Tourmaline Oil’s Earnings Call: Strong Production Amid Challenges

Tourmaline Oil ((TSE:TOU)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Tourmaline Oil highlighted a mix of strong operational performance and financial challenges. The company demonstrated robust production results and strategic agreements, yet faced hurdles due to low natural gas prices and pipeline curtailments that impacted cash flow. Overall, the sentiment was cautiously optimistic, with a focus on strategic growth and cost management despite external pressures.

Strong Production Performance

Tourmaline Oil reported a strong production performance in Q3 2025, achieving an average production of 634,750 BOEs per day, which was at the high end of their guidance range. Looking ahead, the company expects fourth-quarter production to average between 655,000 and 665,000 BOEs per day, with a year-end exit volume projected between 680,000 and 700,000 BOEs per day.

Natural Gas Storage Agreement and LNG Contracts

The company has entered into a long-term natural gas storage agreement with AltaGas at their Dimsdale facility. Additionally, Tourmaline secured both short-term and long-term LNG gas supply contracts, which will enhance its existing portfolio and provide more stability in gas supply and pricing.

Earnings and Cash Flow

In the third quarter of 2025, Tourmaline reported earnings of $190 million and cash flow of $720 million. Despite these figures, the company faced challenges due to low natural gas prices, which affected overall cash flow.

Cost Reduction Initiatives

Tourmaline has successfully implemented cost reduction initiatives, with Q3 2025 corporate operating expenses at $4.80 per BOE, marking a 7% improvement from the first half of the year. The company remains focused on further margin improvement initiatives.

Special Dividend

Tourmaline declared a special dividend of $0.25 per share, payable on November 25, and plans to declare a quarterly base dividend of $0.50 per share in December, reflecting its commitment to returning value to shareholders.

Impacted Cash Flow Due to Low Gas Prices

The company’s third-quarter realizations were significantly affected by low natural gas prices, with AECO and Station 2 pricing averaging $0.64 and $0.48 per Mcf, respectively. This pricing environment posed challenges to maintaining expected cash flow levels.

Curtailments on Export Pipelines

Export pipeline curtailments reduced the volumes accessing downstream markets by approximately 155 million cubic feet per day, which impacted natural gas revenue in September. This highlights the challenges in infrastructure affecting the company’s revenue streams.

High EP Expenditures

Tourmaline’s exploration and production expenditures for Q3 2025 were $825 million, with the full-year capital budget remaining steady at $2.6 billion to $2.85 billion. This reflects the company’s commitment to maintaining its growth strategy despite financial pressures.

Forward-Looking Guidance

Tourmaline provided forward-looking guidance, maintaining its 2025 capital expenditure budget and projecting 2026 cash flow of about $4 billion. The company anticipates a 30% growth in high-margin production by 2031, targeting an average production of 850,000 BOEs per day. Additionally, Tourmaline plans to declare a quarterly base dividend of $0.50 per share in December, alongside a special dividend.

In summary, Tourmaline Oil’s earnings call reflected a cautiously optimistic outlook, with strong production performance and strategic agreements balancing the challenges posed by low natural gas prices and pipeline curtailments. The company’s focus on cost reduction and strategic growth initiatives positions it well for future success, despite the current financial pressures.