Tourmaline Guides to CAD 1.8 Billion 2027 Free Cash Flow

Tourmaline Oil expects CAD 1.8 billion in free cash flow in 2027 at current strip pricing (the forward commodity price curve), a 71% jump from its July forecast, executives said on the company's third-quarter earnings call. The Canadian producer reported Q3 net earnings of CAD 641.5 million and cash flow of CAD 788 million, or CAD 2.02 per fully diluted share.

Average production came in at 593,700 barrels of oil equivalent per day, just below guidance of 595,000 to 605,000 boe/d. President and CEO Mike Rose said the shortfall was deliberate. Tourmaline deferred production and injected gas into storage to capture stronger prices in the fourth quarter and the first quarter of 2027, and it expects roughly 80 new wells to enter production during Q4.

What does the production ramp look like?

Current output is averaging 630,000 to 635,000 boe/d, Rose said, with a 2026 exit rate target of about 670,000 boe/d. He credited strong well performance in the Northeast British Columbia Montney and Alberta Deep Basin complexes. Capital spending for 2027 is budgeted at CAD 2.6 billion.

CFO Jamie Heard attributed roughly two-thirds to three-quarters of the free cash flow upgrade to improved commodity prices. The forecast also assumes a "mega deduction" — a federal tax write-off mechanism — takes effect in 2027, which Heard estimated at CAD 200 million to CAD 300 million of impact that year.

Infrastructure is keeping pace. The Aitken c-38-C deep-cut gas processing facility expansion finished on schedule, with sales gas moving in the second half of November. The Groundbirch-Monias deep-cut plant remains on track for startup in Q4 2027.

How is the company using storage and hedging?

Storage capacity will grow to 14 billion cubic feet next year from 10 billion currently. Storage plus well timing lets Tourmaline sell more gas into stronger winter markets, Heard said. Tourmaline realized CAD 3.41 per thousand cubic feet in Q3 against just CAD 1.59 for the AECO 5A benchmark — the Alberta spot gas price.

Operating expenses fell 7% year over year to CAD 4.48 per boe, and net debt stood at CAD 1.54 billion at September 30, below the CAD 1.75 billion long-term target. For the remainder of 2026, the company has hedged an average of 887 million cubic feet per day of gas at a weighted average fixed price of CAD 5.07 per thousand cubic feet. Heard said Tourmaline expects to increase hedging tied to the European TTF and Asian JKM benchmarks while keeping some open price exposure.

What changes for shareholders?

Tourmaline raised its quarterly base dividend 5% in September and will direct most proceeds from a Topaz Energy secondary offering toward buybacks. It repurchased 1.3 million shares between September 23 and October 9 at an average of CAD 61.88 each, with more purchases planned for November and December.

Heard said management currently favors buybacks as the return mechanism, though allocation decisions wait until free cash flow reaches the accounts. He said management believes the shares trade below fair value, citing asset improvements and natural gas demand prospects.

What is Emerald Energy Technologies?

Tourmaline has formed Emerald Energy Technologies, a clean technology business spanning power generation and transmission, compressed natural gas and related fuels, and resource technologies including carbon capture and water management. Emerald will seek private equity financing to partly fund its 2027 purchase of Tourmaline's water recycling facilities, its interest in an existing compressed natural gas fueling network, and power assets. Rose said the businesses were built inside Tourmaline over several years and are now large enough to bring to market.

Tourmaline, Emerald and Stream Data Centers are also working exclusively on the Malachite One powered-land and data center campus. Site preparation should begin later in Q4. Rose expects an initial rental-based power phase to consume Tourmaline gas and generate electricity in early 2028, ramping to a full gigawatt around 2029.