Tourmaline posts record production in Q1
Tourmaline Oil, Canada’s largest natural gas producer, said May 3 it had record production in the first quarter this year, despite service interruptions on a third-party liquids pipeline through much of the first two months of the year.
Total production averaged 525,916 barrels of oil equivalent (boe)/day, up from 507,059 boe/day in Q1 2022. Natural gas production averaged 2.47bn ft3/day, a 5% increase over the first quarter last year.
Net earnings for the quarter fell to C$250.3mn (US$184mn) from C$675.9mn in Q1 2022, a decline which reflected an unrealised loss on financial instruments of C$1.03bn related to the accounting for the embedded derivatives in Tourmaline’s natural gas supply agreement with Cheniere Energy.
Cash flow increased 5% in Q1 2023, to C$1.13bn from C$1.07bn, generating free cash flow of C$525.4mn. With free cash flow expected to reach C$2bn in 2023, Tourmaline increased its quarterly base dividend effective Q2 2023 to an annualised C$1.04/share from C$1.00/share and declared a special dividend of C$1.50/share, payable on May 19 to shareholders of record on May 11.
Tourmaline intends to return 100% of its free cash flow to shareholders in 2023, through base dividends, special dividends and share buybacks.
Tourmaline’s average realised gas price in the first quarter was C$6.18/’000 ft3, up from C$4.86/’000 ft3 in Q1 2022 and “significantly higher” than the benchmark AECO 5A average of C$3.28/’000 ft3 in Q1 2023.
Tourmaline has about 801mn ft3/day of its 2023 production hedged at a weighted average fixed price of C$5.58/’000 ft3 and about 731mn ft3/day unhedged and exposed to export markets, 71% of which is to premium export markets such as the US Gulf Coast, Japan Korea Marker (JKM) LNG markets and western US markets.
In the first quarter, Tourmaline began deliveries of 140mn ft3/day to Cheniere Energy’s Sabine Pass LNG terminal in Louisiana, where its average Q1 realised price before liquefaction and shipping fees was US$19.44/’000 ft3. The 2023 JKM strip price in mid-April for the last three quarter was US$14.87/’000 ft3; Tourmaline has 31mn ft3/day hedged at a weighted average fixed JKM price of US$31.26/’000 ft3 for 2023.