Canada NewsWire
CALGARY, May 6, 2020
CALGARY, May 6, 2020 /CNW/ - Tourmaline Oil Corp. (TSX:TOU) ("Tourmaline" or the "Company") is pleased to release financial and operating results for the first quarter of 2020 and provide updates regarding 2020 budget and dividend.
HIGHLIGHTS
2020 EP CAPITAL PROGRAM AND GUIDANCE
PRODUCTION UPDATE AND OUTLOOK
Q1 2020 FINANCIAL RESULTS
ACQUISITION UPDATE
MARKETING UPDATE
EP UPDATE
OPERATING ENVIRONMENT AND THE COVID-19 PANDEMIC
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(1) | "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 in the Company's Q1 2020 Management's Discussion and Analysis. |
(2) | Based on oil and gas commodity strip pricing at April 23, 2020. |
(3) | "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 2020 Management's Discussion and Analysis. |
(4) | "Net debt" is defined as bank debt plus working capital (adjusted for the fair value of financial instruments and lease liabilities). See "Non-GAAP Financial Measures" in this news release and in the Company's Q1 2020 Management's Discussion and Analysis. |
CORPORATE SUMMARY – FIRST QUARTER 2020
Three Months Ended March 31, | |||||
2020 | 2019 | Change | |||
OPERATIONS | |||||
Production | |||||
Natural gas (mcf/d) | 1,474,681 | 1,439,212 | 2% | ||
Crude oil, condensate and NGL (bbl/d) | 62,569 | 53,565 | 17% | ||
Oil equivalent (boe/d) | 308,349 | 293,434 | 5% | ||
Product prices(1) | |||||
Natural gas ($/mcf) | $ | 2.45 | $ | 3.59 | (32)% |
Crude oil, condensate and NGL ($/bbl) | $ | 34.54 | $ | 41.43 | (17)% |
Operating expenses ($/boe) | $ | 2.97 | $ | 3.49 | (15)% |
Transportation costs ($/boe) | $ | 4.35 | $ | 3.81 | 14% |
Operating netback(3) ($/boe) | $ | 10.79 | $ | 16.65 | (35)% |
Cash general and | $ | 0.58 | $ | 0.46 | 26% |
FINANCIAL | |||||
Total revenue from commodity sales | 524,915 | 664,301 | (21)% | ||
Royalties | 16,929 | 31,623 | (46)% | ||
Cash flow(3) | 283,718 | 419,242 | (32)% | ||
Cash flow per share (diluted)(3) | $ | 1.05 | $ | 1.54 | (32)% |
Net earnings (loss) | (35,812) | 87,710 | (141)% | ||
Net earnings (loss) per share (diluted) | $ | (0.13) | $ | 0.32 | (141)% |
Capital expenditures (net of dispositions) | 317,614 | 384,384 | (17)% | ||
Weighted average shares outstanding (diluted) | 270,940,484 | 272,043,159 | -% | ||
Net debt(3) | (1,838,128) | (1,713,032) | 7% |
(1) | Product prices include realized gains and losses on risk management and financial instrument contracts. |
(2) | Excluding interest and financing charges. |
(3) | See "Non-GAAP Financial Measures" in this news release and in the Company's Q1 2020 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, May 7, 2020 starting at 9:00 a.m. MT (11:00 a.m. ET). To participate, please dial 1-888-231-8191 (toll-free in North America), or international dial-in 647-427-7450, a few minutes prior to the conference call.
Conference ID is 9696365.
Reader Advisories
CURRENCY
All amounts in this news release are stated in Canadian dollars unless otherwise specified.
