Tourmaline Reports Q1 2019 Results, Montney Ops

Tourmaline Oil Corp. reported financial and operating results for the first quarter of 2019.

Highlights:

• Q1 2019 production averaged 293,434 boepd, a 9% increase over Q1 2018 and a 6% increase over the prior quarter. March 2019 production averaged 301,336 boepd.

• Q1 2019 cash flow(1) was $419.2 million ($1.54/fully-diluted share) compared to Q1 2019 capital spending of $384.4 million.

• Q1 2019 net earnings were $87.7 million ($0.32/fully-diluted share).

• The Company has decided to increase the quarterly cash dividend by 20% to $0.12 per common share from $0.10 per common share.

• Construction of the C-60-A Gundy deep-cut gas plant is complete, and the Company has received the necessary approvals from the B.C. Oil and Gas Commission to commence production.

Production Update

• Q1 2019 production averaged 293,434 boepd, a 9% increase over Q1 2018 and a 6% increase over the prior quarter. March 2019 production averaged 301,336 boepd.

• Full-year 2019 average production guidance remains unchanged at 300,000 boepd (290,000 – 300,000 boepd for first half 2019 and 310,000 – 320,000 boepd for 2H 2019).

• March 2019 liquids production was 55,010 bpd. January and February liquids production was impacted byweather-related outages and unplanned facility interruptions in the Peace River High complex. The Company is on track to reach the full-year liquid production forecast average of 66,000 bpd with the new Gundy deep cut facility providing significant growth for the final seven months of the year.

Q1 2019 Financial Highlights

• Q1 2019 cash flow was $419.2 million ($1.54/fully-diluted share) compared to Q1 2019 capital spending of $384.4 million.

• Q1 2019 net earnings were $87.7 million ($0.32/fully-diluted share).

• Q1 2019 operating netback(2) was $16.65/boe.

• Tourmaline’s natural gas diversification and hedging strategies provided an average realized natural gas price of $3.59/mcf, a 36% premium over the Q1 average AECO index price of $2.64/mcf.

• Q1 2019 operating costs were $3.49/boe. The start-up of the Company-operated Gundy deep-cut plant is expected to drop overall corporate operating costs by $0.10 - $0.15/boe incorporated in full-year 2019 guidance of $3.45/boe.

• Free cash flow(3) of $34.8 million from Q1 was the result of record production levels, strong realized natural gas prices and capital discipline during a high-activity quarter.

• G&A expenses(4) of $0.46/boe in Q1 2019 are amongst the lowest in the sector.

• Net debt(5) was reduced by $5.1 million in the first quarter of 2019 to $1.713 billion after the dividend payment of $27.2 million.

2019 Capital Program

Q1 2019 capital spending of $384.4 million compared to Q1 cash flow of $419.2 million provided $34.8 million of free cash flow in the first quarter. The first quarter is typically the period of heaviest capital investment during the year.

Tourmaline anticipates total Q2 2019 EP capital expenditures of $200.0 - $210.0 million.

With the early start-up of the Gundy plant providing a modest production cushion and continued reduction of per-well capital costs, the Company has decided to reduce the full-year 2019 capital program by a further $25.0 million to $1.2 billion. Average production guidance remains unchanged at 300,000 boepd.

Dividend

The Company has decided to increase the quarterly cash dividend to $0.12 per common share from $0.10 per share and the Board of Directors has declared a quarterly cash dividend on the common shares of $0.12 per share for the second quarter of 2019. The dividend will be payable June 28, 2019 to shareholders of record at the close of business on June 14, 2019. This quarterly cash dividend is designated as an “eligible dividend” for Canadian income tax purposes.

Cost Management

Tourmaline continues to employ multiple new technologies and field approaches to reduce drill-and-completecapital costs. The Company has reduced capital costs to drill, complete and stimulate horizontal wells by between 40% and 50% over the last six years in all three operated complexes. Tourmaline is seeking a further 10% capital cost reduction over the next two years.

One of the new technical approaches to reduce capital costs is monobore drilling in the Alberta Deep Basin. The Company has trialed fifteen monobore wells to date, realizing an average $550k capital reduction per well thus far (25% drilling cost reduction). As the Company more broadly implements this technology, per- well cost reduction is expected to reach $650k/well.

Gundy BC Project Update - Montney

The large Gundy Montney development project is the only significant EP project for the Company in Q2 2019. Tourmaline is currently operating two drilling rigs as well as constructing a 200 mmcfpd deep-cut facility. The combination of high-deliverability liquid-rich natural gas (50 – 100 bbls/mmcf of condensate and NGLs), continuously-dropping drill/complete costs, and very low operating costs due to the sweet natural gas composition ($<3.00/boe) make Gundy one of the most profitable Montney sub-plays in the entire Basin.

Construction of the C-60-A Gundy deep-cut natural gas plant is complete, and the Company has received the necessary approvals from the B.C. Oil and Gas Commission to commence production. Tourmaline will begin circulating hydrocarbons through the plant during the next two weeks with steadily-increasing natural gas and liquid sales volumes expected later this month. From the driving of the first pile, the entire 200 mmcfpd gas and liquids processing facility took six months and one day to complete and came in on budget.

Tourmaline currently has 68 completed Montney natural gas/condensate wells available for production with an expected additional 22 wells available in July through completion operations on two existing pads. TheCompany-operated deep-cut plant and available third-party processing options could be full at that point.

The Company will continue to operate two drilling rigs in the Gundy complex and expects to have a total of 115 completed Montney wells by year-end.

Tourmaline continues to reduce completed and stimulated well costs. The most recent Gundy pacesetter well was drilled in 6.8 days for $1.27 million (measured depth - 3,682m), resulting in a completed/stimulated well cost of less than $2.5 million. The Company is currently budgeting $3.3 - $3.5 million for completed natural gas wells in the Gundy complex.

Sunrise-Doe Complex

Strong production rates have been realized from the Montney turbidite horizon in the Sunrise-Doe complex during April 2019. The C4-6 well averaged 11.7 mmcfpd of natural gas and 994 bbls/day of condensate (85 bbls/mmcf) on a six-day test. The 4-6 well averaged 12.9 mmcfpd of natural gas and 944 bbls/day of condensate (73.2 bbls/mmcf) on a three-day test.