Published: August 18, 2021 |

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Tourmaline Oil Corp. has entered into a definitive agreement to acquire privately owned Black Swan Energy Ltd. for a total consideration of approximately CAD$1.1 billion, consisting of 26 million Tourmaline common shares and the assumption of net debt up to a maximum of $350 million, including all transaction costs. The transaction is expected to close in the second half of July 2021, subject to regulatory approvals.

The acquisition represents a further important component of the company’s ongoing North Montney consolidation strategy. Tourmaline envisions the North Montney as the key sub-basin for supplying Canadian LNG, as the company expects the North Montney to be the primary growth driver in the entire Western Canadian Sedimentary Basin for the next decade.

The Black Swan acquisition complements Tourmaline’s core Gundy development and, along with the more recent Polar Star, Chinook, and Saguaro transactions, will establish Tourmaline as the largest current North Montney producer with the most extensive future drilling and project inventory. As a Senior Canadian producer, Tourmaline now expects to average approximately 500,000 boepd of production by mid-2022.

TOURMALINE PLANS AND OUTLOOK

• The Black Swan acquisition will facilitate Tourmaline evolving into a 500,000 boepd company during 2022, with anticipated mid-2022 gas production of 2.25-2.30 bcf/day and total liquid production of 115,000 bpd (oil, condensate, NGLs).

• The acquisition is expected to grow Tourmaline’s North Montney production to approximately 175,000 boepd during 2022, inclusive of the Gundy Phase 2 expansion commencing production in January 2022.

• The company’s envisioned North Conroy expansion is expected to increase Tourmaline North Montney production by an additional 100,000 boepd post 2025.

• Tourmaline expects the Black Swan assets to generate a $150-200 million/year in free cash flow at strip pricing in 2022 and beyond. The FCF accelerates in 2023 after existing Black Swan natural gas hedges expire.

• Tourmaline will complete the Nig Creek Phase 2 plant expansion growing production to 60,000 boepd in 1H 2022 and plans to maintain production at those levels. There is a current available drilling inventory in the core Aitken development to maintain production at these levels for approximately 15 years. Annual maintenance capital is estimated at $65 - 70 million (16-18 wells/year).

• An expansion of the North Aitken plant, with deep cut capability installation, is currently scheduled in the 2024-2025 time frame, adding an incremental 15,000 boepd to the Black Swan production base. Tourmaline will match this incremental project to the timing of incremental Basin egress capacity that the Company secures.

• Tourmaline expects to be able to reduce cash and capital costs for the Black Swan assets, improving margins/FCF generation commencing in 2022.

About Tourmaline
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.

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