Tourmaline Continues BC Montney Consolidation Strategy With The Acquisition Of Crew Energy Inc. And Increases Base Dividend

Tourmaline Oil Corp. ("Tourmaline" or the "Company") is pleased to announce that it has entered into a definitive arrangement agreement with Crew Energy Inc. ("Crew") to acquire all of the issued and outstanding common shares of Crew^{( 1)} (the "Acquisition" or the "Arrangement") in exchange for 18.778 million Tourmaline common shares and the assumption of net debt of approximately $240M, including all transaction costs, for total consideration of approximately $1.3B⁽²⁾ . The Acquisition is expected to close in early October 2024, subject to customary closing conditions.

The Acquisition represents a further important component of the Company's continuing NEBC consolidation strategy that builds on its 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, adding over $200M to Tourmaline's anticipated 2025 free cash flow(3)(4) ("FCF"). The Crew assets provide a significant future growth opportunity which, coupled with Tourmaline's extensive, well-defined BC Montney development inventory, will facilitate the Company evolving into Canada's largest and most efficient Montney producer. Tourmaline already is the largest Alberta Deep Basin producer; the BC/AB Montney and the Alberta Deep Basin are widely regarded as Canada's two premier natural gas plays. In addition, the Acquisition complements Tourmaline's continued growth towards a 750,000 boepd Canadian senior producer over the next five years, with further growth opportunities extending into the next decade.

The Company plans to sequence the timing of major capital projects, and associated volume growth, with improving commodity markets and will continue to prioritize total shareholder returns. Tourmaline believes this is an opportune time for consolidating natural gas assets prior to imminent major growth in the North American LNG business and acceleration of natural gas-powered electrical generation requirements across the continent.

"Dale and his team at Crew have done a tremendous job over the past 21 years assembling one of the premier, concentrated Montney asset bases in NEBC, with significant upside. Tourmaline's scale, execution capability and ability to generate strong FCF in all parts of the commodity cycle will allow Crew shareholders to realize the material embedded upside on an accelerated timeline" said Mike Rose, President & CEO of Tourmaline.

CREW ACQUISITION OVERVIEW

• The Acquisition includes existing low decline average base production of 29,000 – 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.
• Crew's Groundbirch development project, including the planned and permitted 15-25 electrified deep cut gas processing facility, has the potential to approximately 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.
• Tourmaline has identified multiple synergies associated with the Acquisition, including drilling and completion capital cost improvements, infrastructure capital cost reduction opportunities, as well as liquids growth and margin improvement opportunities. The Company estimates initial acquisition synergies with a net present value of over $0.6B at a 10 percent discount rate before tax. This does not include additional value expected to be realized through further productivity gains, expected field operating cost improvements, synergies with existing Tourmaline facilities, or future natural gas marketing opportunities for the Crew gas volumes.
• The Crew drilling inventory complements Tourmaline's existing Tier 1 inventory, adding an estimated four years of Tier 1 locations based on a break-even average natural gas price of $1.50/GJ⁽⁵⁾. Over the entire combined land base in NEBC and Alberta, the Company now has over 20 years of Tier 1 inventory and over 75 years of total inventory.
• The Arrangement is expected to close in early October 2024, subject to certain customary closing conditions, including receipt of Court, Crew shareholder and regulatory approvals. All of the officers and directors and certain shareholders of Crew (representing 32% of the fully diluted shares outstanding) have entered into voting support agreements and have agreed to vote in favour of the Arrangement.
• The Board of Directors of each of Crew and Tourmaline have unanimously approved the Acquisition.

