Tourmaline Oil Q2 2025 presentation: Largest gas producer unveils growth to 850,000 boepd

Introduction & Market Context

Tourmaline Oil Corp. (TSX:TOU) has outlined an ambitious growth strategy in its July 2025 corporate presentation, detailing plans to increase production by approximately 33% to 850,000 barrels of oil equivalent per day (boepd) by 2031. The presentation comes after Tourmaline reported strong Q2 2025 results, with production reaching 620,757 boepd, a 10% increase year-over-year.

As Canada’s largest natural gas producer, Tourmaline is positioning itself to capitalize on growing liquefied natural gas (LNG) export opportunities while maintaining its focus on low-cost operations and environmental performance. The company’s stock has shown resilience, trading at $60.22 as of October 30, 2025, up 0.66% and well above its 52-week low of $55.40.

Competitive Industry Position

Tourmaline’s presentation emphasizes its dominant position in the North American natural gas market. The company currently leads all North American producers in natural gas output, outpacing major competitors including Canadian Natural Resources and ExxonMobil.

As shown in the following chart comparing North American natural gas producers:

Beyond natural gas, Tourmaline has established itself as a significant player in the liquids market, ranking as the 4th largest producer of conventional liquids in Canada, the 3rd largest condensate producer, and the largest producer of natural gas liquids (NGLs) - with production more than 50% higher than its closest competitor.

The company’s liquids production is projected to grow substantially, with plans to add 50,000 barrels per day of predominantly condensate and pentanes-rich liquids through its North and South Montney development. This diversification strategy is illustrated in the following charts:

Strategic Initiatives

At the core of Tourmaline’s growth strategy is its Exploration and Production (EP) Growth Plan, which projects steady production increases from approximately 640,000 boepd in 2025 to 850,000 boepd by 2031. This represents a 5% compound annual growth rate (CAGR) over the period.

The following chart illustrates Tourmaline’s production growth trajectory through 2031:

The company’s growth is anchored by what it describes as "the largest EP growth project in the Western Canadian Sedimentary Basin (WCSB) over the next 5 years." This initiative, focused on Northeast British Columbia (NEBC), is strategically timed to coincide with the expansion of Canadian LNG exports.

Tourmaline’s NEBC Montney Gas/Condensate Complex serves as a cornerstone asset for this growth. The complex currently produces 320,000 boepd and holds 3,279 million barrels of oil equivalent in reserves as of December 31, 2024. The company has identified over 7,857 potential horizontal drilling locations in this region alone.

The following map details Tourmaline’s extensive NEBC Montney operations:

Complementing its NEBC assets, Tourmaline’s Alberta Deep Basin operations represent another significant production hub. The company describes this contiguous, interconnected asset as "effectively Alberta’s Largest Gas Field," with current production of 320,000 boepd and 1,945 million barrels of oil equivalent in reserves.

The Alberta Deep Basin assets are visualized in this map:

Detailed Financial Analysis

Tourmaline’s financial projections reflect its ambitious growth plans. For 2025, the company forecasts after-tax cash flow of $3.73 billion ($9.71 per share) and free cash flow of $755 million, based on current strip pricing. By 2031, assuming flat pricing, these figures are expected to reach $5.74 billion ($14.71 per share) and $2.94 billion, respectively.

The company’s Q2 2025 results provide context for these projections. Tourmaline reported earnings of $515 million ($1.35 per share) and cash flow of $823 million ($2.16 per diluted share) for the quarter. Free cash flow reached $317 million ($0.83 per diluted share), supporting the company’s dividend strategy.

Tourmaline maintains a strong balance sheet with a net debt position of $1.9 billion as of June 30, 2025, which drops to $1.0 billion when accounting for the company’s equity stake in TPZ. The company’s market capitalization stood at $25.6 billion, resulting in an enterprise value of approximately $26.6 billion.

Forward-Looking Statements

Tourmaline’s near-term production guidance aligns with the figures shared in its recent earnings report. The company expects Q3 2025 production between 625,000 and 635,000 boepd, with full-year 2025 production ranging from 635,000 to 650,000 boepd. For 2026, production is projected to reach between 690,000 and 710,000 boepd.

A key component of Tourmaline’s forward strategy is its NEBC infrastructure project, scheduled for completion by the end of 2025. The company anticipates adding 1.1 billion cubic feet per day of new gas production and over 50,000 barrels per day of condensate and NGLs over the next six years, with first production additions expected in Q4 2026.

CEO Mike Rose emphasized the company’s growth trajectory during the recent earnings call, stating, "We’ll be a materially larger, more profitable company right about the time that we expect the continent to be getting short on resource." This aligns with the presentation’s projection of 30% production growth, over 40% cash flow growth, and a 2.5-times increase in free cash flow through the NEBC project.

Tourmaline continues to focus on shareholder returns, with a base dividend yield of 3% and total yield (including special dividends) of approximately 5%. The company recently declared a special dividend of $0.35 per share, consistent with its strategy of returning excess cash to shareholders while funding its growth initiatives.

As Tourmaline executes its ambitious growth plan, investors will be watching closely to see if the company can maintain its low-cost operations and environmental performance while delivering on its production and financial targets through 2031.

Full presentation:

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