CALGARY, AB, Dec. 18, 2020 /CNW/ - Tourmaline Oil Corp. (TSX:
TOU) ("Tourmaline" or the "Company") is pleased to announce the
completion of its previously announced acquisition of Jupiter
Resources Inc. ("Jupiter") whereby it acquired all of the issued
and outstanding shares of Jupiter for total consideration of
approximately $630.0 million,
comprised of 24.2 million Tourmaline common shares, and the
assumption of net debt of approximately $200.0 million, inclusive of all transaction
costs.
The Jupiter acquisition, accretive on both a cash
flow(1) and free cash flow(2) basis,
adds approximately 67,000 boepd of average production in the
Alberta Deep Basin with strong overall liquid production, currently
20,000 bpd (condensate and NGLs), estimated 2P
reserves(3) of 357 mmboe, over 500 net sections of land
(average working interest 84%), and working interests in three, two
of which are operated, deep cut natural gas processing plants in
the Resthaven and Kakwa areas. Current production was acquired for
approximately $9,400/boepd, 2P
reserves for $1.77 boe.
The greater Musreau-Resthaven-Kakwa portion of the Deep Basin,
where these assets are located, yields amongst the highest EUR
wells and liquid recoveries in the entire Deep Basin complex.
Tourmaline has been delivering completed and equipped horizontal
wells for 40% lower capital costs on immediately offsetting
acreage, with similar EURs. The Company is operating one drilling
rig on the lands acquired pursuant to the previously announced
acquisition of Modern Resources Inc. and will have two drilling
rigs active on the Jupiter assets by late December.
With the acquisition of Jupiter, Tourmaline's current production
is now in excess of 400,000 boepd.
___________________________________
|
(1)
|
"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 in the Company's Q3 2020
Management's Discussion and Analysis.
|
|
|
(2)
|
"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 Q3 2020 Management's Discussion and
Analysis.
|
|
|
(3)
|
Jupiter 2P reserves
of 357 mmboe as at December 31, 2019 have been evaluated by GLJ
Petroleum Consultants, an independent reserve evaluator.
Reserves are working interest gross reserves before deduction of
royalties payable to others and without including any royalty
interests.
|
Reader Advisories
CURRENCY
All amounts in this news release are stated in Canadian dollars
unless otherwise specified.
FORWARD-LOOKING INFORMATION
This news release contains forward-looking information and
statements (collectively, "forward-looking information") within the
meaning of applicable securities laws. The use of any of the words
"forecast", "expect", "anticipate", "continue", "estimate",
"objective", "ongoing", "on track", "may", "will", "project",
"should", "believe", "plans", "intends" and similar expressions are
intended to identify forward-looking information. More particularly
and without limitation, this news release contains forward-looking
information concerning Tourmaline's plans and other aspects of its
anticipated future operations, management focus, objectives,
strategies, financial, operating and production results and
business opportunities, including the following: anticipated
petroleum and natural gas production and production for various
periods; the benefits to be derived from the Jupiter acquisition
including statements with respect to the operational, capital, land
and facility synergies of the acquisitions and the acquisition
being accretive to cash flow and free cash flow; growth plans for
the Jupiter assets; the degree to which Tourmaline's operations and
production will be disrupted by circumstances attributable to the
COVID-19 pandemic and the responses of governments and the public
to the pandemic; applicable royalty rates and tax laws; interest
rates; future well production rates and reserve volumes; operating
costs, the timing of receipt of regulatory approvals; the
performance of existing wells; the success obtained in drilling new
wells; anticipated timing and results of capital expenditures; the
sufficiency of budgeted capital expenditures in carrying out
planned activities; the timing, location and extent of future
drilling operations; the benefits to be derived from acquisitions;
the state of the economy and the exploration and production
business including the impacts of the COVID-19 pandemic and
the responses of governments and the public to the pandemic
thereon; the availability and cost of financing, labour and
services; and ability to market crude oil, natural gas and NGL
successfully. Without limitation of the foregoing, future dividend
payments, if any, and the level thereof is uncertain, as the
Company's dividend policy and the funds available for the payment
of dividends from time to time is dependent upon, among other
things, free cash flow, financial requirements for the
Company's operations and the execution of its growth strategy,
fluctuations in working capital and the timing and amount of
capital expenditures, debt service requirements and other
factors beyond the Company's control. Further, the ability of
Tourmaline to pay dividends will be subject to applicable laws
(including the satisfaction of the solvency test contained in
applicable corporate legislation) and contractual restrictions
contained in the instruments governing its indebtedness, including
its credit facility.
