Tourmaline Oil Corp. · TSX:TOU
Tourmaline Oil — Investor Presentation (August 2018)
48 slides from Tourmaline Oil's investor presentation, August 2018
Slide 1: Corporate Presentation
Corporate Presentation August 2018
Slide 2: Current Status
2 Current Status Aug 2018 Production Overview 2018 average production forecast of 267,500-275,000 boepd 2018 average liquid production of 50,000 bpd 2018 production exit estimate of 290,000-297,500 boepd. Three Major Core Areas Alberta Deep Basin: Approximately 1.8 million acres (largest Dee
Slide 3: Historical EP Performance
3 Historical EP Performance Mar 2018 Production Growth Per Share* Reserves Growth Per Share* 350 9 Production per Thousand Shares Reserves per Share (BOEs) 300 8 7 250 6 200 5 (BOEs) 150 4 100 3 2 50 1 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 2010 2011 2012 2013 2014 2015 2016 2017 2009
Slide 4: A History of Full Cycle Profitability
4 A History of Full Cycle Profitability Aug 2018 400 6.00 * 350 Earnings before taxes (000,000s) 5.00 AECO (CAD$/mcf) Earnings before tax ($ millions) 300 4.00 250 AECO ($/mcf) 200 3.00 150 2.00 100 1.00 50 - 0.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012 201
Slide 5: Largest Canadian Gas Producers
5 Largest Canadian Gas Producers Mar 2018 1,800 2016A Natural Gas (Mmcf/d) 1,600 2017E Natural Gas (Mmcf/d) 1,400 2018E Natural Gas (Mmcf/d) 1,200 Production (Mmcf/d) Tourmaline is currently producing 1,000 between 1.3 and 1.35 bcf/day 800 600 400 200 - 2016 WCSB Gas production was based on publicly
Slide 6: A Significant Liquids Producer
6 A Significant Liquids Producer May 2018 Tourmaline has doubled liquids production over the past 15 months with strong liquids growth across all three operated complexes. Condensate production will grow from current levels of 12,000 bpd to 22,500-25,000 bpd by Q4 2019. Tourmaline grew total 2P liqu
Slide 7: Balanced Revenue and Cash Flow Streams
7 Balanced Revenue and Cash Flow Streams Through Product, Marketing and Transportation Diversification Aug 2018 2018 BUDGETED REVENUE AECO & Station 2 14% Oil 29% Fixed Price 18% NGL 12% NYMEX Basis 7% NYMEX-Based Delivery 20% Tourmaline consistently outperforms the quarterly AECO index price (eve
Slide 8: Current 5 Year Plan
8 Current 5 Year Plan(1) Aug 2018 400,000 350,000 300,000 250,000 Spirit River Boe/d 200,000 NEBC 150,000 Deep Basin 100,000 50,000 - 2016 2017 2018 2019 2020 2021 2022 After-tax After-tax E&P Capital Free Cash Ending Prod’n Cash Flow CFPS - Program(4) (6) Flow(5) Dividend (Net Debt)(3) BOEPD $MM(2)
Slide 9: Alberta Deep Basin
9 Alberta Deep Basin May 2018 T65 R9 R7 R5 Current Production 180,000-185,000 boepd Current Reserves 984.4 mmboe (Jan 1, 2018) T63 Tourmaline Land Base 1.77 million acres Drilling Inventory 2,322 locations (vertical) TCPL Main Line (~1.5wells per section only) T61 Fir 6,167 hz locations Musr
Slide 10: Tourmaline Deep Basin EP Performance
10 Tourmaline Deep Basin EP Performance Jul 2018 Top Alberta Viking Wells (March to May) Tourmaline consistently drills a significant proportion of the best performing new wells in the Alberta Deep Basin. The Company attributes this to a combination of a dominant position in the subsurface sweet spo
Slide 11: Alberta Deep Basin Liquids Rich Cardium Fairway
11 Alberta Deep Basin Liquids Rich Cardium Fairway Aug 2018 The combination of extensive 3D seismic coverage T59 T59 and the lowest cost drilling/completion capability Smoky make the liquids rich Cardium play a significant new incremental opportunity in the overall T57 T57 Tourmaline Deep Basin port
