Tourmaline Hits Record Output, Boosts Cash Flow on Global Gas Plays

CALGARY, AB – May 06, 2026 – By Janet Adams

Tourmaline Oil Corp. has demonstrated a masterful navigation of a complex energy market, posting record first-quarter production and significantly upgrading its free cash flow (FCF) forecast for 2026 and 2027. Despite persistent weakness in North American natural gas prices, Canada's largest gas producer is reaping the rewards of a multi-pronged strategy focused on international market diversification, relentless cost-cutting, and operational excellence.

The Calgary-based company announced Wednesday that it achieved an average production of 666,089 barrels of oil equivalent per day (boepd) in the first quarter of 2026. More impressively, it now anticipates generating approximately $0.9 billion in free cash flow in both 2026 and 2027. This robust financial outlook is fueled by soaring global prices for liquids and liquefied natural gas (LNG), where Tourmaline has strategically increased its exposure, effectively insulating its bottom line from a sluggish domestic market.

The Global Gambit Pays Off

At the heart of Tourmaline’s success is its sophisticated marketing strategy, which has allowed it to capture premium international prices while its North American counterparts grapple with low benchmarks. In the first quarter, the company’s average realized natural gas price was CAD $3.59 per thousand cubic feet (mcf), a remarkable 75% premium over the benchmark AECO price of CAD $2.05/mcf.

This outperformance is no accident. Tourmaline has methodically built a diversified portfolio with significant exposure to higher-priced international markets. The company has an average of 220,000 million British thermal units per day (mmbtu/d) exposed to international pricing benchmarks like the Japan Korea Marker (JKM) and the Dutch Title Transfer Facility (TTF) in 2026, a figure set to grow to over 333,000 mmbtu/d by the end of 2028. With JKM and TTF prices trading above USD $15/mmbtu for the balance of the year—a 62% increase since January—the financial benefits are substantial.

It’s a similar story for the company's natural gas liquids (NGLs). As one of Canada’s largest propane producers, Tourmaline has secured access to Pacific exports, with about 45% of its propane production receiving pricing linked to the Argus Far East Index (AFEI). Driven by global demand, this index is trading 25% higher than it was before recent geopolitical conflicts, leading the company to forecast that its overall 2026 NGL realizations will be approximately 30% higher than in 2025.

To further capitalize on price volatility, the company is enhancing its market flexibility through increased storage capacity, including a new agreement at AltaGas' Dimsdale facility. This allows Tourmaline to inject gas into storage during periods of weak summer pricing and sell it when market fundamentals strengthen, turning a market challenge into a strategic advantage.

Operational Excellence and Cost Discipline

Tourmaline’s financial strength is built on a foundation of operational prowess and an unwavering focus on cost control. The company’s wells in both the NEBC Montney and Alberta Deep Basin complexes continue to outperform historical averages, with new wells showing production rates 6% to 13% higher than those drilled in the past five years. This efficiency allowed the company to hit its production targets in Q1 despite deferring some capital spending.

This operational excellence is matched by rigorous cost management. First-quarter operating costs fell 8% year-over-year to $4.75/boe, and the company is targeting a full-year 2026 opex of just $4.50/boe. Looking further ahead, Tourmaline has set an ambitious goal to reduce its combined operating and transportation costs by $1.50/boe by 2031, having already made significant progress toward that target.

This discipline extends to its capital budget. After an initial reduction, the 2026 exploration and production capital budget remains at $2.55 billion, but the company has identified another $200 million in drilling and completion capital that could be deferred if North American gas prices remain weak, demonstrating a flexible approach that prioritizes returns over sheer volume.

Reshaping for Future Growth and Sustainability

While managing the present, Tourmaline is aggressively building for the future. Two major infrastructure projects in Northeast British Columbia—the Aitken expansion and the Groundbirch deep cut plant—remain on schedule for completion in late 2026 and late 2027, respectively. These facilities are critical to unlocking the full potential of the company's vast Montney reserves and connecting low-cost production to high-value LNG markets.

The company is also strategically refining its asset base. The recent sale of its higher-cost Peace River High assets for $765 million allows capital to be redeployed into the core Montney and Deep Basin plays, funding the new infrastructure and permanently reducing debt.

This growth is being pursued in tandem with industry-leading environmental performance. In a significant milestone, Tourmaline became the first Canadian company to achieve a Grade 'A' certification for methane performance under the independent MiQ standard for its entire integrated NEBC gas production and processing operations. This positions the company to supply verified low-methane-intensity natural gas to discerning global buyers.

Furthermore, its diesel displacement program, which uses natural gas to power drilling rigs and frac spreads, has already saved the company over $245 million and displaced 250 million litres of diesel. The company has now set a new 10-year target to achieve $565 million in total savings from the initiative, underscoring its dual commitment to cost reduction and emissions reduction.

Rewarding Shareholders Amidst Volatility

Tourmaline's robust financial position, characterized by a net debt of $1.5 billion that is well below its long-term target, provides significant flexibility. This financial strength allows the company to simultaneously invest in long-term growth and deliver substantial returns to its shareholders.

The company announced its intention to declare a quarterly base dividend of $0.50 per share in June, continuing its policy of providing a reliable income stream to investors. Given the strong free cash flow outlook, the potential for additional special dividends or share buybacks remains high.

In its release, Tourmaline noted that with the volatility in commodity prices, it will announce potential allocations for its anticipated excess free cash flow, including increased shareholder returns, in the coming quarters. This patient and strategic approach to capital allocation ensures that the company can continue to build long-term value while rewarding its investors for their confidence. As global energy markets continue to evolve, Tourmaline's blend of operational efficiency, market savvy, and financial discipline positions it for sustained success.