Tourmaline Oil sees Q3 earnings up 481%

Tourmaline Oil, Canada’s largest natural gas producer, said November 2 it had Q3 2022 after tax net earnings of C$2.1bn (US$1.5bn), up from C$361mn in the same period a year ago.

The increase consisted largely of an unrealized gain of C$2.1bn related to an embedded derivative in Tourmaline’s natural gas marketing agreement with Cheniere Energy, under which Tourmaline will deliver 140mn ft³/day of natural gas to Cheniere and receive payment based on the Japan Korea Marker (JKM) price for LNG, less deductions for transport and liquefaction.

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Deliveries to Cheniere will begin January 1, 2023, Tourmaline said, at which time gains from the embedded derivative will be accounted for as realised gains. At the end of October, the 2023 JKM strip price was US$35.01/mn Btu.

Also impacting earnings was a 29% increase in Tourmaline’s operating netback, to C$23.68/barrel of oil equivalent (boe) from C$18.35/boe, and a higher production oil and gas volumes.

Q3 2022 production averaged 481,897 boe/day, a 6% increase from 456,489 boe/day in the same period last year. Natural gas production rose 4%, to 2.2bn ft³/day from 2.15bn ft³/day.

Tourmaline’s average realised price for natural gas in the quarter increased to C$5.37/’000 ft³ from C$3.88/’000 ft³ a year ago.