Tourmaline Oil (TOU) Q2 2024 earnings summary

Executive summary

• Q2 2024 average production reached 562,000 BOE/d, up 13% year-over-year and within guidance.

• Generated strong free cash flow of $433.5 million and reduced net debt by $137 million in Q2 2024.

• Quarterly base dividend increased by 3% to $0.33/share, with a special dividend of $0.50/share declared.

• Maintains lowest capital cost and emissions intensity among Canadian senior producers, with a 42% reduction in CO₂e/boe since 2013.

• Largest natural gas producer in Canada and fifth largest in North America, with 5.0 billion Boe 2P reserves and 75 years of drilling inventory.

Financial highlights

• Q2 2024 net earnings were $257 million, or $0.72 per diluted share; cash flow was $755 million ($2.12 per diluted share).

• Q2 2024 operating netback was $15.36/boe, down 20% year-over-year.

• Average realized natural gas price was $3.03/mcf, well above the AECO 5A index of $1.20/mcf.

• 45.1 million shares of Topaz held, valued at $1.1 billion as of June 30, 2024.

• 2024E cash flow: $3.4B; free cash flow: $1.3B; E&P capital program: $2.0B; net debt: $1.6B (net of Topaz equity stake: $0.4B).

Outlook and guidance

• Full-year 2024 average production guidance revised to 575,000–585,000 BOE/d; 2025 guidance at 620,000 BOE/d.

• 2024 cash flow expected at $3.4 billion ($9.62 per diluted share) and free cash flow at $1.3 billion ($3.63 per diluted share).

• Select Q3 frac deferrals to Q4 to align production with anticipated stronger gas prices; minimal 2024 cash flow impact, positive for 2025.

• 2024 EP capital budget remains unchanged at $2 billion.

• Free cash flow allocated to dividends, buybacks, M&A, infrastructure, and exploration.