FORWARD-LOOKING INFORMATION
This news release contains forward-looking information and statements (collectively, "forward-looking information") within the meaning of applicable securities laws. The use of any of the words "forecast", "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "on track", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information. More particularly and without limitation, this news 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 the following: anticipated petroleum and natural gas production and production for various periods including estimated production levels for 2020 and 2021 and 2020 exit production; capital expenditure budgets for various periods including 2020 and 2021; estimated cash flow for various periods including 2020 and 2021; estimated free cash flow for 2020 and 2021; estimated available liquidity and credit capacity at December 31, 2020; estimated 2020 exit net debt-to-cash flow; expectations for future natural gas price increases; expectations for a Topaz liquidity event and the timing and proceeds that could be realized therefrom; future capital efficiencies to be realized; the future declaration and payment of dividends and the timing and amount thereof including the aggregate amount of dividends to be paid in 2020 and the availability of free cash flow to fund such dividends; cost reduction initiatives; projected operating and drilling costs including anticipated reductions in operating costs; the timing for facility expansions and facility start-up dates; the benefits to be derived from the Chinook and Polar Star acquisitions and annual cash flow to be generated from such acquired assets; the benefits to be derived from high line power in drilling operations including reductions in CO2 , NOx and SO2 emissions and monthly per-pad cost savings; the Company's plan to reduce overall emissions intensity; as well as Tourmaline's future drilling prospects and plans, business strategy, future development and growth opportunities, prospects and asset base. The forward-looking information is based on certain key expectations and assumptions made by Tourmaline, including expectations and assumptions concerning the following: prevailing and future commodity prices and currency exchange rates including in the case of 2020 production estimates, commodity price assumptions for natural gas (NYMEX (US) - $2.15/mcf and $2.71/mcf for 2020 and 2021, respectively, AECO - $2.24/mcf and $2.62/mcf for 2020 and 2021, respectively), and crude oil (WTI (US) - $31.04/bbl and $32.29 for 2020 and 2021, respectively) and an exchange rate assumption of $0.72 and 0.71 (US/CAD) for 2020 and 2021, respectively; the degree to which Tourmaline's operations and production will be disrupted by circumstances attributable to the COVID-19 pandemic and the responses of governments and the public to the pandemic; 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 benefits to be derived from acquisitions; the state of the economy and the exploration and production business including the impacts of the COVID-19 pandemic and the responses of governments and the public to the pandemic thereon; the availability and cost of financing, labour and services; and ability to market crude oil, natural gas and NGL successfully. Without limitation of the foregoing, future dividend payments, if any, and the level thereof is uncertain, as the Company's dividend policy and the funds available for the payment of dividends from time to time is dependent upon, among other things, free cash flow, financial requirements for the Company's operations and the execution of its growth strategy, fluctuations in working capital and the timing and amount of capital expenditures, debt service requirements and other factors beyond the Company's control. Further, the ability of Tourmaline to pay dividends will be subject to applicable laws (including the satisfaction of the solvency test contained in applicable corporate legislation) and contractual restrictions contained in the instruments governing its indebtedness, including its credit facility.
Statements relating to "reserves" are also deemed to be forward looking information, 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 it 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 uncertain impacts of COVID-19 on Tourmaline's business, and the societal, economic and governmental response to COVID-19; the uncertainty of estimates and projections relating to reserves, production, revenues, 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; uncertainties associated with counterparty credit risk; 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.
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 news 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.
FINANCIAL OUTLOOK
Also included in this news release are estimates of Tourmaline's 2020 exit net debt-to-cash flow ratio as well as 2020 and 2021 free cash flow, which are based on, among other things, the various assumptions as to production levels, capital expenditures, annual cash flows and other assumptions disclosed in this news release and including Tourmaline's estimated average production of 305,000 – 310,000 boepd for 2020 and 320,000 for 2021. Commodity price assumptions for natural gas (NYMEX (US) - $2.15/mcf and $2.71/mcf for 2020 and 2021, respectively, AECO - $2.24/mcf and $2.62/mcf for 2020 and 2021, respectively), and crude oil (WTI (US) - $31.04/bbl and $32.29 for 2020 and 2021, respectively) and an exchange rate assumption of $0.72 and 0.71 (US/CAD) for 2020 and 2021, respectively. To the extent such estimates constitute financial outlooks, they were approved by management and the board of directors of Tourmaline on May 6, 2020 and are included to provide readers with an understanding of Tourmaline's anticipated 2020 exit net debt-to-cash flow ratio and cash flow and free cash flow based on the capital expenditure, production and other assumptions described herein and readers are cautioned that the information may not be appropriate for other purposes. In particular, readers are cautioned that estimates for 2021 are provided for illustration only as budgets and forecasts beyond 2020 have not been finalized and are subject to a variety of factors including prior year's results.
NON-GAAP FINANCIAL MEASURES
This news release includes references to "free cash flow", "cash flow", "net debt" and "net capital expenditures" which are financial measures commonly used in the oil and gas industry and do not have a standardized meaning prescribed by International Financial Reporting Standards ("GAAP"). Accordingly, the Company's use of these terms may not be comparable to similarly defined financial measures presented by other companies. Management uses the term "free cash flow", "cash flow", "net debt" and "net capital expenditures" 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, to pay dividends or to repay debt. Investors are cautioned that these non-GAAP financial measures should not be construed as an alternative to net income or cash from operating activities determined in accordance with GAAP as an indication of the Company's performance. Free cash flow is calculated as cash flow less total net capital expenditures and is prior to dividend payments. Cash flow is defined as cash provided by operations before changes in non-cash operating working capital. Net debt is defined as bank debt plus working capital (adjusted for the fair value of financial instruments and lease liabilities). Net capital expenditures is defined as the sum of E&P capital program and other corporate expenditures, net of non-core dispositions. See "Non-GAAP Financial Measures" in the most recently filed Management's Discussion and Analysis for additional information regarding these non-GAAP financial measures including reconciliations to the most directly comparable GAAP financial measures.
