Tourmaline Oil Corp. · TSX:TOU
Tourmaline Oil — Q3 2023 Earnings Presentation
52 slides from Tourmaline Oil's earnings presentation, Nov 2, 2023
Slide 1: Corporate Presentation November 2023
Corporate Presentation November 2023
Slide 2: Tourmaline Overview
Tourmaline Overview 2 The Scale, Resource, and Infrastructure Required to Profitably Grow in the WCSB and Provide Returns to Shareholders Nov 2023 Tourmaline Overview Conroy 3.4 MM Net Acres, 4.5 Billion Boe 2P Reserves(1) • Largest natural gas producer in Canada Birley Aitken Drilled to Date • 4 la
Slide 3: GHG Emissions – Senior E&P Comparison
3 GHG Emissions – Senior E&P Comparison Nov 2023 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 0.06 Tourmaline has achieved a 42% reduction Gross CO2 E
Slide 4: A History of Full Cycle Profitability
4 A History of Full Cycle Profitability Mar 2023 $7,000 $7.00 Earnings before taxes ($mm) AECO (CAD$/mcf) NYMEX (USD$/MMbtu) $6,000 $6.00 Earnings before tax ($ millions) $5,000 $5.00 (Gas Price) $4,000 $4.00 $3,000 $3.00 $2,000 $2.00 $1,000 $1.00 $0 $0.00 2012 2013 2014 2015 2016 2017 2018 2019 202
Slide 5: Largest North American Natural Gas Producers
5 Largest North American Natural Gas Producers Nov 2023 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 6,000 5,000 Scale is a key component in driving down costs, leveraging trans
Slide 6: Resource Ownership
6 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 fu
Slide 7: Tourmaline: A Significant Canadian Liquids Producer
7 Tourmaline: A Significant Canadian Liquids Producer Nov 2023 Tourmaline is a significant liquids producer in Canada, with continued peer leading growth • Incorporating recent acquisitions, Tourmaline is the 4th largest producer of conventional liquids, the largest producer of NGLs, and the second
Slide 8: EP Growth Plan
8 EP Growth Plan(1) Nov 2023 800,000 700,000 600,000 500,000 Spirit River Boe/d 400,000 NEBC 300,000 200,000 Deep Basin 100,000 - 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Tourmaline After-tax After-tax E&P Capital Free Cash Base Ending Surplus Prod’n Cash Flow CFPS – Program(
Slide 9: Tourmaline Free Cash Flow Allocation & Dividend Growth Track Record
Tourmaline Free Cash Flow Allocation & 9 Dividend Growth Track Record Nov 2023 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 10: Alberta Deep Basin Bonavista Energy Corp. Acquisition
Alberta Deep Basin 10 Bonavista Energy Corp. Acquisition Oct 2023 A material accretive addition to the existing Tourmaline Deep Basin complex. Bonavista is debt free and currently generates attractive free cash flow which Tourmaline believes can be increased utilizing internal TCPL Musreau Deep Basi
Slide 11: Alberta Deep Basin
11 Alberta Deep Basin Nov 2023 The contiguous Tourmaline interconnected Deep Basin TCPL Cretaceous gas asset is effectively Alberta’s Largest Gas Field Musreau /Kakwa • Current Production >310,000 boepd (proforma BNP) Netook • Current Reserves 1,952 mmboe (as at Dec 31, 2022 proforma+459 mmboe BNP)
Slide 12: NEBC Montney Gas/Condensate Complex
12 NEBC Montney Gas/Condensate Complex Nov 2023 D-48-C Sour Current Prod. 240,000 – 250,000 boepd Gas Plant. 30 MMcfpd b-24-H Comp/Dehy Current Reserves 2,721 mmboe (Dec 31, 2022) 140 MMcfpd. Montney Drilling In excess of 6,536 horizontal Northriver D-72-F Comp Sta. Inventory locations. North Jedney
Slide 13: Significant Montney Growth Potential
13 Significant Montney Growth Potential Nov 2023 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 • 400 Aitken Creek • 390 Con
Slide 14: Peace River High Complex Triassic Oil
14 Peace River High Complex Triassic Oil Charlie Lake, Montney and Wapiti Cardium Plays Mar 2023 R. 11 R. 9 R. 7 R. 5 Peace River High Legend Tourmaline Lands • 2,652 Horizontal Locations* along Regional Play 15-13 Mulligan Tou UpperCharlie Lake HZ Drills Fairways Oil Battery Tou Lower Charlie Lake