Slide 12: NEBC Montney Gas/Condensate Complex
12 NEBC Montney Gas/Condensate Complex May 2018 Black Swan Current Prod. 350-360 mmcf/d TOU Land Comp. Station, dehy C-60-A Gas Plant 25 mmcf/d 7,500-8,500 bpd condensate TOU Wells 200 MMCF/D Q4 2019 Current Reserves 1,079.4 mmboe (Jan 1, 2018) TOU Pipelines TOU Gas Plants Montney Drilling In excess
Slide 13: Gundy Ck Montney Development
13 Gundy Ck Montney Development Aug 2018 Gundy Black Swan Current Production: 13,000-15,000 BOEPD Construction of Phase 1 Deep Cut Comp. Station, dehy No of wells drilled by TOU: 28 Gas Plant has commenced in the field, 25 MMCF/D No of potential locations: 1600 (100% TOU) a 50,000 boepd operated pro
Slide 14: Gundy Deep Cut Plant Construction
14 Gundy Deep Cut Plant Construction Aug 2018 Gundy Sales Line Right of Way • Phase 1 50,000 boepd deep cut facility is on schedule for a Q3 2019 start-up. • Phase 1 construction designed to facilitate the potential Phase 2 expansion (incremental 50,000 boepd, not in the current 5 year development p
Slide 15: Peace River High Complex Triassic Oil
15 Peace River High Complex Triassic Oil Charlie Lake and Montney Plays Mar 2018 Mulligan 8-15 Upper Trcl Pad Q3 2016 Peace River High Charlie Lake Play 90 day production rates R. 11 R. 9 5-14 R. Mulligan 7 R. 5 Oil Battery • 1,898 Horizontal Locations* along Regional Play Fairway 1-21: 285 bopd, 0.
Slide 16: 2018/2019 Liquids Growth Projects
16 2018/2019 Liquids Growth Projects May 2018 Doe 2-11 • Facility provides capacity for additional liquid rich 3,500 bpd Sweetening Facility Montney turbidite condensate production (17 wells (Q4 2018) currently shut-in). NW Spirit River 13-28 • Acceleration of regional battery tie-in project, provid
Slide 17: Tourmaline Condensate Production Outlook
17 Tourmaline Condensate Production Outlook 2018-2020 Jun 2018 35,000 Current Base 31,500(+) Production totals reflect anticipated Deep Basin Kca (750 bpd) 30,000 total condensate production by the end of the specified period. 25,000 Deep Basin Wroe Compressor 25,000 Project (750 bpd) Condensate Pro
Slide 18: Tourmaline Mid-Stream Assets
18 Tourmaline Mid-Stream Assets Sep 2017 The infrastructure skeleton in all three core operated complexes is now complete. This infrastructure is essentially R. 15W6 R. 1W6 all newR.and 15W5in the ‘growth’ areas of the WCSB. NE Alberta BC Gundy • 18 Working interest gas plants, 15 of which are 100%
Slide 19: Historical Reserves Summary
19 Historical Reserves Summary Mar 2018 Reserves (GLJ) Reserves 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 2500 (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) (mmboe) PDP 91.9 122.3 177.8 263.2 352.1 436.5 TP 249.2 316.5 472.3 644.1 859.2 1056.0 2000 2P 438.1 590.1 855.8 1108.3 1747.2 2216.6 MM
Slide 20: Independently Recognized Canadian 2P Reserves
18 Independently Recognized Canadian 2P Reserves May 2018 12 Tourmaline has booked only 14% of 10 Natural Gas (1) existing drilling inventory (2,074 of 8 14,471 locations – See Schedule A). TCF 6 4 2 1000 0 800 Conventional Oil & Liquids 600 Tourmaline has historically converted MMboe 400 2P reserve
Slide 21: Gas Development Location Inventory and Economics
21 Gas Development Location Inventory and Economics Mar 2018 AB Deep Basin Outer Foothills AB Deep Basin B.C. Montney Charlie Lake Vertical Vertical Horizontal Horizontal Horizontal Total Well Costs 2.55 3.70 3.85 3.05 2.10 (Drill, Case, Complete, $ Million) Average Reserves/Well (bcfe) 2.4 5.8 5.4
