Press Release

DBRS Morningstar Places Tourmaline Oil Corp. Under Review with Positive Implications Following Agreement to Acquire Black Swan Energy Ltd.

June 18, 2021

DBRS Limited (DBRS Morningstar) placed Tourmaline Oil Corp.’s (Tourmaline or the Company) Issuer Rating and Senior Unsecured Notes rating of BBB Under Review with Positive Implications following the Company’s announcement that it has entered into an agreement to acquire Black Swan Energy Ltd. (Black Swan) for a total consideration of approximately $1.1 billion. Subject to regulatory approvals, the transaction is expected to close in July 2021. The Under Review with Positive Implications status reflects the expected improvement in the Company’s (1) business risk profile due to a meaningful increase in size primarily as the result of acquisitions announced and concluded since Q3 2020 and (2) financial risk profile as a result of deleveraging and stronger cash flow outlook with the recovery in crude oil and natural gas prices as well as increased volumes.

Tourmaline’s size and scale have improved materially, driven by its strategy to consolidate its position in the liquids-rich Northeastern British Columbia (NEBC) Montney resource play through primarily equity-funded acquisitions. On completion of the acquisition of Black Swan, Tourmaline will be the largest natural-gas producer in Canada and expects daily production to average 500,000 barrels of oil equivalent per day by mid-2022, which is approximately 61% higher compared with average daily production in 2020. Given the proximity of the acquired assets to Tourmaline’s existing operations, DBRS Morningstar believes integration risk is modest and expects the Company to realize most of its envisaged synergies. The acquisitions have also improved the Company’s in-basin diversification with the NEBC Montney assets, matching the size and scale of the company’s existing Alberta Deep Basin assets. DBRS Morningstar expects the Company to maintain its low operating and capital cost structure because of its ownership of significant natural gas-processing facilities, related transportation infrastructure, and strong capital efficiencies. The Company can also access multiple natural gas markets in North America through secured capacity on major natural gas pipelines, which substantially mitigates the risk of regional price differentials. DBRS Morningstar expects the Company to maintain its reserve related metrics at current levels.

Tourmaline’s financial risk profile has also improved substantially in Q1 2021 relative to year-end 2020 as the Company has used a free cash flow (FCF; cash flow after capital expenditure and dividends) surplus to repay debt. For the 12 months ended March 31, 2021, the Company’s lease-adjusted, debt-to-cash flow, debt-to-capital, and EBIT interest-coverage ratios were 0.96 times (x), 13.5% (both in the AA range), and 13.62x (in the “A” range), respectively. DBRS Morningstar expects the Company to generate significant FCF surpluses in 2021 and 2022 based on DBRS Morningstar's base-case commodity price assumptions (see DBRS Morningstar’s press release titled “DBRS Morningstar Updates Oil and Natural Gas Price Forecasts: Coronavirus Vaccinations and OPEC+ Production Cuts Underpin Speedy Oil Price Recovery,” dated February 23, 2021). While the Company could potentially conclude additional acquisitions and initiate share buybacks, DBRS Morningstar expects the Company to maintain a strong financial risk profile with lease-adjusted debt-to-cash flow ratio at or below 1.0x. The Company’s financial risk profile is stronger compared with its business risk profile and is expected to continue to support the ratings even if crude oil and natural gas prices trend below DBRS Morningstar’s base case assumptions, underscoring the Company’s ability to withstand market volatility. Tourmaline has sufficient liquidity and financial flexibility. As at March 31, 2021, the Company had $1.9 billion available under its credit facilities. In addition, the Company has a 45% interest in the publicly listed Topaz Energy Corp., which is valued at approximately $0.9 billion.

DBRS Morningstar expects to resolve the Under Review with Positive Implications status at close of the acquisition of Black Swan. Assuming the transaction closes as planned, the ratings of Tourmaline at close are likely to be one notch higher than the current ratings.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at

All figures are in Canadian dollars unless otherwise noted.

The principal methodologies are Rating Companies in the Oil and Gas and Oilfield Services Industries (August 17, 2020; and DBRS Morningstar Criteria: Guarantees and Other Forms of Support (May 31, 2021;, which can be found on under Methodologies & Criteria. Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (February 3, 2021;

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release:

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.

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