Statements relating to "reserves" are also deemed to be forward
looking information, as they involve the implied assessment, based
on certain estimates and assumptions, that the reserves described
exist in the quantities predicted or estimated and that the
reserves can be profitably produced in the future.
Although Tourmaline believes that the expectations and
assumptions on which such forward-looking information is based are
reasonable, undue reliance should not be placed on the
forward-looking information because Tourmaline can give no
assurances that it will prove to be correct. Since forward-looking
information addresses future events and conditions, by its very
nature it involves inherent risks and uncertainties. Actual results
could differ materially from those currently anticipated due to a
number of factors and risks. These include, but are not limited to:
the risks associated with the oil and gas industry in general such
as operational risks in development, exploration and production;
delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertain impacts
of COVID-19 on Tourmaline's business, and the societal, economic
and governmental response to COVID-19; the uncertainty of estimates
and projections relating to reserves, production, revenues, costs
and expenses; health, safety and environmental risks; commodity
price and exchange rate fluctuations; interest rate fluctuations;
marketing and transportation; loss of markets; environmental risks;
competition; incorrect assessment of the value of acquisitions,
including the Jupiter acquisition; failure to realize the
anticipated benefits of acquisitions or dispositions; ability to
access sufficient capital from internal and external sources;
uncertainties associated with counterparty credit risk; failure to
obtain required regulatory and other approvals; changes in
legislation, including but not limited to tax laws, royalties and
environmental regulations; and political party policy changes or
mandates resulting from governmental elections in Canada and in the
United States. Readers are cautioned that the foregoing list
of factors is not exhaustive.
Additional information on these and other factors that could
affect Tourmaline, or its operations or financial results, are
included in the Company's most recently filed Management's
Discussion and Analysis (See "Forward-Looking Statements" therein),
Annual Information Form (See "Risk Factors" and "Forward-Looking
Statements" therein) and other reports on file with applicable
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com) or Tourmaline's website
(www.tourmalineoil.com).
The forward-looking information contained in this news release
is made as of the date hereof and Tourmaline undertakes no
obligation to update publicly or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, unless expressly required by applicable securities
laws.
NON-GAAP FINANCIAL MEASURES
This news release includes references to "free cash flow" and
"cash flow", "net debt" and "net capital expenditures" which are
financial measures commonly used in the oil and gas industry and do
not have a standardized meaning prescribed by International
Financial Reporting Standards ("GAAP"). Accordingly, the Company's
use of these terms may not be comparable to similarly defined
financial measures presented by other companies. Management uses
the term "free cash flow", "cash flow", "net debt" and "net capital
expenditures" for its own performance measures 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 a portion of its future growth expenditures, to pay
dividends or to repay debt. Investors are cautioned that these
non-GAAP financial measures should not be construed as an
alternative to net income or cash from operating activities
determined in accordance with GAAP as an indication of the
Company's performance. Free cash flow is calculated as cash flow
less total net capital expenditures and is prior to dividend
payments. Cash flow is defined as cash provided by operations
before changes in non-cash operating working capital. Net
debt is defined as bank debt plus working capital (adjusted for the
fair value of financial instruments and lease liabilities).
Net capital expenditures is defined as the sum of E&P capital
program and other corporate expenditures, net of non-core
dispositions. See "Non-GAAP Financial Measures" in the most
recently filed Management's Discussion and Analysis for additional
information regarding these non-GAAP financial measures including
reconciliations to the most directly comparable GAAP financial
measures.
OIL AND GAS METRICS
This news release contains certain oil and gas metrics which do
not have standardized meanings or standard methods of calculation
and therefore such measures may not be comparable to similar
measures used by other companies and should not be used to make
comparisons. Such metrics have been included in this document to
provide readers with additional measures to evaluate the Company's
performance; however, such measures are not reliable indicators of
the Company's future performance and future performance may not
compare to the Company's performance in previous periods and
therefore such metrics should not be unduly relied upon.
ESTIMATED ULTIMATE RECOVERY (EUR)
This news release contains a metric commonly used in the oil and
natural gas industry, "estimated ultimate recovery" (EUR). The term
EUR is the estimated quantity petroleum that is potentially
recoverable or has already been recovered from a well. EUR does not
have a standardized meaning and may not be comparable to similar
measures presented by other companies. As such, it should not be
used to make comparisons. Management uses EUR for its own
performance measurements and to provide shareholders with measures
to compare the Company's performance over time; however, such
measure is not a reliable indicator of the Company's future
performance and future performance may not compare to the
performance in previous periods and therefore should not be unduly
relied upon. EUR was determined internally by the Company by a
non-independent qualified reserves evaluator incorporating current
well results and historical well performance from the Company's
analogous pools in the nearby area.