TOURMALINE EP PLAN AND FINANCIAL ACCRETION

• Tourmaline has included a pro-forma update of its five-year EP plan, incorporating Crew's assets, in its corporate presentation available on the Company's website. Under a maintenance capital scenario, based on average daily production of 30,000 boed, the Company anticipates generating over $240M in annual cash flow⁽⁶⁾ (before tax). Also, under a maintenance capital scenario, the Acquisition is estimated to add over $200M to 2025 FCF, inclusive of one-time savings, and $130M⁽⁷⁾ of recurring FCF.
• Following completion of the Groundbirch development project⁽⁸⁾, estimated annual FCF of the acquired assets is expected to increase to approximately $350-400M per year, or approximately $1 of FCF per pro-forma share, which will be used to primarily fund future dividend growth.
• Tourmaline's net debt⁽⁹⁾ to 2024 cash flow is expected to remain below 0.6 times inclusive of the approximately $240M additional debt assumed with the Acquisition.
• Assuming closing of the Acquisition occurs on or around the first week of October, the pro-forma Tourmaline 2024 average production guidance has been revised to 582,500 – 592,500 boepd from 575,000 – 585,000 boepd and the 2024 pro-forma EP capital budget has been revised to $2,050M from $2,000M to account for additional Crew Q4 anticipated activity. Tourmaline will provide updated 2024 guidance and an updated EP plan following closing of the Acquisition, which is anticipated to be released with its third quarter 2024 financial results.

DIVIDEND

• Tourmaline's Board of Directors has approved an increase in the quarterly base dividend effective in Q3 2024 from $0.33/share to $0.35/share ($1.40/share on an annualized basis), representing a 6% increase from the recently announced increased base dividend of $0.33/share. To date in 2024, the Company has increased the base dividend by 25% ($0.07/share). The Q3 quarterly base dividend is expected to be declared in early September and payable on September 27, 2024, to shareholders of record at the close of business on September 13, 2024. The quarterly base dividend will be designated as an eligible dividend for Canadian income tax purposes.

ADVISORS

• Peters & Co. Limited is acting as exclusive financial advisor to Tourmaline with respect to the Acquisition.

Reader Advisories

CURRENCY

All financial figures are in Canadian dollars.

RESERVES DATA
The reserves data set forth in this new release is based upon external and internal estimates. There are numerous uncertainties inherent in estimating quantities of crude oil, natural gas and NGL reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth above are estimates only. In general, estimates of economically recoverable crude oil, natural gas and NGL reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and natural gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially. For those reasons, estimates of the economically recoverable crude oil, NGL and natural gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues associated with reserves prepared by different engineers, or by the same engineers at different times, may vary. The Company's actual production, revenues, taxes and development and operating expenditures with respect to its reserves will vary from estimates thereof and such variations could be material.

BOE EQUIVALENCY
In this news release, production and reserves information may be presented on a "barrel of oil equivalent" or "BOE" basis. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, as the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

FINANCIAL OUTLOOKS
Also included in this news release are estimates of Tourmaline's 2025 and beyond free cash flow and 2024 net debt targets, which are based on, among other things, the various assumptions as to production levels, receipt of drilling permits, capital expenditures and other assumptions disclosed in this news release and including Tourmaline's estimated average production of 587,500 boepd for 2024, 650,000 boepd for 2025, 690,000 boepd for 2026, 735,000 boepd for 2027 and 745,000 boepd for 2028, commodity price assumptions for natural gas ($2.31/mmbtu 2024 NYMEX US, $3.33/mmbtu 2025 NYMEX US, $3.71/mmbtu 2026 NYMEX US, $3.78/mmbtu 2027 NYMEX US $3.72/mmbtu 2028 NYMEX US, $1.62/mcf 2024 AECO, $2.62/mcf 2025 AECO, $3.07/mcf 2026 AECO, $3.24/mcf 2027 AECO, $3.32/mcf 2028 AECO, $11.54/mcf 2024 JKM US, $12.83/mcf 2025 JKM US, $11.57/mcf 2026 JKM US, $10.10/mcf 2027 JKM US, $9.02/mcf 2028 JKM US ), crude oil ($79.27/bbl 2024 WTI US, $74.40/bbl 2025 WTI US, $70.47/bbl 2026 WTI US, $67.98/bbl 2027 WTI US, $66.41/bbl 2028 WTI US) and an exchange rate assumption (CAD/USD) of $0.73 for 2024, 0.74 for 2025 and 2026 and 0.75 for 2027 and 2028. In addition, in the case of the years other than 2024, such estimates are provided for illustration only and are based on budgets and forecasts that have not been finalized or approved by the Board of Directors and are subject to a variety of contingencies including prior years' results. To the extent such estimates constitute a financial outlook, it was approved by management and the Board of Directors of Tourmaline on August 12, 2024 and is included to provide readers with an understanding of Tourmaline's anticipated cash flow, free cash flow and net debt levels based on the capital expenditure, production, pricing, exchange rate and other assumptions described herein and readers are cautioned that the information may not be appropriate for other purposes.

