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    Canada’s Tourmaline boosts 2021 capital budget

Summary

Base dividend will also increase, and a special dividend scheduled for October

by: Dale Lunan

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Canada’s Tourmaline boosts 2021 capital budget

Tourmaline Oil, Canada’s largest natural gas producer, said September 22 it would increase its 2021 capital spending budget to $C1.375bn (US$1.09bn) from C$1.27bn by accelerating the drilling of about 21 wells from its 2022 drilling programme to the fourth quarter this year.

It also declared a special dividend of C$0.75/share, payable on October 7 to shareholders of record on October 1, and raised its base quarterly dividend by C$0.01/share, to C$0.18/share, payable on December 31. The increased base dividend and the special dividend reflect stronger than expected 2021 commodity prices and production volumes and the early achievement of long-term net debt targets.

With the increased 2021 capital budget, Tourmaline now expects production this year will average 440,000-445,000 barrels of oil equivalent (boe)/day, generating full-year cash flow of C$3bn and free cash flow of C$1.6bn. Exit rate production this year is forecast in the 500,000 boe/day range.

The 2022 capital budget of C$1.125bn – essentially a maintenance program – remains unchanged and is expected to deliver average production of 500,000-510,000 boe/day, cash flow of C$3.7bn and free cash flow of C$2.5bn, based on current strip pricing.

Tourmaline says it will monitor natural gas supply/demand balances and schedule new production startups appropriately through the course of this winter and the balance of 2022. It has 100mn ft3/day of incremental egress capacity on TC Energy’s Gas Transmission Northwest (GTN) system, which provides access to Pacific Northwest and California markets, in 2022, and a further 50mn ft3/day in 2023, and 140mn ft3/day of egress capacity to serve Gulf Coast LNG markets starting in 2023.

“Total volumes on the GTN system will grow from 330mn ft3/day currently to 480mn ft3/day by 2H 2023, with over 80% of these volumes accessing the California market,” Tourmaline said. “Incremental company gas volumes in 2022/2023 will not be directed at AECO or Station 2.”