Le Lézard
Classified in: Oil industry, Business
Subjects: ERN, DIV

Tourmaline Delivers Strong Q2 Free Cash Flow, Increases 2018 Exit Production Estimate and Increases Quarterly Dividend


Tourmaline Oil Corp. (CNW Group/Tourmaline Oil Corp.)

CALGARY, Aug. 1, 2018 /CNW/ - Tourmaline Oil Corp. (TSX:TOU) ("Tourmaline" or the "Company") is pleased to release financial and operating results for the second quarter of 2018.

HIGHLIGHTS

FINANCIAL RESULTS

PRODUCTION UPDATE


EP UPDATE

2H 2018 Drilling Program

Q4 Liquid-Focused Facility Projects

Deep Basin Cardium Gas Condensate Play

Gundy Creek BC Montney Development

_________________

(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
Company's Q2 2018 Management's Discussion and Analysis.

(2)

"Net debt" is defined as bank debt plus working capital (adjusted for the fair value of financial instruments).  See "Non-GAAP Financial Measures" in the Company's Q2 2018 Management's Discussion and Analysis.

(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".

 

CORPORATE SUMMARY ? SECOND QUARTER 2018


Three Months Ended June 30,


Six Months Ended June 30,


2018

2017

Change


2018

2017

Change

OPERATIONS

Production









Natural gas (mcf/d)

1,290,436

1,196,477

8%


1,309,478

1,195,435

10%


Crude oil and NGL (bbl/d)

45,857

36,127

27%


46,461

35,176

32%


Oil equivalent (boe/d)

260,930

235,540

11%


264,707

234,415

13%

Product prices(1)


Natural gas ($/mcf)

$

2.25

$

3.19

(29)%


$

2.61

$

3.17

(18)%


Crude oil and NGL ($/bbl)

$

47.93

$

40.01

20%


$

47.00

$

40.85

15%

Operating expenses ($/boe)

$

3.18

$

3.22

(1)%


$

3.27

$

3.36

(3)%

Transportation costs ($/boe)

$

3.41

$

2.88

18%


$

3.37

$

2.85

18%

Operating netback(3) ($/boe)

$

12.10

$

15.36

(21)%


$

13.68

$

14.98

(9)%

Cash general and
administrative expenses ($/boe)(2)

$

0.52

$

0.46

13%


$

0.50

$

0.47

6%


FINANCIAL
($000, except share and per share)


Revenue

463,845

479,269

(3)%


1,014,011

945,914

7%

Royalties

19,990

19,409

3%


40,109

47,260

(15)%

Cash flow(3)

272,261

313,271

(13)%


624,509

606,204

3%

Cash flow per share (diluted)(3)

$

1.00

$

1.16

(14)%


$

2.30

$

2.25

2%

Net earnings

25,639

108,580

(76)%


155,227

208,114

(25)%

Net earnings per share (diluted)

$

0.09

$

0.40

(78)%


$

0.57

$

0.77

(26)%

Capital expenditures (net of
dispositions)

191,773

189,532

1%


409,324

588,917

(30)%

Weighted average shares outstanding
(diluted)





271,343,615

269,302,667

1%

Net debt(3)





(1,538,658)

(1,558,203)

(1)%


(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 Company's Q2 2018 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, August 2, 2018 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 7937686.

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 growth for various periods; the future declaration and payment of dividends and the timing and amount thereof; drilling inventory or locations; cash flow; cash flow per share; free cash flow; net debt-to-cash flow levels; production levels supported by certain of the Company's reserves and drilling inventory; capital spending; cost reduction initiatives; projected operating and drilling costs; the timing for facility expansions and facility start-up dates; EUR levels: 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; 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 state of the economy and the exploration and production business; 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 will be 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 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 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 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; 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.

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 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 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. 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 the definition and description of "cash flow" and "net debt".

FINANCIAL OUTLOOK

Also included in this news release are estimates of Tourmaline's 2018 cash flow as well as 2018 and 2019 production levels, 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 267,500-275,000 boepd for 2018 and 291,000 boepd for 2019 and commodity price assumptions for natural gas (NYMEX (US) - $3.00/mcf for 2018 and $3.10/mcf for 2019; AECO - $1.85/mcf for 2018 and $2.25/mcf for 2019), and crude oil (WTI (US) - $65.00/bbl for 2018 and $60.00/bbl for 2019) and an exchange rate assumption of $0.79 (US/CAD) for 2018 and $0.80 for 2019. To the extent such estimates constitute a financial outlook, they were approved by management and the Board of Directors of Tourmaline on August 1, 2018 and are included to provide readers with an understanding of Tourmaline's anticipated 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.

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.

ESTIMATED ULTIMATE RECOVERY (EUR)

This news release contains a metric commonly used in the oil and natural gas industry, "estimated ultimate recovery" (EUR).  The term EUR is the estimated quantity petroleum that is potentially recoverable or has already been recovered from a well.  EUR does not have a standardized meaning and may not be comparable to similar measures presented by other companies.  As such, it should not be used to make comparisons.  Management uses EUR for its own performance measurements and to provide shareholders with measures to compare the Company's performance over time; however, such measure is not a reliable indicator of the Company's future performance and future performance may not compare to the performance in previous periods and therefore should not be unduly relied upon.  EUR was determined internally by the Company by a non-independent qualified reserves evaluator incorporating current well results and historical well performance from the Company's analogous pools in the nearby area.

GENERAL

See also "Forward-Looking Statements", "Boe Conversions" 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

EP

exploration and production

gj

gigajoule

gjs/d

gigajoules per day

mbbls

thousand barrels

mmbbls

million barrels

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

NGL or NGLs

natural gas liquids

 

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 June 30, 2018 and 2017, please refer to SEDAR (www.sedar.com) as well as 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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