OIL AND GAS METRICS
This news release contains certain oil and gas metrics which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included in this document to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the Company's future performance and future performance may not compare to the Company's performance in previous periods and therefore such metrics should not be unduly relied upon.
SUPPLEMENTAL INFORMATION REGARDING PRODUCT TYPES
This news release includes references to Tourmaline's 2020 and 2021, 2020 exit rate, Q1, Q2 and Q4 2020 average daily production and average daily production from recently completed acquisitions. The following table is intended to provide supplemental information about the product type composition for each of the production figures that are provided in this news release:
Light and Medium | Conventional | Shale Natural Gas | Natural Gas | Oil Equivalent | |||||
Company Gross | Company Gross | Company Gross | Company Gross | Company Gross | |||||
2020 Average Production | 29,340 | 888,227 | 567,630 | 35,517 | 307,500 | ||||
Q1 2020 Average Daily | 27,870 | 934,363 | 540,318 | 34,699 | 308,349 | ||||
Q2 2020 Average Daily | 28,983 | 880,827 | 527,857 | 33,736 | 297,500 | ||||
Q4 2020 Average Daily | 29,793 | 860,009 | 612,297 | 37,323 | 312,500 | ||||
2020 Exit Rate | 30,270 | 873,769 | 622,094 | 37,920 | 317,500 | ||||
2021 Average Daily | 28,792 | 879,658 | 635,980 | 38,602 | 320,000 | ||||
Polar Star Production | 229 | - | 12,328 | 216 | 2,500 | ||||
Chinook Production | 218 | - | 17,973 | 287 | 3,500 |
(1) | For the purposes of this disclosure, condensate has been combined with Light and Medium Crude Oil as the associated revenues and certain costs of condensate are similar to Light and Medium Crude Oil. Accordingly, NGLs in this disclosure exclude condensate. |
RESERVES DATA
Reserves have been evaluated by independent reserve evaluators as at December 31, 2018 as follows: Polar Star 2P reserves of 80.7 mmboe by Sproule Associates Ltd. and Chinook 2P reserves of 35.6 mmboe by McDaniel & Associates Consultants Ltd. for a combined 2P reserves total of 116.3 mmboe. Reserves are working interest gross reserves before deduction of royalties payable to others and without including any royalty interests.
There are numerous uncertainties inherent in estimating quantities of crude oil, natural gas and NGL reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth above are estimates only. In general, estimates of economically recoverable crude oil, natural gas and NGL reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and natural gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially. For those reasons, estimates of the economically recoverable crude oil, NGL and natural gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues associated with reserves prepared by different engineers, or by the same engineers at different times, may vary. The Company's actual production, revenues, taxes and development and operating expenditures with respect to its reserves will vary from estimates thereof and such variations could be material.
The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to effects of aggregations. The estimated values of future net revenue disclosed in this news release do not represent fair market value. There is no assurance that the forecast prices and cost assumptions used in the reserve evaluations will be attained and variances could be material.
BOE EQUIVALENCY
Per barrel of oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil equivalent (6:1). Barrel of oil equivalents (boe) 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. In addition, 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 conversion on a 6:1 basis may be misleading as an indication of value.
INITIAL PRODUCTION RATES
Any references in this news release to initial production rates are useful in confirming the presence of hydrocarbons; however, such rates are not determinative of the rates at which such wells will continue production 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.
GENERAL
See also "Forward-Looking Statements", and "Non-GAAP Financial Measures" in the most recently filed Management's Discussion and Analysis.
CERTAIN DEFINITIONS:
bbl | barrel |
bbls/day | barrels per day |
bbl/mmcf | barrels per million cubic feet |
bcf | billion cubic feet |
bcfe | billion cubic feet equivalent |
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 |
CO2 | carbon dioxide |
gj | gigajoule |
gjs/d | gigajoules per day |
mbbls | thousand barrels |
mmbbls | million barrels |
mboe | thousand barrels of oil equivalent |
mboepd | thousand barrels of oil equivalent per day |
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 |
MPa | megapascal |
mstb | thousand stock tank barrels |
NGL or NGLs | natural gas liquids |
NOx | nitrogen oxide |
SO2 | sulphur dioxide |
tcf | trillion cubic feet |
MANAGEMENT'S DISCUSSION AND ANALYSIS AND CONSOLIDATED FINANCIAL STATEMENTS
To view Tourmaline's Management's Discussion and Analysis and Interim Condensed Consolidated Financial Statements for the periods ended March 31, 2020 and 2019, please refer to SEDAR (www.sedar.com) or Tourmaline's website at www.tourmalineoil.com.
ABOUT TOURMALINE OIL CORP.
Tourmaline is a Canadian senior crude oil and natural gas exploration and production company focused on long-term growth through an aggressive exploration, development, production and acquisition program in the Western Canadian Sedimentary Basin.
SOURCE Tourmaline Oil Corp.
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