Tourmaline Oil Corp. · TSX:TOU
Tourmaline Oil — Q1 2024 Earnings Presentation
53 slides from Tourmaline Oil's earnings presentation, May 2, 2024
Slide 1: Corporate Presentation May 2024
Corporate Presentation May 2024
Slide 2: Tourmaline Overview
Tourmaline Overview 2 The Scale, Resource, and Infrastructure Required to Profitably Grow in the WCSB and Provide Returns to Shareholders May 2024 Tourmaline Overview Conroy 4.8 MM Net Acres, 5.0 Billion Boe 2P Reserves(1) • Largest natural gas producer in Canada Birley Aitken Drilled to Date • 4 la
Slide 3: Largest North American Natural Gas Producers
3 Largest North American Natural Gas Producers May 2024 Tourmaline is the largest natural gas producer in Canada, and the fifth largest gas focused producer in North America MMcf/d 2024E Natural Gas Production – Canada & US 8,000 7,000 Scale is a key component in driving down 6,000 costs, leveraging
Slide 4: Tourmaline: A Significant Canadian Liquids Producer
4 Tourmaline: A Significant Canadian Liquids Producer Mar 2024 Tourmaline is a significant liquids producer in Canada, with continued peer leading growth • Incorporating recent acquisitions, Tourmaline is the 3rd largest producer of conventional liquids, the largest producer of NGLs, and the second
Slide 5: EP Growth Plan
5 EP Growth Plan(1) May 2024 800,000 700,000 600,000 500,000 Spirit River Boe/d 400,000 NEBC 300,000 Deep Basin 200,000 100,000 - 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Tourmaline Tourmaline Ending After-tax After-tax E&P Capital Free Cash Base Declared Special Surplus Prod
Slide 6: Free Cash Flow Allocation & Dividend Growth Track Record
Tourmaline Free Cash Flow Allocation & 6 Dividend Growth Track Record May 2024 The majority of Tourmaline’s free cash flow will be returned to shareholders; special dividends will be the preferred method of shareholder returns during periods of high commodity prices • Base dividend will continue to
Slide 7: Alberta Deep Basin
7 Alberta Deep Basin Mar 2024 The contiguous Tourmaline interconnected Deep Basin TCPL Cretaceous gas asset is effectively Alberta’s Largest Gas Field Musreau /Kakwa • Current Production 300,000 - 315,000 boepd Netook • Current Reserves 1,982 mmboe (as at Dec 31, 2023) • Tourmaline Land Base >3 mill
Slide 8: Glauconite Play Performance Improvement
8 Tourmaline Glauconite Play Performance Improvement May 2024 Since taking operatorship, production performance in the down-dip Glauconite trend has more than doubled and Monobore drilling has been successfully implemented resulting in over $0.5mm savings per well Glauconite Cumulative Natural Gas (
Slide 9: NEBC Montney Gas/Condensate Complex
9 NEBC Montney Gas/Condensate Complex Mar 2024 D-48-C Sour Current Prod. 250,000 – 260,000 boepd Gas Plant. 30 MMcfpd b-24-H Comp/Dehy Current Reserves 2,741 mmboe (Dec 31, 2023) 140 MMcfpd. Montney Drilling In excess of 6,549 horizontal Northriver D-72-F Comp Sta. Inventory locations. North Jedney
Slide 10: NEBC Gas & Liquids Production by Vintage Year
10 Tourmaline NEBC Gas & Liquids Production by Vintage Year Mar 2024 NEBC Productivity hits new highs in 2023 with year over year improvement of 6% on natural gas and 24% on liquids after 90 days of production NEBC Cumulative Natural Gas (Bcf) NEBC Cumulative Oil + Condensate (Mbbl) 0.50 18 0.45 16
Slide 11: Peace River High Complex Triassic Oil
11 Peace River High Complex Triassic Oil Charlie Lake, Montney and Wapiti Cardium Plays Mar 2024 R. 11 R. 9 R. 7 R. 5 Peace River High • 2,649 Horizontal Locations* along Regional Play Legend Fairways L. Tourmaline Lands C U.C • Current Reserves of 286 mmboe (Dec 31, 2023) ha T. 83 Tourmaline HZ Wel
Slide 12: Tourmaline Mid Stream Assets
12 Tourmaline Mid Stream Assets Mar 2024 The infrastructure skeleton in all three core operated complexes is now complete. Conroy This infrastructure is essentially all new and in the ‘growth’ areas of the WCSB. British Columbia • 31 Working interest gas plants, 18 of which are 100% owned Alberta Bi
Slide 13: North American Natural Gas Reserves
13 North American Natural Gas Reserves Mar 2024 Companies that own the largest, lowest development cost, transport-integrated natural gas reserves, will increasingly dominate the Energy space in the next 20 – 30 years Rockies LNG 24 23 St. 2 2P Reserves (Tcf) Montney LNG Canada 8 Deep 7 Sumas Basin
Slide 14: Multiple Decades of Economic Inventory
14 Multiple Decades of Economic Inventory May 2024 Tourmaline’s deep inventory ownership provides multiple decades of very profitable development, plus no need to pursue expensive resource additions in A&D market Drilled to Date 75 yrs of 2024 Drilling $3.50 Drilling Inventory(1) Booked Locations A.
