Tourmaline Oil Corp. (“Tourmaline” or the “Company”) is pleased to announce that it has closed the acquisition of Crew Energy Inc. (“Crew”), pursuant to which the Company acquired all of the issued and outstanding common shares of Crew in exchange for 18.778 million Tourmaline common shares and the assumption of net debt of approximately $230 million, including all transaction costs, for total consideration of approximately $1.4 billion(1) (the “Crew Acquisition”).
The Crew Acquisition represents a further important component of the Company’s continuing NEBC consolidation strategy that complements the long-term EP organic growth plan. It provides a significant high-quality addition to Tourmaline’s South Montney asset base and is immediately accretive to the Company’s key financial and reserve metrics, estimated to add over $200 million to Tourmaline’s anticipated 2025 free cash flow (“FCF”)(2).
The Crew Acquisition includes existing low-decline average base production of 28,000 to 30,000 boepd, externally and independently evaluated proved and probable (2P) reserves of 473.2 million boe (Sproule Report – effective December 31, 2023), and an extensive drilling inventory, including over 700 Tier 1 locations (246 net Montney locations booked in the Sproule Report 2P reserve category). The Crew assets are immediately adjacent to Tourmaline’s existing South Montney operated complex, with multiple facility synergies and cost reduction opportunities already identified.
Crew’s Groundbirch development project, including the planned and permitted 15-25 electrified deep cut gas processing facility, has the potential to more than double the existing Crew production base. Tourmaline intends to proceed with the Groundbirch project within the next five years, with specific timing to be determined over the next year.
Topaz Transaction
Tourmaline has entered into an agreement to sell a gross overriding royalty (“GORR”) interest to Topaz Energy Corp. (“Topaz”) on the recently acquired Crew lands, the Bonavista Energy lands acquired in 2023, and new Deep Basin, Peace River High and NEBC lands acquired by Tourmaline over the past two years, for total cash consideration of $278.2 million (the “Topaz Transaction”). Consistent with Tourmaline’s existing GORR agreements with Topaz, Topaz will receive a GORR of 3% on natural gas and 2.5% on crude oil and condensate. The Topaz Transaction represents an 11 times cash flow multiple on Tourmaline’s forecasted 2025 cash flow, based on August 16, 2024 strip pricing. The Topaz Transaction is expected to close on November 1, 2024. The proceeds from the Topaz Transaction will be used to reduce bank indebtedness and allow for the Company to continue to execute on its consolidation strategy while maintaining low leverage.
