Tourmaline Oil Corp. ("Tourmaline" or the "Company") is pleased to announce that it has entered into a definitive share purchase agreement with all of the shareholders of Bonavista Energy Corporation ("Bonavista") to acquire all of the shares of Bonavista for $1.45 billion, consisting of $725 million in Tourmaline common shares and $725 million of cash, less Bonavista's net debt(1)(2) at closing (the "Acquisition"). The Acquisition is expected to close in the second half of November 2023, subject to customary regulatory and stock exchange approvals.
The Acquisition represents a further important component of the Company's ongoing consolidation strategy that complements its long-term EP organic growth plan, adding decades of inventory and supplementing Tourmaline's existing Deep Basin assets. The Bonavista assets are a natural extension of Tourmaline's existing operations in the Deep Basin where the Company is already the largest producer. The Acquisition is immediately accretive to Tourmaline's 2024 free cash flow ("FCF")(3) yield(4). Following closing of the Acquisition, Tourmaline expects to exit 2023 with production of over 600,000 boepd(5). The Company will release its formal 2024 guidance proforma this Acquisition with an updated 5-year plan alongside third quarter results on November 1, 2023.
BONAVISTA ACQUISITION OVERVIEW
The Acquisition, which includes low-decline, long-life average production of over 60,000 boepd(6), is expected to generate net operating income(7) of approximately $450 million per year in 2024 through 2026 based on strip pricing(8), with anticipated EP spending(9) of under $225 million per year on the assets.
The Bonavista assets include existing 2P reserves of 459 million boe (10) at October 1, 2023; 839 gross (656.7 net) horizontal internally estimated drilling locations and 1.2 million net acres of land rights.
Bonavista after tax PDP reserve net present value at a 10% discount rate is $1.4 billion (based on internally estimated reserves and IC3 Q4 2023(11) pricing).
Bonavista YTD cash costs(12) to June 30, 2023 were $10.29/boe, including operating costs of approximately $6.14/boe. Tourmaline anticipates considerable cost synergies on the Bonavista assets on a go forward basis.
The Board of Directors of each of Bonavista and Tourmaline have unanimously approved the Acquisition.
Peters & Co. Limited acted as financial advisor to Tourmaline and TPH&Co, the energy business of Perella Weinberg Partners, acted as financial advisor to Bonavista.
BASE DIVIDEND INCREASE AND SPECIAL DIVIDEND DECLARATION
Given continued strong financial forecast for 2H 2023, as well as anticipated sustainable FCF coupled with Tourmaline's low-cost structure, the Board of Directors of the Company has approved an increase to the quarterly base dividend effective Q4 2023 to $1.12/share, on an annualized basis, from the current annualized $1.04/share, representing a 7.7% increase.
The Board of Directors of the Company has also declared a Q4 2023 special dividend of $1.00/share that will be paid on November 1, 2023, to shareholders of record on October 24, 2023. This special dividend is designated as an "eligible dividend" for Canadian income tax purposes.