Slide 15: Tourmaline Mid Stream Assets
15 Tourmaline Mid Stream Assets Nov 2023 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, 16 of which are 100% owned Alberta Bi
Slide 16: Historical Reserves Summary
16 Historical Reserves Summary Nov 2023 Reserves (GLJ) Reserves 2018 2019 2020 2021 2022 2015 2016 2017 2018 2019 2020 2021 2022 5,000 (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) PDP 263.2 352.1 436.5 473.5 527.4 736.4 947.3 1,001 4,000 TP 644.1 859.2 1,056 1,207 1,294 1,691 2,18
Slide 17: Gas Development Location Inventory and Economics
17 Gas Development Location Inventory and Economics(1) Mar 2023 NEBC Gundy NEBC North NEBC South PRH PRH AB Deep Basin MNTN MNTN MNTN Charlie Lake Montney Horizontal Horizontal Horizontal Horizontal Horizontal Horizontal Total Well Costs (Drill, Case, Complete, $ Million) 4.27 3.50 4.20 3.30 2.48 3.
Slide 18: Multiple Decades of Economic Inventory
18 Multiple Decades of Economic Inventory May 2023 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 2023 Drilling $3.50 Drilling Inventory(1) Booked Locations Un
Slide 19: A Unique, Expanding Exploration Program
19 A Unique, Expanding Exploration Program Multiple New Zone/New Pool Successes Over the Last 3 Years Nov 2023 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 20: Continuous D&C Performance / Cost Improvements
20 Continuous D&C Performance / Cost Improvements Mar 2023 Wells Drilled by Area Feet Average Lateral Feet per Well by Area Development shifting to NEBC as Deep Basin & 180 9,000 PRA settle into maintenance development 159 45% increase in corporate 160 8,500 lateral length since 2018 137 140 140 8,0
Slide 21: Continuous Capital Efficiency Improvements
21 Continuous Capital Efficiency Improvements Nov 2023 $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 $10,600 $9,500 $9,500 $9,800 $10,000 $8,900 $8,650 $8,000 $7,300 $7
Slide 22: Continuous Cost Reduction Strategy
22 Continuous Cost Reduction Strategy Mar 2023 Operating Costs General and Administrative Costs ($/boe) ($/boe) $6.00 $5.58 $1.50 $4.87 $5.00 $4.43$4.35 $4.37 $4.30 $3.77 $1.02 $4.00 $1.00 $3.31$3.19$3.33$3.28 $3.14 $0.79 $0.74 $3.00 $0.60 $0.56 $0.54 $0.57 $0.49$0.49 $2.00 $0.50 $0.45 $0.44 $0.46 $
Slide 23: 2023 Natural Gas Transportation and Marketing Overview
23 2023 Natural Gas Transportation and Marketing Overview Oct 2023 Natural Gas Price Exposure 3% 2% 2% 3% 1% 23% 24% 33% 46% 48% 5% 4% 14% 15% 2% 8% 17% 9% 2% 2% 11% 12% 9% 18% 18% Station 2 6% 5% 12% 8% 7% 5% 8% 31% 12% 15% 29% 19% 6% 5% 7% 1% 2023 2024 2025 2026 2027 Hedged US Gulf/LNG Stn2/Hunt D
Slide 24: Tourmaline Pursues Highly Profitable & Strategically Timed Growth
24 Tourmaline Pursues Highly Profitable & Strategically Timed Growth July 2022 Tourmaline matches natural gas growth with contracted egress and local demand increases • Tourmaline’s near term natural gas growth pairs with its 150 MMcfpd Gulf Coast egress expansion (140 MMcfpd of which is supplied to
Slide 25: Tourmaline/Cheniere LNG Export Overview
25 Tourmaline/Cheniere LNG Export Overview Jan 2023 Canada’s Largest Gas Producer and the Largest U.S. LNG Company create a unique Overview • Tourmaline is the largest natural gas producer in Canada at 2.5 bcf/d cross border agreement • Natural gas supplied from Tourmalines Alberta Deep Basin and/or
Slide 26: Guidance
26 Guidance Nov 2023 2024(1) Production – Boe/d 600,000 Cash Flow(i) - $MM $4,530 CFPS - Diluted(i) $12.76 E&P Capital Program(ii) - $MM $2,150 Capital Expenditures(i) - $MM $2,345 Free Cash Flow(iii) - $MM $2,185 Exit Net Debt(i) - $MM N/A Debt to CF N/A (1) Price Assumptions: Oct 13th, 2023 Strip
Slide 27: Environmental Performance Investment & Returns
27 Environmental Performance Investment & Returns Nov 2023 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 28: Tourmaline 2024 After Tax Cash Flow Sensitivity & Allocation
