Tourmaline says output will exceed guidance
Better than expected results from its liquids-rich gas plays in B.C. and Alberta will boost Tourmaline Oil Corp.’ s exit volumes by about eight per cent over guidance, it said Wednesday.
The Calgary-based company said it expects to be producing 70,000 barrels of oil equivalent per day, an increase from previous guidance of 63,00065,000 boe/d.
“Our B.C. Montney and our Deep Basin Cretaceous horizontals are well ahead of template expectations,” president and chief executive Mike Rose said in an interview.
“Our liquids are about 70 per cent condensate and light oil and then the other 30 per cent is an NGL (natural gas liquids) mix. Condensate seems to get a premium price still because there’s seems to be an insatiable demand on the oilsands front.”
Condensate, the lightest of the liquids, is used as diluent to allow oilsands crude to flow in a pipeline.
Tourmaline left its 2013 guidance unchanged at an average of 75,000 boe/d of production and $650 million in capital spending.
“They’ve had considerable success on two different projects,” noted Peters & Co. research analyst Adam Twa.
“At their northeast B.C. Montney play they’ve had some very high-rate wells there, and then their Wilrich drilling in the Deep Basin (of Alberta) has exceeded expectations.”
Like all liquids producers, Tourmaline is affected by low current North American prices for propane due to a glut of supply, Twa said.
Tourmaline confirmed it is joining Perpetual Energy Inc. in selling their non-producing Elmworth property in west central Alberta for $155 million ($77.5 million each) to an unnamed party.
“It’s a capital allocation thing,” said Rose. “We’ve got 4,000 horizontal wells in inventory between the Deep Basin and northeast B.C. Montney that are higher return than Elmworth Montney.
“It’s the weakest of the things we have, so I don’t know if we’d ever allocate capital to it. Plus, the gas is sour.”
Perpetual, which has been shedding assets over the past year to strengthen its balance sheet, said in an announcement Tuesday the companies have drilled three horizontal Montney gas wells and one vertical well on the property being sold, which includes 8,100 hectares of undeveloped land.
“Due to the long development timeline and significant capital required to build sour gas infrastructure into the Elmworth area to establish cost-efficient production, Perpetual has chosen to build the liquids-rich gas component of its diversified portfolio around the robust inventory of Wilrich horizontal development opportunities in the greater Edson area,” it said in a release.
An analyst who asked not to be identified said the buyer is believed to be Sinopec Daylight Energy Ltd.
Perpetual said it plans to use proceeds to reduce bank debt. It said with the dispositions it has announced recently and a $40-million first-quarter spending plan, it hopes to reach March 31 with $35 million to $40 million drawn on its credit facility, down from the current $85 million.
Tourmaline reported it is currently operating 10 drilling rigs and will continue to operate nine or 10 rigs during the first quarter of 2013.
Tourmaline stock closed down 35 cents at $30.31. Perpetual gained five cents to $1.20.