new plan.
- The Gundy Phase 2 deep cut expansion is expected to increase Tourmaline’s total liquid volumes to approximately 85,000 bpd by Q4 2021 (oil, condensate, NGLs).
- An aggregate $430.0 million of future facility expenditures have been removed from the previous five-year plan.
GUNDY PHASE 2 EXPANSION
- The combination of high-deliverability liquids-rich natural gas (50-100 bbls/mmcf of condensate and NGLs), the continually-reduced drill/complete capital costs, and the very low operating costs related to the sweet natural gas composition (<$3.00/boe) render Gundy to be one of the most profitable Montney sub-plays in the entire Basin.
- The $150 million Phase 2 deep cut facility expansion will be spread over 2020/21, with approximately $40 million to be expended in 2020.
- Tourmaline has sufficient future gas and liquid egress to transport the incremental volumes associated with the facility expansion.
ALBERTA DEEP BASIN COMPLEX
- The contiguous Tourmaline interconnected Alberta Deep Basin Cretaceous gas complex is effectively the largest current gas field in Alberta.
- The Tourmaline Alberta Deep Basin asset achieved a production record of 205,000 boepd in March of 2019. The Company plans to manage complex production in the 180,000-185,000 boepd range in 2H 2019/2020.
- The Company believes it is prudent to defer significant gas volume growth from the Deep Basin until there is a sustained improvement in prevailing natural gas prices.
- Tourmaline will maintain a 15-20 well DUC inventory in the Alberta Deep Basin to allow for rapid response to shorter cycle natural gas price improvements.
PEACE RIVER HIGH
- The Peace River High Alberta Triassic complex will be maintained in the 20,000-25,000 boepd (gross) production range, essentially keeping the existing infrastructure at capacity.
- The complex can generate significant annual free cash flow on estimated annual maintenance capital of approximately $75 million.
- The Peace River High is currently at maximum facility capacity. The Company has no current plans to fund a large incremental infrastructure build-out at this time.
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(1) |
“Free cash flow” is defined as cash flow less total net capital expenditures. Total net capital expenditures is defined as total capital spending before acquisitions and non-core dispositions. Free cash flow is prior to dividend payments. See “Non-GAAP Financial Measures” in this news release and the Company’s Q1 2019 Management’s Discussion and Analysis. |
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(2) |
“Cash flow” is defined as cash provided by operations before changes in non-cash operating working capital. See “Non-GAAP Financial Measures” in this news release and the Company’s Q1 2019 Management’s Discussion and Analysis. |
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(3) |
“See “Non-GAAP Financial Measures” in this news release and the Company’s Q1 2019 Management’s Discussion and Analysis. |