28 Tourmaline 2024 After Tax Cash Flow Sensitivity & Allocation Nov 2023 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, averaging $2.0
Slide 29: Tourmaline is North America's Most Attractive Natural Gas Investment
29 Tourmaline is North America’s Most Attractive Natural Gas Investment Nov 2023 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 30: Growth Discipline Maximizes Margin & Free Cash Flow
30 Growth Discipline Maximizes Margin & Free Cash Flow Nov 2023 Our strategy is to pursue gradual organic production growth of ~5% through the base EP program, and continuing adding scale through select, bolt on accretive acquisitions, ultimately owning a larger proportion of supply, at a higher mar
Slide 31: Appendix
APPENDIX
Slide 32: Historical EP Performance
32 Historical EP Performance Mar 2023 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 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Operating Costs / BOE Cash Flow Per
Slide 33: Independently Recognized Canadian 2P Reserves
33 Independently Recognized Canadian 2P Reserves(1) May 2023 Tcf Natural Gas 2P Reserves MMbbl Conventional Liquid 2P Reserves 25 1,800 1,600 21 20 1,400 1,200 15 1,056 1,000 800 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 Pe
Slide 34: NEBC North Montney Delineation and Development
34 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 35: Tourmaline Environmental Performance
35 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 36: Sustainability Performance Highlights
36 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 37: Tourmaline Financial Position
37 Tourmaline Financial Position Excellent Liquidity, Resiliency & Capacity Nov 2023 Tourmaline has ample liquidity and capacity to weather adverse commodity prices Debt Profile, Term, Capacity Change in: 2024 Cash Flow Sensitivities $mm 3,500 3,050 3,050 3,050 3,050 3,000 3,000 3,000 2,785 Oil US$1
Slide 38: Diesel Displacement Initiatives
38 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 39: Canadian Oil & Gas is the World Leader
Continuous Environmental Performance Improvement 39 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 40: Tourmaline Environmental Performance Improvement Highlights
Tourmaline Environmental Performance 40 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 41: Tourmaline Technology Curve/Future Concepts, Requirements & Opportunities
41 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 42: Schedule A
42 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 23,077 (gross)
Slide 43: Schedule A continued
43 Schedule A continued Deep Basin Horizontal well count : • Total horizontal Deep Basin locations = 15,154 (1-2 wells per section per zone depending on zone) • Less 1,356 existing horizontals, and less 20% of existing vertical producers (246) • Remaining Horizontal Locations = 13,534 Deep Basin ver
Slide 44: Schedule B
44 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 45: Forward Looking Information
45 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 46: Forward Looking Information
46 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 47: Forward Looking Statement Advisories
47 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 48: Forward Looking Statement Advisories
48 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 necessary to fund
Slide 49: Forward Looking Statement Advisories
49 Forward Looking Statement Advisories Non-GAAP Financial Measures (con’t) Free Cash Flow Management uses the term “free 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
Slide 50: Forward Looking Statement Advisories
50 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 51: Forward Looking Statement Advisories
51 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. Netback per-boe is a key performance indicator and measure of operational efficiency and one
Slide 52: Forward Looking Statement Advisories
52 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