Tourmaline Oil (TOU) Q3 2024 earnings summary

Executive summary

• Q3 2024 cash flow reached CAD 742 million (CAD 2.09 per diluted share), supported by strong realized natural gas prices of CAD 3.19 per MCF.

• Net earnings for Q3 were CAD 355 million (CAD 1.00 per diluted share), a 29% increase year-over-year.

• A special dividend of CAD 0.50 per share was declared, bringing total dividends to CAD 3.25 per share since December 2023 (5% trailing yield).

• Closed the acquisition of Crew Energy and a transaction with Topaz Energy, receiving CAD 278 million in proceeds.

• Q3 average production was over 557,000 BOEs/day, up 11% year-over-year and at the high end of guidance.

• Largest natural gas producer in Canada and fourth largest in North America, with 5.0 billion Boe 2P reserves and 22.7 Tcf gas reserves.

Financial highlights

• Free cash flow for Q3 was CAD 152.5 million, with total CapEx of CAD 591 million (E&P expenditures: CAD 575 million).

• Net debt at Q3 2024 exit was CAD 1.7 billion, with a new long-term net debt target of CAD 1.5 billion.

• 45 million Topaz shares held, valued at over CAD 1.2 billion as of September 30.

• 2025E cash flow forecast at $4.1B, free cash flow at $1.1B, and free cash flow yield of 5%.

• Dividend yield: 2% base, 5% including specials; total payout ratio for 2025 at 85%.

Outlook and guidance

• Q4 2024 production expected between 600,000 and 620,000 BOEs/day; exit rate forecasted at 630,000–640,000 BOEs/day.

• 2025 average production guidance: 635,000–665,000 BOEs/day (midpoint: 650,000 BOEs/day); liquids production forecasted at 162,000 barrels/day.

• 2025 E&P capital budget set at CAD 2.6–2.85 billion, with flexibility to adjust for commodity price volatility.

• Plan to drill about 365 wells in 2025; North Montney Phase One to add 50,000 BOEs/day over three years.

• Anticipates generating over $1.1 billion in free cash flow annually through 2029 at current strip pricing.