Tourmaline Oil CEO says oilpatch acquisition environment still 'positive'

The CEO of Tourmaline Oil Corp. says there are still plenty of potential acquisition targets in Western Canada but that may change if recently higher global oil prices continue to strengthen.

On a conference call to discuss fourth-quarter results, Mike Rose says the company is looking at several possible deals as it celebrates higher earnings and production following a year in which it completed four corporate acquisitions.

Tourmaline closed deals to buy two private producers, Modern Resources Inc. and Jupiter Resources Inc., in the fourth quarter, adding 76,000 barrels of oil equivalent per day of output for a total of about $526 million in cash and shares.

The Calgary-based company, the largest natural gas producer in Canada, says it produced an average of about 336,000 boe/d in the fourth quarter, up 12 per cent from just under 300,000 boe/d in the year-earlier period. Current production is above 405,000 boe/d.

'I'd term it as positive'

Rose says the company's program to eventually convert all of its drilling and well-completion operations from diesel to lower-emitting natural gas to date has resulted in displacing 34.6 million litres of diesel and saved $28 million, including the cost of the natural gas.

He says one of Tourmaline's rigs is operating entirely on electric power but that is difficult to replicate because powerline infrastructure is limited in many of the areas where the company works.

He says the company has opened a methane testing and research facility at a gas plant to find ways to accurately measure fugitive, flare and storage methane emissions with an eventual goal of zero-methane emission well sites. Methane, the main component of natural gas, is a potent greenhouse gas.

"There still are lots of opportunities so I'd term it as positive," Rose said when asked about the current environment for oil and gas asset purchases.

"I mean, if oil prices continue to run and solidify then perhaps that pipeline of opportunities slows down but right now we're always busy evaluating and we only transact on very small proportion of the things we look at."

Benchmark U.S. oil prices rising

Benchmark U.S. oil prices have risen by more than 36 per cent so far in 2021.

Tourmaline had net income in the last three months of 2020 of $629 million, more than 10 times the $61.3 million it reported in the same period of 2019.

It said the increase in net earnings reflects a gain on acquisitions and divestitures of $500 million in the fourth quarter of 2020 and a five per cent increase in operating netbacks.

Tourmaline announced Wednesday it would raise its quarterly dividend by 14 per cent to 16 cents per share.

Its shares rose by as much as $2.28 or 9.2 per cent on Thursday to $27.01 before falling back below $26.