Canada’s Tourmaline posts record results in 2022
Tourmaline Oil, Canada’s largest natural gas producer, said March 1 it had record earnings, cash flow and free cash flow in 2022, allowing it to increase its quarterly base dividend three times through the year.
After tax net earnings for 2022 more than doubled, to C$4.5bn (US$3.3bn), while cash flow rose 67%, to C$4.9bn from C$2.9bn.
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Free cash flow of C$3.2bn supported not only the increase in base dividends (to an annualised C$1.00/share from C$0.72/share) but also four special dividends totaling C$7.00/share in 2022. A special dividend of C$2.00/share was paid on February 1 this year, driving Tourmaline’s intent to return 50-90% of free cash flow to investors.
Natural gas production in 2022 averaged 2.33bn ft3/day, up from 2.06bn ft3/day in 2021. Tourmaline realised an average natural gas price of C$5.87/’000 ft3 for the year, up from C$3.94/’000 ft3 in 2021 in part due to its focus on higher-margin natural gas markets in western North America: in the fourth quarter, for example, the Malin index in Oregon averaged US$14.42/’000 ft3, while the PG&E California index averaged US$15.87/’000 ft3.
In 2023, Tourmaline will increase volumes exported to these markets to 495mn ft3/day from 345mn ft3/day in 2022, with about 74% of the natural gas expected to access the premium PG&E California index price.
Tourmaline also expects to see material improvement in its realised natural gas prices this year as deliveries of 140mn ft3/day began in January to US LNG developer Cheniere Energy’s Sabine Pass liquefaction terminal in Louisiana, making Tourmaline the first Canadian producer to participate directly in the US LNG business with exposure to lucrative Japan Korea Marker (JKM) pricing.
Under terms of the long-term gas supply agreement with Cheniere, Tourmaline receives the JKM price – the 2023 JKM strip is about US$19.24/’000 ft3 – for gas delivered to Sabine Pass, net of liquefaction and shipping fees.
On the environmental performance front, Tourmaline expanded operations at its Emissions Testing Centre (ETC), the first of its kind in the world, at its West Wolf gas plant, which it owns jointly with Perpetual Energy. With support from the Natural Gas Innovations Fund, 18 new clean technologies have now been tested at the ETC, a critical step in evolving the commercialisation of technologies and methodologies to reduce methane and other greenhouse gas emissions.