Tourmaline completes Crew Energy acquisition and royalty sale to Topaz Energy

(WO) — Tourmaline Oil Corp. has finalized its acquisition of Crew Energy Inc., acquiring all issued and outstanding common shares of Crew in exchange for 18.778 million Tourmaline common shares and the assumption of approximately $230 million in net debt. The total transaction is valued at around $1.4 billion.

This acquisition is part of Tourmaline’s ongoing consolidation strategy in Northeast British Columbia (NEBC) and enhances the company's South Montney asset base. It is expected to significantly impact Tourmaline's financial and reserve metrics, adding over $200 million to the anticipated free cash flow (FCF) in 2025.

The Crew acquisition includes an average base production of 28,000 to 30,000 barrels of oil equivalent per day (boepd) and an independent evaluation of proved and probable (2P) reserves totaling 473.2 million barrels of oil equivalent, as per the Sproule Report effective December 31, 2023. It also features an extensive drilling inventory with over 700 Tier 1 locations, including 246 net Montney locations booked in the Sproule Report 2P reserve category. The Crew assets are adjacent to Tourmaline’s existing South Montney operated complex, creating opportunities for facility synergies and cost reductions.

Additionally, Crew's Groundbirch development project, which includes plans for a 15-25 electrified deep cut gas processing facility, could potentially double the current production base. Tourmaline plans to advance the Groundbirch project over the next five years, with specific timing to be determined within the next year.

In a related move, Tourmaline has reached an agreement to sell a gross overriding royalty (GORR) interest to Topaz Energy Corp. on the recently acquired Crew lands, Bonavista Energy lands obtained in 2023, and new Deep Basin, Peace River High, and NEBC lands acquired over the past two years for a total cash consideration of $278.2 million. Under this agreement, Topaz will receive a GORR of 3% on natural gas and 2.5% on crude oil and condensate. The Topaz transaction is expected to close on November 1, 2024, and represents an 11 times cash flow multiple based on Tourmaline's forecasted 2025 cash flow. Proceeds from this sale will be used to reduce bank indebtedness and support the company's consolidation strategy while maintaining low leverage.