Slide 15: A Unique, Expanding Exploration Program
15 A Unique, Expanding Exploration Program Multiple New Zone/New Pool Successes Over the Last 3 Years Mar 2024 Exploration program success has created significant incremental value in existing core NEBC (North) New Pool Oil/Gas Conroy complexes, the majority of the discoveries can • 2 separate succe
Slide 16: Continuous D&C Performance / Cost Improvements
16 Continuous D&C Performance / Cost Improvements Mar 2024 Wells Placed on Production Feet Average Lateral Feet per Well by Area 180 A NEBC and Deep Basin dominated 9,000 development program 159 48% increase in corporate 160 8,500 lateral length since 2018 137 140 140 8,000 124 120 108 7,500 107 106
Slide 17: Continuous Capital Efficiency Improvements
17 Continuous Capital Efficiency Improvements Mar 2024 $22,500 Tourmaline maintains best in class capital efficiencies, even $20,900 after accounting for inflationary headwinds $20,000 $17,500 $15,500 $15,000 $12,500 $/boepd $11,200 $10,700 $10,000 $10,000 $9,500 $9,500 $8,650 $8,900 $8,000 $7,300 $
Slide 18: 2024 Natural Gas Transportation and Marketing Overview
18 2024 Natural Gas Transportation and Marketing Overview Apr 2024 Natural Gas Price Exposure 2% 2% 4% 3% 3% 3% 2% 2% 18% 30% 6% 44% 51% 55% 14% 2% 15% 10% 2% Station 2 10% 2% 12% 16% 2% 16% 6% 11% 9% 16% 10% 6% 7% 12% 3% 28% 12% 11% 21% 7% 6% 7% 6% 2% 2024 2025 2026 2027 2028 AECO Hedged JKM & TTF
Slide 19: Tourmaline LNG Overview
19 Tourmaline LNG Overview Jan 2024 Tourmaline continues to grow its international pricing exposure Rockies LNG - Partner • A partnership of Western Canadian natural gas producers working together to develop LNG export opportunities for Canadian Natural Gas Rockies • Ksi Lisims site secured through
Slide 20: The Growing Tourmaline Liquids Business
20 The Growing Tourmaline Liquids Business Mar 2024 Tourmaline’s diverse and profitable liquids marketing business • Liquids receive diversified pricing: WTI, FSPL, Namao/Peace, CRW, Mt. Belvieu, Conway, Far East Index, and Polypropylene netbacks • NGL volumes are meaningfully exposed to all Canadia
Slide 21: Guidance
21 Guidance May 2024 2024(1) Production – Boe/d 585,000 Cash Flow(i) - $MM $3,520 CFPS - Diluted(i) $9.92 E&P Capital Program(ii) - $MM $2,000 Capital Expenditures(i) $2,125 (excluding acquisitions and dispositions) - $MM Free Cash Flow(iii) - $MM $1,395 Exit Net Debt(i) - $MM $1,120 Debt to CF 0.3x
Slide 22: Environmental Performance Investment & Returns
22 Environmental Performance Investment & Returns Mar 2024 Focusing on investment opportunities that maximize cost savings & environmental impact • Water: recycling, & pipeline infrastructure; ~100% recycling in NEBC, advancing AB towards 100% • Air: diesel displacement, pneumatic / venting reductio
Slide 23: 2024 After Tax Cash Flow Sensitivity & Allocation
23 Tourmaline 2024 After Tax Cash Flow Sensitivity & Allocation May 2024 Tourmaline’s low cost structure drives sustainable return on, and of, capital opportunities • TOU’s maintenance budget, and dividend fully funded at US$1.50/mcf • Current strip provides meaningful free cash flow, over $1.4 bn p
Slide 24: North America's Most Attractive Natural Gas Investment
24 Tourmaline is North America’s Most Attractive Natural Gas Investment Mar 2024 TOU offers the most compelling investment proposition amongst large cap North American peers • Superior Margin: Stronger sales hub pricing and transport at ~50% the cost of US Appalachia peers • Resilient FCF Offering:
Slide 25: Market Leading Return on and of Capital
25 Market Leading Return on and of Capital May 2024 Tourmaline’s return on capital employed (“ROCE”) is anticipated to remain >10% with base and special dividends offering a future income yield in the mid to high single digits with upside in stronger commodity price environments The ‘Magnificent 7’
Slide 26: Appendix
APPENDIX
Slide 27: Historical EP Performance
27 Historical EP Performance Mar 2024 Production Per Share* Reserves Per Share* 600 14 500 12 Boe / 000 Shares 10 Boe / Share 400 8 300 6 200 4 100 2 0 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Operating Costs / BOE Cash Flow Per
Slide 28: Independently Recognized Canadian 2P Reserves
