Tourmaline Year-End Results Show Little Surprise


There were few surprises in Tourmaline Oil’s year-end results, but plenty of positive factors for investors to embrace. The company hit record production levels in 2012, as expected (this figure was disclosed last month in its reserve estimate release), and commented briefly on its increased production guidance for 2013.

Management now believes it will average 80 thousand barrels of oil equivalent per day of production in 2013 (up from 75 mboe/d) as higher gas prices allow the firm to increase its rig count from 8 to 11. Digging into the latest corporate presentation, we see that the firm has also raised its 2014 guidance (not discussed in the news releases) from 95 mboe/d to 107 mboe/d as it maintains its higher rig count.

Costs for the firm fell on a per unit basis. Most notably, operating expense was down 21% from 2011 as the company continued to move gas processing into internally owned facilities, reducing the related expense. The firm expects cash flow (cash flow from operations before noncash working capital changes) to be roughly CAD 650 million in 2013.

Based on anticipation of the higher production levels, higher commodity prices for 2013-15, and lower costs across for the duration of our 2013-17 forecast, investors are looking for stellar results in the near future.


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