Tourmaline Oil Corp.

Scott Kirker - Secretary and General Counsel Mike Rose - President, CEO Brian Robinson - CFO, Vice President - Finance

Travis Wood - TD Securities Dennis Fong - CIBC

Thank you, Sebastian. And welcome everyone to our discussion of Tourmaline’s 2014 Q1 results.

Before we get started, I’d like to refer you to the advisory on forward-looking statements contained in the news release as well as the advisories contained in the Tourmaline annual information form available on CEDAR. I’d like to draw your attention in particular to the material factors and assumptions in those advisories.

I’m here with Mike Rose, our President and Chief Executive Officer; and with Brian Robinson, our Vice President of Finance and Chief Financial Officer. Mike will start off by speaking to some of the highlights and after his remarks; both Mike and Brian will be available for questions.

Go ahead, Mike.

Good morning, everybody. Thanks for dialing in.

For Tourmaline, our first quarter was a record in all regards. Our cash flow of $252.6 million in the first quarter of 2014 was up 117% over the same quarter in 2013.

Our first quarter earnings of essentially $90 million were up 72%, over the first quarter of 2013. And that again underscores the underlying profitability of the EP business that we've built.

We had record first quarter 2014 average production of 102,563 Boes a day, that’s up 49% year-over-year. Probably more importantly, it's up 19% over the previous quarter, that being Q4 of 2013.

Current production is in the 115,000 to 120,000 Boe a day range, which is Q2 guidance. We had record oil and liquid production of approximately 15,000 Boes a day per day or 15% of total corporate production, and so overall liquid production has been steadily increasing on a proportionate basis.

We had a very strong first quarter in the Deep Basin, 20 out of 21 horizontals with 30 days of production history. The average of those 21 wells is 10.2 million, so more than double our current economic template that we use in our forecasting and models.

Q1 cash flow demonstrates we’re right on track for 2014 full year cash flow of just under $1.1 billion, so we were over $1.25 billion in cash flow in the first quarter alone. And we’re forecasting $1.48 billion cash in 2015.

We are in the process of expanding our banking credit facility from $900 million to $1.3 billion and that'll be finalized during Q2 this quarter. But the company will continue to operate with the debt to cash flow ratio of less than 1.0 times and it's less than 1.0 times right now.

We had a very busy first quarter, very active first quarter. The incremental spending of $75 million was related to the addition of a 17th rig during the first quarter and the associated completion spread.

Participation in five unbudgeted outside operated Deep Basin horizontals; significant activity at Crown sales, both in Alberta and BC. And some expenditures related to the large -- three large facility projects that we have with late Q3, early Q4 start-up.

Our cost structure continues to improve our all-in cash cost, including operating G&A, transportation and financing and interest our top decile and they will continue to drop. On the production side, as I mentioned current production is right in the range for Q2, so 115,000 to 120,000 Boes a day.

So, up substantially from the Q1 average already. We have an additional 16,000 Boes a day that are actually tied into facilities, and they are awaiting facility expansions to come on stream.

And the three main facility projects are on schedule for late Q3, early Q4 start up. In addition, we have 10,000 Boes a day that’s drilled and tested and behind pipe, but not tied in yet.

We’ll get after that right after break up and bring that production on primarily during Q3. So things are going extremely well on the production front.

Turning to the EP program itself, we’re increasing our rig fleet to 18 rigs post break up, we currently have three of them working right now. Two in BC and one on the Peace River High Charlie Lake horizontal play.

We expect all 18 rigs to be working at some point in June, just depends how much it rains between now and then. As mentioned, in the first quarter in the Deep Basin was our best guess, with 30 horizontals drilled and completed and I mentioned that our IPs -- 30 day IPs of the 21 wells that have over 30 days of production, are more than double our economic template rate.

So, 10.2 million per day for an average, with liquids on top of that. In North East B.C.

company interest production has reached the 35,000 Boe per day level, we have drilled two successful follow ups to our new condensate-rich Lower Montney discovery, which we are very encouraged by. And the extra rig that we’ve added, the 18th rig, it will go to B.C.

and it will be focused on this new play. And we should have all three B.C.

rigs working shortly, two of them going right now. On the Charlie Lake play, we’ve now drilled 75 successful Charlie Lake horizontals and no dry holes.

Most importantly, our sour gas injection plant at Sprit River that we’re building remains on schedule for an October start up. And that will immediately lead to a fairly large production bump as we do have significant shut-in production there and it had that release since mid-2013.

So that’s all I was going to say on EP program, and we’re more than happy to answer any questions that some of you might have.

Sebastian, back to you.

Good morning guys, I just have two questions for you. The first to the extent that you can talk about it at, in North East BC with the Montney.

Do you have an idea of how much land you have that's perspective for the Lower Montney well that you’re drilling with some of those condensate rates? And then my second question is related to facilities as we head into some third party downtime.

You laid out Q2, Q3 and Q4 production guidance with the last release and I'm just wondering in term of how you’re thinking about, or if that all, you’re going to be impacted by some of these third party turnarounds through Q2?

Okay. I’ll answer those questions Travis, firstly in North East BC that new lower horizon that we’re pursuing, we think it’s quite extensive.

It’s probably two townships or larger in size and we’ll learn more as we drill more wells. As far as third-party downtime, when we put out our quarterly guidance for the balance of '14, we increased our downtime provision on a daily basis and so as far as scheduled outages I think we have handled that in our estimates and so we don’t need to change them, so we’re looking at 115,000 to 120,000 Boes per day for an average in Q2.

I think we’re 120 to 125 in Q3 and that builds in facility downtime and unforeseen production interruptions as well.

Okay, great. Thanks very much.

Hi, guys, just one quick question. I was just wondering what portion of the $75 million was spent on the land sales as opposed to the other grid?

It was approximately $25 million on land sales, between the two provinces.

Okay. And is there breakdown between the two provinces or…?

The lion share of that was in B.C.

Okay, perfect. Thanks.

Thanks Sebastian. Thanks everybody for joining the conference call.

We’ll talk to you next quarter.