28 Independently Recognized Canadian 2P Reserves(1) Mar 2024 Tcf Natural Gas 2P Reserves MMbbl Conventional Liquid 2P Reserves 30 1,800 1,600 25 23 1,400 1,222 20 1,200 1,000 15 800 10 600 400 5 200 0 0 Peer TOU Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer TOU Peer Peer Peer Peer
Slide 29: Resource Ownership
29 Resource Ownership The next differentiator in North American E&P Aug 2023 Enverus has assessed that Tourmaline holds the largest Tier 1 inventory in North America • >80% of <US$2.00 breakeven gas resource held by gas operators resides in Canada • >1/2 of North American gas producers have nearly f
Slide 30: NEBC North Montney Delineation and Development
30 NEBC NORTH Montney Delineation and Development Aug 2023 NEBC North Montney Development Summary • 18 pads drilled and completed since 2021 • Delineation and development pads progress regional play understanding and reinforce underlying profitability of the assets • Continuing to refine landing zon
Slide 31: Significant Montney Growth Potential
31 Significant Montney Growth Potential May 2024 Tourmaline has access to significant potential Montney growth through fully delineated assets that are economic on current strip. Mboe/d Tourmaline Montney BC and Alberta Montney Peers 500 450 >400 Sundown Full Development • 390 400 Conroy Ph2 • South
Slide 32: Gas Development Location Inventory and Economics
32 Gas Development Location Inventory and Economics(1) Mar 2024 AB Deep Basin AB Deep Basin NEBC Gundy NEBC North NEBC South PRH PRH North & West South MNTN MNTN MNTN Charlie Lake Montney Horizontal Horizontal Horizontal Horizontal Horizontal Horizontal Horizontal Total Well Costs (Drill, Case, Comp
Slide 33: Historical Reserves Summary
33 Historical Reserves Summary May 2024 Reserves (GLJ) Reserves 2019 2020 2021 2022 2023 2016 2017 2018 2019 2020 2021 2022 2023 6,000 (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) 5,000 PDP 352.1 436.5 473.5 527.4 736.4 947.3 1,001 1,205 TP 859.2 1,056 1,207 1,294 1,691 2,188 2,32
Slide 34: Continuous Cost Reduction Strategy
34 Continuous Cost Reduction Strategy Mar 2024 Operating Costs General and Administrative Costs ($/boe) ($/boe) $6.00 $1.00 $4.87 $5.00 $4.51 $4.37 $4.30 $0.68 $4.00 $3.77 $3.31 $3.19 $3.33 $3.28 $0.60 $0.56 $0.54 $0.57 $3.14 $0.49 $0.49 $3.00 $0.50 $0.45 $0.44 $0.46 $2.00 $1.00 $0.00 $0.00 2014 201
Slide 35: GHG Emissions – Senior E&P Comparison
35 GHG Emissions – Senior E&P Comparison Mar 2024 Tourmaline has amongst the lowest GHG emissions intensity (CO2e/boe) among Canadian Senior E&P’s Canadian Senior E&P GHG Emissions 2022 50,000,000 0.09 45,000,000 0.08 40,000,000 0.07 35,000,000 Tourmaline has achieved a 42% reduction 0.06 Gross CO2
Slide 36: Tourmaline Environmental Performance
36 Tourmaline Environmental Performance • Tourmaline strives to continually improve all aspects of environmental performance including the impact of its operations on air, land and water. • Tourmaline has the lowest CO2 emissions and emission intensity of the Canadian Senior producers. • Tourmaline
Slide 37: Sustainability Performance Highlights
37 Sustainability Performance Highlights Nov 2023 Tourmaline has been aggressively and successfully pursuing a comprehensive environmental performance improvement strategy for over seven years. The Company is systematically improving its performance and reducing the impact of all aspects of the Comp
Slide 38: Tourmaline Financial Position
38 Tourmaline Financial Position Excellent Liquidity, Resiliency & Capacity Mar 2024 Tourmaline has ample liquidity and capacity to weather adverse commodity prices Debt Profile, Term, Capacity Change in: 2025 Cash Flow Sensitivities $mm 3,500 3,050 3,050 3,050 3,000 3,000 3,000 2,785 Oil US$1/bbl $
Slide 39: Diesel Displacement Initiatives
39 Diesel Displacement Initiatives Nov 2023 Initiative Annual Emissions Impact Net Savings Highline Power • 1.4mm litres per year fuel displaced $1,400,000 per year • PRH drilling rig running 100% highline power • 3,900 tC02e per year savings Natural Gas Fuel Gas Substitution • 37mm litres per year
Slide 40: Canadian Oil & Gas Is the World Leader
Continuous Environmental Performance Improvement 40 Through Innovative Application of New Technologies • Massive reduction in flaring • Water recycling for fracs Tech Service • Gas fired drilling rigs/fracs • Methane leakage elimination across all operating regimes • COSIA & NGIF industry technology
Slide 41: Environmental Performance Improvement Highlights