Slide 22: The TOU Engineering Execution Machine
22 The TOU Engineering Execution Machine Sep 2017 Drill & Complete Costs 8.00 Tourmaline has the lowest completed per stage (Equipping not included) well costs in the overall Montney play in 7.00 Western Canada and the Alberta Deep Basin. South Deep Basin Capital Cost ($MM) 6.8 6.00 NEBC (South Comp
Slide 23: Continuously Improving Well Performance and Recoverable Reserves
Continuously Improving Well Performance 23 and Recoverable Reserves Mar 2018 2,000 Deep Basin EUR 895 mboe 1,500 IP30 1,615 boe/d 41% EUR Increase Since 2012 Boe/d 1,000 IP90 1,197 boe/d 500 IP365 671 boe/d - 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 9
Slide 24: Continuous Cost Reduction Strategy
24 Continuous Cost Reduction Strategy Mar 2018 Operating Costs General and Administrative Costs $7.00 $6.50 $6.34 $1.50 $1.29 $6.00 $5.58 $1.02 $5.50 $1.00 $/boe $/boe $5.00 $4.87 $0.79 $0.74 $4.43 $4.35 $4.37 $0.60 $4.50 $0.45 $0.44 $0.46 $4.00 $0.50 $3.50 $3.31 $3.19 $3.00 $0.00 2010 2011 2012 201
Slide 25: 2018 Guidance
25 2018 Guidance Aug 2018 2018(1) Production – Boe/d 267,500 - 275,000 Cash Flow(i) - $MM $1,343 CFPS - Diluted(i) $4.94 E&P Capital Program(ii) - $MM (net of non-core dispositions) $1,082 Free Cash Flow(iii) - $MM $232 Exit Net Debt(i) - $MM $1,576 Debt to CF 1.2x (1) Price Assumptions: Gas price -
Slide 26: 2018 Natural Gas Transportation and Marketing Overview
26 2018 Natural Gas Transportation and Marketing Overview Aug 2018 2018 Natural Gas Portfolio Diversification 2018 Exit: 440 mmcf/d of gas will be to US/Other Markets 2019 Exit: 540 mmcf/d of gas will be to US/Other Markets 35% Station 2 11% 11% 37% (1) AECO 16% 16% TCPL Mainline Dawn ~115 Mmcf/d (2
Slide 27: 2017 Highlights/2018 Outlook
27 2017 Highlights/2018 Outlook Mar 2018 • Tourmaline now a Senior with production exceeding 270,000 boepd. • Tourmaline is currently the second largest producer of Canadian natural gas and is a top ten Canadian liquids producer (excluding oil sands/thermal). • Continued strong earnings in 2017 as t
Slide 28: Appendix
APPENDIX
Slide 29: Natural Gas Flows From Western Canada
29 Natural Gas Flows From Western Canada
Slide 30: Completed Well Costs and EUR By N. American Play Type
30 Completed Well Costs and EUR By N. American Play Type Aug 2017 Well Costs (CAD) Vs. EUR by Play Type 25 $0.47/mcf Completed Well Cost $CDN EUR (Bcfe) 20.5 Bcfe $0.69/mcf 20 17.9 Bcfe 15 $0.70/mcf $12.3 MM 12.5 Bcfe $1.13/mcf $9.6 MM $0.70/mcf 10 $8.7 MM $7.9 $0.47/mcf $0.79/mcf $1.00/mcf MM 7.0 B
Slide 31: Tourmaline vs Natural Gas Peers
31 Tourmaline vs Natural Gas Peers Cash Costs Per BOE July 2017 Tourmaline Vs. Natural Gas Weighted Peers Cash Costs in USD* per BOE (Q1/17) Operating Transportation G&A Interest $12.00 $10.26 $10.00 $1.45 $8.00 $7.15 $1.54 Costs Per BOE $5.82 $1.40 $6.00 $0.38 $0.38 $0.75 $5.42 $4.00 $2.25 $1.77 $2
Slide 32: Historical Drilling Performance and Cost Improvements
32 Historical Drilling Performance and Cost Improvements Mar 2017 South Deep Basin Peace River High Average Drill Days Average Drill Cost Average Drill Days Average Drill Cost $3.0 35 57% 49% 20 41% 36% $5.0 $2.5 30 Decrease Decrease Decrease Decrease Since 2013 $4.0 Since 2013 Since 2013 $2.0 Since
Slide 33: Historical Completions Performance Improvements
