Tourmaline Oil Corp. · TSX:TOU
Tourmaline Oil — Q3 2024 Earnings Presentation
47 slides from Tourmaline Oil's earnings presentation, Nov 7, 2024
Slide 1: Corporate Presentation November 2024
Corporate Presentation November 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 Nov 2024 Tourmaline Overview 4.8 MM Net Acres, 5.0 Billion Boe 2P Reserves(1) • Largest natural gas producer in Canada Drilled to Date • 4th largest Canadian gas
Slide 3: Largest North American Natural Gas Producers
3 Largest North American Natural Gas Producers Nov 2024 Tourmaline is the largest natural gas producer in Canada, and the fourth largest gas focused producer in North America MMcf/d 2025E Natural Gas Production – Canada & US 8,000 7,000 Scale is a key component in driving down 6,000 costs, leveragin
Slide 4: Tourmaline: A Significant Canadian Liquids Producer
4 Tourmaline: A Significant Canadian Liquids Producer Nov 2024 Tourmaline is a significant liquids producer in Canada, with continued peer leading growth • Tourmaline is the 2nd largest producer of conventional liquids and condensate, and the largest producer of NGLs (~2x the next closest peer) • To
Slide 5: EP Growth Plan
5 EP Growth Plan(1) Nov 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 Ending After-tax After-tax E&P Capital Free Cash Base Surplus Prod’n Cash Flow CFPS – Program(
Slide 6: Free Cash Flow Allocation & Dividend Growth Track Record
Tourmaline Free Cash Flow Allocation & 6 Dividend Growth Track Record Nov 2024 The majority of Tourmaline’s free cash flow will be returned to shareholders; a growing base dividend and special dividends will be the preferred method of shareholder returns • Base dividend will continue to grow alongsi
Slide 7: A Growing Portfolio of Highly Profitable Development Projects
A Growing Portfolio of Highly Profitable 7 Development Projects Nov 2024 Tourmaline has the largest future drilling inventory in N. America (>23,000 locs including over 20 years of Tier 1) and an unmatched portfolio of well-defined development projects being continuously executed over the next 3 to
Slide 8: Alberta Deep Basin
8 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 9: Tourmaline Deep Basin Vintage Type Curve Performance
9 Tourmaline Deep Basin Vintage Type Curve Performance Nov 2024 1H24 Deep Basin performance illustrates that the Deep Basin can still make new all time performance highs, through longer laterals and debottlenecking TOU’s access to the most prolific resource areas TOU Deep Basin Cumulative Natural Ga
Slide 10: NEBC Montney Gas/Condensate Complex
10 NEBC Montney Gas/Condensate Complex Nov 2024 Current Prod. 270,000 – 290,000 boepd Current Reserves 2,741 mmboe (Dec 31, 2023) NRM Jedney Montney Drilling In excess of 6,549 horizontal Inventory locations. (Dec 31, 2023 ex Crew) Aiken Gas Plants 320 MMcfpd NRM Aitken/Hwy Gas Plants Tourmaline is
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 Nov 2024 The infrastructure skeleton in all three core operated complexes is now complete. This infrastructure is essentially all new and in the ‘growth’ areas of the WCSB. 31 Working interest gas plants, 18 of which are 100% owned and operated, 4 Topaz interest plant
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 Tier Inventory
14 Multiple Decades of Tier 1 Inventory Aug 2024 Tourmaline’s deep inventory ownership provides multiple decades of very profitable development, plus no need to pursue large “resource reloads” in A&D market Drilled to Date $3.50 75 yrs of 2024 Drilling Drilling Inventory Booked A.Tax Break-Even Gas
Slide 15: A Unique, Expanding Exploration Program
15 A Unique, Expanding Exploration Program Multiple New Zone/New Pool Successes Over the Last 3 Years Nov 2024 Exploration program success has created significant incremental value in existing core NEBC (North) New Pool Oil/Gas complexes, the majority of the discoveries • 2 separate successful disco
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 Nov 2024 Natural Gas Price Exposure 8% 19% 14% 41% 4% 13% 49% 52% 14% 2% 14% 10% 16% 6% 10% Station 2 2% 15% 14% 7% 4% 6% 2% 16% 2% 11% 16% 15% 37% 9% 32% 3% 8% 8% 6% 2% 1% 7% 6% 6% 2% 2024 2025 2026 2027 2028 (Nov/Dec) 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 Nov 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 Nov 2024 2025(1) Production – Boe/d 635,000 – 665,000 Cash Flow(i) - $MM $4,110 (at mid-point) CFPS - Diluted(i) $10.93 (at mid-point) E&P Capital Program(ii) - $MM $2,600 – $2,850 Capital Expenditures(i) - $MM $2,850 - $3,100 Free Cash Flow(iii) - $MM $1,135 (at mid-point) (1) Price Ass
Slide 22: Tourmaline 2025 After Tax Cash Flow Sensitivity & Allocation
22 Tourmaline 2025 After Tax Cash Flow Sensitivity & Allocation Nov 2024 Tourmaline’s low cost structure drives sustainable return on, and of, capital opportunities • TOU’s maintenance budget, and dividend is fully funded at US$1.50/mcf • Current strip provides meaningful free cash flow, over $1 bn
Slide 23: Tourmaline is North America's Most Attractive Natural Gas Investment
23 Tourmaline is North America’s Most Attractive Natural Gas Investment July 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 24: Market Leading Return on and of Capital
24 Market Leading Return on and of Capital Nov 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 25: APPENDIX
APPENDIX
Slide 26: Historical EP Performance
26 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 27: Independently Recognized Canadian 2P Reserves
27 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 28: Significant Montney Growth Potential
28 Significant Montney Growth Potential Nov 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 >450 450 North Montney / Conroy • South Montney / Groundbirch •
Slide 29: Gas Development Location Inventory and Economics
29 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 30: Continuous Cost Reduction Strategy
30 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 31: Environmental Performance Investment
31 Environmental Performance Investment Nov 2024 Focusing on investment opportunities that maximize cost savings & environmental impact • Water: recycling, & pipeline infrastructure; ~95% recycling in NEBC, advancing AB towards 100% • Air: diesel displacement, pneumatic / venting reduction, power (h
Slide 32: GHG Emissions – Senior E&P Comparison
32 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 33: Environmental Performance Improvement
33 Environmental Performance Improvement Nov 2024 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 34: Tourmaline Financial Position
34 Tourmaline Financial Position Excellent Liquidity, Resiliency & Capacity July 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 3,300 3,300 3,250 3,050 3,000 3,000 2,750 Oil US$1/bbl
Slide 35: Continuous Environmental Performance Improvement Through Innovative Application of New Technologies
Continuous Environmental Performance Improvement 35 Through Innovative Application of New Technologies • Reduction in flaring • Water recycling for fracs Tech Service • Gas fired drilling rigs/fracs • Methane leakage mitigation across all operating regimes • COSIA & NGIF industry technology developm
Slide 36: Tourmaline Technology Curve/Future Concepts, Requirements & Opportunities
36 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 37: Schedule A
37 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 38: Schedule A continued
38 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 39: Schedule B
39 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 40: Forward Looking Information
40 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 41: Forward Looking Information
41 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 42: Forward Looking Statement Advisories
42 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 43: Forward Looking Statement Advisories
43 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 44: Forward Looking Statement Advisories
44 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 45: Forward Looking Statement Advisories
45 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 46: Forward Looking Statement Advisories
46 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 47: Forward Looking Statement Advisories
47 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