Tourmaline Environmental Performance 41 Improvement Highlights Nov 2023 BC Water Management Alberta Water Management • 95-100% of all water sourced for stimulation operations is • 1st, and only, company in Alberta to be licenced to store recycled and recycle produced water from an in-ground storage
Slide 42: Technology Curve/Future Concepts, Requirements & Opportunities
42 Tourmaline Technology Curve/Future Concepts, Requirements & Opportunities • Cost saving via novel frac water sourcing/recycling • Waste heat recovery technology • Alternative hz frac programs/processes – Concurrent pairs, delayed flow-backs etc. • Novel drilling technology to reduce time/cost • U
Slide 43: Schedule A
43 Schedule A DRILLING LOCATIONS Estimated Drilling Inventory This presentation discloses drilling locations in four categories: (i) proved undeveloped locations; (ii) probable undeveloped locations; (iii) unbooked locations; and (iv) an aggregate total of (i), (ii) and (iii). Of the 23,724 (gross)
Slide 44: Schedule A continued
44 Schedule A continued Deep Basin Horizontal well count : • Total horizontal Deep Basin locations = 16,331 (1-2 wells per section per zone depending on zone) • Less existing horizontals, and less 20% of existing vertical producers = 2,224 • Remaining Horizontal Locations = 14,108 Deep Basin vertica
Slide 45: Schedule B
45 Schedule B Prospective locations are unbooked locations that are not included in inventory. Unbooked locations are internal estimates based on the Company's prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal revi
Slide 46: Forward Looking Information
46 Forward Looking Information Certain information contained in this presentation constitutes forward-looking information within the meaning of applicable securities laws. This information relates to future events or the Company's future performance. All information other than information of histori
Slide 47: Forward Looking Information
47 Forward Looking Information With respect to forward-looking information contained in this presentation, assumptions have been made regarding, among other things: future crude oil and natural gas prices; future interests rates and currency exchange rates; the Company's ability to obtain qualified
Slide 48: Forward Looking Statement Advisories
48 Forward Looking Statement Advisories Oil and Gas Advisories Certain crude oil and natural gas liquids ("NGLs") volumes have been converted to millions of cubic feet equivalent ("mmcfe") or thousands of cubic feet equivalent ("mcfe") on the basis of one barrel ("bbl" of crude oil or NGLs to six th
Slide 49: Forward Looking Statement Advisories
49 Forward Looking Statement Advisories Non-GAAP Financial Measures Cash Flow Management uses the term “cash flow" for its own performance measure and to provide shareholders and potential investors with a measurement of the Company’s efficiency and its ability to generate the cash (net of current i
Slide 50: Forward Looking Statement Advisories
50 Forward Looking Statement Advisories Non-GAAP Financial Measures (con’t) E&P Capital Program Management uses the term "E&P Capital Program" as a measure of capital investment in exploration and production activity which is defined as Capital Expenditures (a Non-GAAP Financial Measure), excluding
Slide 51: Forward Looking Statement Advisories
51 Forward Looking Statement Advisories Non-GAAP Financial Measures (con’t) Operating Netback Management uses the term “operating netback” as a key performance indicator and one that is commonly presented by other oil and natural gas producers. Operating netback is defined as the sum of commodity sa
Slide 52: Forward Looking Statement Advisories
52 Forward Looking Statement Advisories Non-GAAP Financial Ratios Operating Netback per-boe Management calculates “operating netback per-boe” as operating netback divided by total production for the period. Operating netback per-boe is a key performance indicator and measure of operational efficienc
Slide 53: Forward Looking Statement Advisories
53 Forward Looking Statement Advisories Capital Management Measures Adjusted Working Capital Management uses the term “adjusted working capital” for its own performance measures and to provide shareholders and potential investors with a measurement of the Company’s liquidity. A summary of the compos