NON-GAAP AND OTHER FINANCIAL MEASURES
This news release includes references to "net debt" and "adjusted working capital" which are considered "capital management measures" and do not have standardized meanings prescribed by International Financial Reporting Standards ("GAAP"). Accordingly, the Company's use of these terms term may not be comparable to similarly defined measures presented by other companies. Investors are cautioned that these measures should not be construed as an alternative to or more meaningful than the most directly comparable GAAP measures in evaluating the Company's performance. See "Non-GAAP and Other Financial Measures" in the most recent Management's Discussion and Analysis for more information on the definition and description of these terms.

Non-GAAP Financial Measures

Free Cash Flow
Management uses the term "free cash flow" for its own performance measure and to provide shareholders and potential investors with a measurement of the Company's efficiency and its ability to generate the cash necessary to fund its future growth expenditures, to repay debt and provide shareholder returns. Free cash flow is defined as cash flow less capital expenditures, excluding acquisitions and dispositions. Free cash flow is prior to dividend payment. "Cash flow" is defined as cash flow from operating activities less current income taxes, plus current income taxes paid, less change in non-cash working capital. The most directly comparable GAAP measure for cash flow is cash flow from operating activities. "Capital Expenditures" is a non-GAAP financial measure defined as Cash flow used in investing activities adjusted for the change innon-cash working capital (deficit). The most directly comparable GAAP measure for capital expenditures is cash flow used in investing activities.

Capital Management Measure

Net Debt
Management uses the term "net debt" as a key measure for evaluating a company's capital structure and to provide shareholders and potential investors with a measurement of total indebtedness. For purposes of the Acquisition, net debt is defined as all indebtedness (including bank debt) plus working capital (excludes commodity hedges) and includes all transaction and related costs.

OIL AND GAS METRICS
This news release contains certain oil and gas metrics which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included in this document to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the Company's future performance and future performance may not compare to the Company's performance in previous periods and therefore such metrics should not be unduly relied upon.

ESTIMATES OF DRILLING LOCATIONS
Unbooked drilling locations are the internal estimates of Tourmaline based on Tourmaline's or the acquired assets prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves or resources (including contingent and prospective). Unbooked locations have been identified by Tourmaline's management as an estimation of Tourmaline's multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. There is no certainty that Tourmaline will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and natural gas reserves, resources or production. The drilling locations on which Tourmaline will actually drill wells, including the number and timing thereof is ultimately dependent upon the availability of funding, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While a certain number of the unbooked drilling locations have been de-risked by Tourmaline drilling existing wells in relative close proximity to such unbooked drilling locations, the majority of other unbooked drilling locations are farther away from existing wells where management of Tourmaline has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves, resources or production.

SUPPLEMENTAL INFORMATION REGARDING PRODUCT TYPES
This news release includes references to acquired Crew average production, and pro-forma Tourmaline 2024 average production. The following table is intended to provide supplemental information about the product type composition for each of the production figures that are provided in this news release:

CERTAIN DEFINITIONS:

About Tourmaline Oil Corp.
Tourmaline is Canada's largest and most active natural gas producer dedicated to producing the lowest-cost natural gas in North America. We are an investment grade exploration and production company providing strong and predictable operating and financial performance through the development of our three core areas in the Western Canadian Sedimentary Basin. With our existing large reserve base, decades-long drilling inventory, relentless focus on execution and cost management, and industry-leading environmental performance, we are excited to provide shareholders an excellent return on capital, and an attractive source of income through our base dividend and surplus free cash flow distribution strategies.