Tourmaline Oil Corp.

Scott Kirker - Secretary, General Counsel Mike Rose - President, Chief Executive Officer Brian Robinson - VP Finance, Chief Financial Officer

Dennis Fong - CIBC World Markets

Thank you, Jade, and welcome everyone to our discussion of Tourmaline’s 2014 Q3 results and operational update. 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 SEDAR.

I would like to draw your attention specifically to the material factors and assumptions in those advisories. I am 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 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 Scott and thanks for dialing and we’re very pleased to go over our Q3 2014 results and update investors on our recent activities.

So starting with the highlights and we have several of them, we had record nine month after tax earnings of just under 224 million and net up 145% year-over-year. And in this volatile commodity price environment I think it's important for shareholder to remember that Tourmaline natural gas plays are profitable on a full cycle basis, prices below $3 an mcf and our oil complex is profitable full cycle at an oil price below $35 per barrel.

We had record nine months cash flow of 714 million, that’s up 104% over the comparable period in 2013. Our nine months production average of just 107,000 BOE today is actually up 51% year-over-year and our current production of course is now grown to 135,000 BOE today and I’ll update production in a moment.

We’ve been very busy on the financial side and the deal side, we now have an additional 1.05 billion in financial capacity for 2015 and as we always have, we will maintain that cash flow at less than one times. Our daily natural gas production reached record 725 million a day during the second half of October, and by our calculations we are the fourth largest producer of natural gas in Canada.

Our board has approved a 2015 capital program of 1.6 billion as compared to our forecast cash flow of 1.5 billion, very really close to a cash flow budget. And that $1.6 billion budget will allow us to run 20 rigs for the year which is what we’re currently running.

Looking at the '14 - '15 capital programs in a little bit more detail, we upsize the second half '14 capital program both on drilling and completion side and the facility side. And just to go over some of those incremental expenditures, an additional 41.3 million was spent and that’s directed entirely towards 2015 facility projects.

And that’s to ensure that our 15 facility projects are on or ahead of schedule, so that’s money that we don’t have to spend in 2015. We started coming out of break up quite early in May, so we have rig release to 110 wells since break up and we anticipate 160 wells will be drilled between mid May and the end of the December this year.

Which is 20 wells more than what we had anticipated. So the drilling times are going down.

It's 110 million in additional expenditure. But that also generates incremental production volume that we’ll see in Q1 of 2015.

We have invested heavily in facilities in 2014 for the full year, we’re estimating 635 million. We have five major projects in the second half of '14 and they'll all be on stream prior to year end.

Three of them are on stream now. And these new facilities provide the framework for our continue very strong growth in '15 - '16 and beyond and they’re very valuable assets in their own rate and we by the end of this year we’ll have control of the infrastructure in all three of our expanding core areas.

We spent $20 million thus far continuing to consolidate our regional Charlie Lake Pool on the Peace River High. As we seek to tie up the 25% of the pool as we currently map at we don’t own at this time and we’ve been expanding our liquid rich lower most Montney play in Northeast BC with $25 million on land expenditures there.

And the results from that play from a drilling perspective continue to be very strong. Our 2015 capital program of 1.6 billion breakdowns to 1.1 billion on drilling in completion, that’s a 20 rig program for the full year and 410 million on facilities.

So facilities expenditures in '15 will be less, this is the big year for getting those done, particularly the facilities on the Peace River High as we secure the Charlie Lake play going forward. And as we do every other year we’ll revisit the pace of activity during Q2 or spring break up in '15 in light to the commodity prices that are prevailing at that time.

We have been busy on the financial side of the business. We’ve executed several transactions that give us considerable additional financial capacity in 2015.

We expanded our bank line from 1.3 to 1.6 billion. In September we did a $250 million term debt deal which creates another 250 million of broom on that facility.

And we’ve also done a deal on the Peace River High that we’ll bring in an additional 500 million prior to year end. So we plan to continue to operate with debt to cash flow of less than one times.

By our calculations our 2015 debt to cash flow will be approximately 0.7. We’ve also been active on the hedging front or Q4 of this year we were 196 million per day hedged at a price of 430 an mcf.

And into 2015 we have 110 million per day hedge for the full year at a price of 434 and we’ll continue to watch prices and have an active hedging program to protect future cash flows. Turning to the EP program, a self current productions in a 135,000 to 140,000 BOE per day range and we’ll continue to grow from there.

We’ve got three other five major facility projects on the Spirit River gas plant is starting up during November in the second half, that’s on schedule, and the Wild River plant expansion of 50 million per day is on schedule for the first half December start up. So very comfortable that we hit our plan to exit between 150,000 and 155,000 BOEs per day.

So we’re on the most significant production growth ramped in Tourmaline six year history and it’s very exciting. We have rig released 110 wells since spring break up and that will provide access volumes throughout 2015 as we continue to employee the 20 rig program.

We are forecasting a full year '15 production average of 164,500 BOEs and that’s actually from a 15 rig program. We are expecting if we ran 20 rigs for the full year to reach BCF a day production milestone at some point in the fourth quarter of '15 and the associated total liquid production oil condensate and NGL of that time will be an excessive 40,000 barrels per day.

In the Alberta Deep Basin, our horizontal results primarily in the Wilrich and Notikewin, but we have tested other four nations. They continue to significantly outperformed our thirty day IP economic template of 5 million per day, of the 51 wells now that have 30 days production history or more, the average 30 day IP is 10.1 million per day.

So we’re still outperforming by a factor of two, we haven’t changed the base economic template in our forecasting. And we continue to drill and test lowermost Montney liquid rich turbidite in Northeast BC.

The most recent well tested at a gas rate of approximately 4 million per day. The condensate associated with that was 140 barrels per million at the well head and we continue to broaden the scope of this play.

Turning to our Peace River high JV, we’re very excited about the deal we’ve done there. We have an agreement with Canadian Non-Operated Resources LP, they will buy 25% of the existing complex for approximately $500 million and then going forward subsequent to close in December of this year it will be a straight up Plain Venula JV 75, 25.

We will accelerate the planned EP program on the Peace River High in 2015, both on the drilling completion and infrastructure side. So we’re anticipating gross annual expenditures now of 400 million per year into that complex.

And given the increased pace of activity the sale of the existing 25% working interest will not have an impact on our anticipated 2015 production and reserves from the complex, we’ll simply add another rig and make up the difference for that. Also, future acquisitions along that regional that pool that we captured in first half of 2013 will be shared 75, 25 and we envisage tying up a significant amount of the 25% that we don’t currently own.

And that’s all I was going to say from a highlight standpoint, so we are more than willing to entertain questions.

Go ahead Jade.

Hi, good morning guys. Just one quick simple question.

The $400 capital spending commitment at Spirit River, are they on gross or net basis?

That’s gross, so we’ll spend 300 and our partner will spend 100 on an annual basis.

Okay perfect. Thank you guys.

You bet.

Well thanks everybody for attending and we’ll talk again next quarter.