RESERVES DATA
Jupiter 2P reserves of 357 mmboe as at December 31, 2019 have been evaluated by GLJ
Petroleum Consultants, an independent reserve evaluator. Reserves
are working interest gross reserves before deduction of royalties
payable to others and without including any royalty interests.
There are numerous uncertainties inherent in estimating
quantities of crude oil, natural gas and NGL reserves and the
future cash flows attributed to such reserves. The reserve
and associated cash flow information set forth above are estimates
only. In general, estimates of economically recoverable crude oil,
natural gas and NGL reserves and the future net cash flows
therefrom are based upon a number of variable factors and
assumptions, such as historical production from the properties,
production rates, ultimate reserve recovery, timing and amount of
capital expenditures, marketability of oil and natural gas, royalty
rates, the assumed effects of regulation by governmental agencies
and future operating costs, all of which may vary materially.
For those reasons, estimates of the economically recoverable crude
oil, NGL and natural gas reserves attributable to any particular
group of properties, classification of such reserves based on risk
of recovery and estimates of future net revenues associated with
reserves prepared by different engineers, or by the same engineers
at different times, may vary. The Company's actual
production, revenues, taxes and development and operating
expenditures with respect to its reserves will vary from estimates
thereof and such variations could be material.
The estimates of reserves and future net revenue for individual
properties may not reflect the same confidence level as estimates
of reserves and future net revenue for all properties, due to
effects of aggregations. The estimated values of future net
revenue disclosed in this news release do not represent fair market
value. There is no assurance that the forecast prices and
cost assumptions used in the reserve evaluations will be attained
and variances could be material.
BOE EQUIVALENCY
Per barrel of oil equivalent amounts have been calculated using
a conversion rate of six thousand cubic feet of natural gas to one
barrel of oil equivalent (6:1). Barrel of oil equivalents
(boe) may be misleading, particularly if used in isolation. A
boe conversion ratio of 6 mcf:1 bbl is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the
wellhead. In addition, as the value ratio between natural gas
and crude oil based on the current prices of natural gas and crude
oil is significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
Certain Definitions:
bbl
|
barrel
|
bbls/day
|
barrels per
day
|
bbl/mmcf
|
barrels per million
cubic feet
|
bcf
|
billion cubic
feet
|
bcfe
|
billion cubic feet
equivalent
|
bpd or
bbl/d
|
barrels per
day
|
boe
|
barrel of oil
equivalent
|
boepd or
boe/d
|
barrel of oil
equivalent per day
|
bopd or
bbl/d
|
barrel of oil,
condensate or liquids per day
|
CO2
|
carbon
dioxide
|
DUC
|
drilled but
uncompleted wells
|
EUR
|
estimated ultimate
recovery
|
FCP
|
flowing casing
pressure
|
gj
|
gigajoule
|
gjs/d
|
gigajoules per
day
|
mbbls
|
thousand
barrels
|
mmbbls
|
million
barrels
|
mboe
|
thousand barrels of
oil equivalent
|
mboepd
|
thousand barrels of
oil equivalent per day
|
mcf
|
thousand cubic
feet
|
mcfpd or
mcf/d
|
thousand cubic feet
per day
|
mcfe
|
thousand cubic feet
equivalent
|
mmboe
|
million barrels of
oil equivalent
|
mmbtu
|
million British
thermal units
|
mmbtu/d
|
million British
thermal units per day
|
mmcf
|
million cubic
feet
|
mmcfpd or
mmcf/d
|
million cubic feet
per day
|
MPa
|
megapascal
|
mstb
|
thousand stock tank
barrels
|
NGL or
NGLs
|
natural gas
liquids
|
NOx
|
nitrogen
oxide
|
SO2
|
sulphur
dioxide
|
tcf
|
trillion cubic
feet
|
ABOUT TOURMALINE OIL CORP.
Tourmaline is an investment grade Canadian senior crude oil and
natural gas exploration and production company focused on providing
strong and predictable long-term growth and a steady return to
shareholders through an aggressive exploration, development,
production and acquisition program in the Western Canadian
Sedimentary Basin by building its extensive asset base in its three
core exploration and production areas and exploiting and developing
these areas to increase reserves, production and cash flows at an
attractive return on invested capital.
SOURCE Tourmaline Oil Corp.