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Tourmaline Releases Enhanced Five-Year Development Plan Focusing on Significant Free Cash Flow Acceleration


CALGARY, May 29, 2019 /CNW/ – Tourmaline Oil Corp. (TSX:TOU) (“Tourmaline” or the “Company”) is pleased to provide details of an enhanced five-year development plan.

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

FREE CASH FLOW ACCELERATION PLAN:  SUMMARY OF PLAN CHANGES

  • Aggregate free cash flow increases by approximately $840 million to a total of approximately $3.05 billion over the five years.  Annual production and cash flow(2) are essentially unchanged from the previous plan.
  • Growth capital directed primarily to Gundy BC Montney development.  Tourmaline will proceed with the Gundy Phase 2 deep cut expansion to 400 mmcfpd with a Q4 2021 projected completion.  The incremental gas volumes will be delivered into what the Company believes will be a period of improved natural gas prices.
  • Alberta Deep Basin and Peace River High complexes will progress to maintenance capital mode with no incremental facility investments in the plan.
  • Capital efficiencies improve overall given reduced facility expenditures; improved operating netbacks(3) and annual production decline is reduced in the new plan.
  • The Gundy Phase 2 deep cut expansion is expected to increase Tourmaline’s total liquid volumes to approximately 85,000 bpd by Q4 2021 (oil, condensate, NGLs).
  • An aggregate $430.0 million of future facility expenditures have been removed from the previous five-year plan.

GUNDY PHASE 2 EXPANSION

  • The combination of high-deliverability liquids-rich natural gas (50-100 bbls/mmcf of condensate and NGLs), the continually-reduced drill/complete capital costs, and the very low operating costs related to the sweet natural gas composition (<$3.00/boe) render Gundy to be one of the most profitable Montney sub-plays in the entire Basin.
  • The $150 million Phase 2 deep cut facility expansion will be spread over 2020/21, with approximately $40 million to be expended in 2020.
  • Tourmaline has sufficient future gas and liquid egress to transport the incremental volumes associated with the facility expansion.

ALBERTA DEEP BASIN COMPLEX

  • The contiguous Tourmaline interconnected Alberta Deep Basin Cretaceous gas complex is effectively the largest current gas field in Alberta.
  • The Tourmaline Alberta Deep Basin asset achieved a production record of 205,000 boepd in March of 2019.  The Company plans to manage complex production in the 180,000-185,000 boepd range in 2H 2019/2020.
  • The Company believes it is prudent to defer significant gas volume growth from the Deep Basin until there is a sustained improvement in prevailing natural gas prices.
  • Tourmaline will maintain a 15-20 well DUC inventory in the Alberta Deep Basin to allow for rapid response to shorter cycle natural gas price improvements.

PEACE RIVER HIGH

  • The Peace River High Alberta Triassic complex will be maintained in the 20,000-25,000 boepd (gross) production range, essentially keeping the existing infrastructure at capacity.
  • The complex can generate significant annual free cash flow on estimated annual maintenance capital of approximately $75 million.
  • The Peace River High is currently at maximum facility capacity.  The Company has no current plans to fund a large incremental infrastructure build-out at this time.

_______________________________

(1) 

“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” in this news release and the Company’s Q1 2019 Management’s Discussion and Analysis.

(2)

“Cash flow” is defined as cash provided by operations before changes in non-cash operating working capital.  See “Non-GAAP Financial Measures” in this news release and the Company’s Q1 2019 Management’s Discussion and Analysis.

(3)

“See “Non-GAAP Financial Measures” in this news release and the Company’s Q1 2019 Management’s Discussion and Analysis.



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