33 Historical Completions Performance Improvements Deep Basin - Completions Peace River High - Completions $3,000 $3,500 47% $3,000 72% $2,500 Decrease Since 2012 Decrease Since 2012 $2,500 $2,000 $2,000 $ 000 $ 000 $1,500 $1,500 $1,000 $1,000 $500 $500 $0 $0 2012 2013 2014 2015 2016 2012 2013 2014
Slide 34: Tourmaline Montney Efficiency + Execution
Tourmaline Montney 34 Efficiency + Execution Montney Peers Q2/17 Production >40,000 boe/d Sep 2017 Drilling and Completions Costs (1) Montney Operating Costs $14 Q2/2017(1) (2) $12 $10 CAD$MM $8 $7.00 $6 $6.00 $4 $5.00 $2 $4.00 $/Boe $0 $3.00 $2.00 $1.00 $- Tourmaline Peer 1 Peer 2 Peer 3 Peer 4 Pee
Slide 35: EP Growth Plan
35 EP Growth Plan (Original Business Plan) Sept 2008 This is essentially the same business plan that was executed for Duvernay Oil Corp. (2001-2008) • Primary growth mechanism will be a conventional EP Program (including Resource plays). • Build 2-3 core EP areas during initial three years of operat
Slide 36: Banshee Alberta Gas Plant
36 Banshee Alberta Gas Plant • Simple, easy to construct dew point plants tied to the main TCPL sales system • Total cost (2 phases) of $80M, capacity of 130 mmcfpd with enhanced liquids recovery capability
Slide 37: Top Alberta Gas Wells
mmcfe (cumulative) 1000 1200 0 200 400 600 800 Tourmaline 04-05-053-23W5 Tourmaline 09-07-062-05W6 Tourmaline 09-05-055-22W5 Tourmaline 14-08-059-01W6 Jupiter 16-33-059-01W6 Tourmaline 13-12-059-02W6 Tourmaline 13-08-053-23W5 (March to May) Vermilion 04-20-042-10W5 Tourmaline 12-13-057-02W6 Bonavist
Slide 38: Tourmaline Environmental Performance
38 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 ranks as a ‘top decile’ performer under the new Ab Government carbon emission framework and despite
Slide 39: GHG Emissions – Peer Comparison
39 GHG Emissions – Peer Comparison Jul 2018 Tourmaline has the lowest GHG emissions intensity (CO2/boe) among Canadian Senior E&P peers Canadian E&P GHG Emissions 2016 25,000,000 0.080 0.070 20,000,000 0.060 (tonnes CO2(e)/boe) Gross CO2 Emissions 0.050 15,000,000 (tonnes CO2(e)) CO2 Intensity 0.040
Slide 40: BC Water Management
40 BC Water Management • 100% of all water flowed back from completion operations is recycled • 90% of all water sourced for stimulation operations is recycled • 187,000m3 of produced water storage capacity – 3 produced water ponds South Montney and 1 North Montney • 46 km of permanent pipeline infr
Slide 41: Natural Gas Substitution in Operations
41 Natural Gas Substitution in Operations • Raw Natural Gas cost (Feb 2017) ~$0.10/DLE (Diesel Equivalent Liter) vs $0.69/L rack price for marked diesel • 12 Drilling Rigs and all BC completion operations use a combination of NG/Diesel • Drilling Rigs achieving ~40-50% displacement of diesel • 6.8M
Slide 42: Tourmaline Technology Curve/Future Concepts, Requirements & Opportunities
42 Tourmaline Technology Curve/Future Concepts, Requirements & Opportunities • Cost saving via novel frac water sourcing/recycling • Alternative hz frac programs/processes – Concurrent pairs, delayed flow-backs etc. • Novel drilling technology to reduce time/cost • Utilizing gas fired turbines to re
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 14,471 (gross)
Slide 44: Schedule A continued
44 Schedule A continued Deep Basin Vertical well count : Approximately 2,767 gross prospective sections at approximately 1.5 wells per section minus 10% for areas that are inaccessible or limited by spacing requirements minus approximately 963 existing wells. Includes 450 locations in the Outer Foot
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