Tourmaline Oil Corp. Continues Record Profitable Growth, Updates Expanding EP Program

Tourmaline Oil Corp. Continues Record Profitable Growth, Updates Expanding EP 
Program 
CALGARY, ALBERTA -- (Marketwired) -- 08/07/13 -- Tourmaline Oil Corp.
(TSX:TOU) ("Tourmaline" or the "Company") is pleased to announce
results for the three and six months ended June 30, 2013 and provide
an update on its 2013 EP program. 
Q2 2013 Highlights 


 
--  Record quarterly production of 70,178 boepd, a 38% increase over second
    quarter of 2012. 
    
--  Second quarter 2013 earnings of $30.0 million, a 2,865% increase over
    second quarter 2012. 
    
--  Record quarterly cash flow of $128.9 million, a 111% increase over
    second quarter 2012. 
    
--  Continued top-tier cost control performance with second quarter
    operating expenses of $4.29/boe and cash G&A(1) of $0.82/boe. 
    
--  The Company completed additional significant acquisitions along the
    expanding regional Charlie Lake oil play fairway on the Peace River High
    in July 2013. 
    
--  Continued strong Deep Basin Wilrich horizontal results with the initial
    two wells post-breakup testing at final rates of 17.2 and 20.1 mmcfpd,
    respectively. 
    
--  The EP program has been expanded to include a 15-rig drilling fleet in
    the second half of 2013. 
    
--  The Company is now producing in excess of 30,000 boepd in the NEBC
    Montney gas-condensate complex.  

 
Production Update 
Record second quarter 2013 average production of 70,178 boepd was 38%
higher than Q2 2012 and 2% higher than Q1 2013. Tourmaline remains on
track to achieve full-year 2013 average production of 80,000 boepd.
The Company is currently anticipating a 2013 exit volume of
approximately 100,000 boepd (522 mmcfpd, 13,000 bpd oil, condensate
and NGL). The Company plans to tie-in approximately 77 new wells (55
gas wells and 22 oil wells) during the second half of 2013, primarily
to Company-operated facilities. These new well start-ups will include
approximately 24 high-deliverability Wilrich horizontal gas wells in
the Alberta Deep Basin. 
As previously disclosed (July 4, 2013 press release), second quarter
production was negatively impacted by unscheduled third-party
facility disruptions at West Doe BC, Gordondale, Berland and Musreau.
Unscheduled production downtime averaged approximately 4,10
0 boepd in
May and June. Tourmaline's new 100% working interest gas plant at Doe
commenced operations in July and is now running at full capacity of
55 mmcfpd. Condensate and NGL production at the Doe 13-25 plant is
currently averaging 1,700 bpd. The two 50 mmcfpd plant expansions in
the Alberta Deep Basin at Minehead/Banshee and Wild River remain on
schedule with a Q4 2013 completion anticipated for both. 
EP Update 
Tourmaline plans to operate 14-15 drilling rigs and 6-7 frac spreads
through year end and into the first quarter of 2014. Currently eight
drilling rigs are operating in the Deep Basin, two drilling rigs are
pursuing Montney gas-condensate in NEBC and four rigs will be
pursuing the expanding Charlie Lake oil play on the Peace River High.
This accelerated drilling program is expected to yield approximately
80 new wells during the second half of the year. 
Alberta Deep Basin 
In the Alberta Deep Basin, seven drilling rigs are pursuing
horizontal gas targets in the Cretaceous Wilrich, Notikewin and
Cardium formations. The very strong Wilrich results have continued
post break-up; the Edson 1- 30-51-18W5M well tested at a final rate
of 17.2 mmcfpd at a flowing casing pressure of 24.7 MPa and flowing
tubing pressure of 2.1 MPa and the Kakwa 12-3-62-6W6M well tested at
a final rate of 20.1 mmcfpd at a flowing casing pressure of 6.1 MPa
on a 160-hour test. Tourmaline expects to have 30 new Wilrich
horizontals drilled in the Deep Basin during the second half of 2013
with 24 new wells tied-in and producing by year end. 
The one vertical rig in the Deep Basin continues to pursue 3D
seismic-defined structurally-stacked Notikewin/Wilrich targets along
the edge of the outer foothills belt. Anticipated well deliverability
and reserve estimates for this type of vertical well are comparable
to the horizontal Deep Basin targets currently being pursued. 
2H 2013 gas plant expansions at Wild River and Minehead/Banshee will
bring Tourmaline's Deep Basin gas processing capacity to
approximately 400 mmcfpd, matching anticipated Q1 2014 Alberta Deep
Basin gas production levels. 
NEBC Montney Complex 
Tourmaline is operating two drilling rigs pursuing horizontal,
liquid-rich Montney gas targets in the expansive
Sunrise-Dawson-Sundown complex. These rigs are expected to yield an
additional 16 new gas wells by year end 2013. 
The 100% working interest Doe 13-25 gas plant commenced operation in
July and is producing at full capacity. Current total Company
production in NEBC is approximately 170 mmcfpd and 3,000 bpd
condensate and NGL, exceeding the 30,000 boepd target. 
The Company has an estimated future drilling inventory of over 550
horizontal Montney locations in NEBC and will continue to expand the
facility network to accommodate the steadily growing production
levels. 
The Company's first deep Paleozoic exploration well in BC is expected
to spud in September of 2013.  
Peace River High Charlie Lake Oil 
Tourmaline continued to consolidate and expand its growing regional
Charlie Lake oil play on the Peace River High. The Company acquired
an additional 75 sections of highly-prospective Charlie Lake rights
on the Peace River High during July through both crown sales and
direct acquisition. In aggregate, the Company has acquired 485
sections of prospective Charlie Lake rights along the defined oil
fairway for total consideration of $45.8 million. Total Company
landholdings along the entire envisaged regional oil pool, including
the original Spirit River complex, is now 575 sections.  
The Company is planning to operate four rigs in the second half of
2013 to accelerate the regional pool delineation program. This
expanded drilling program is expected to yield approximately 28 new
horizontal Charlie Lake wells by year end 2013. Tourmaline has
drilled 47 successful Charlie Lake horizontal oil wells and no dry
holes since horizontal exploitation of the play commenced in late
2011. Drill, complete and stimulate costs have been reduced to
approximately $3.6 million per horizontal well with average per-well
2P reserve recoveries of 300-350 mboe in the main Spirit River pool
based on internal estimates. 
The Company has embarked upon a long-term facility plan for the area
incorporating ongoing site-specific oil battery and gas handling
expansions at Spirit River as well as a more comprehensive regional
infrastructure plan that will accommodate the growing, regional play
oil and gas volumes.  
Financial Update 
Tourmaline delivered record quarterly cash flow in the second quarter
of 2013. Q2 2013 cash flow of $128.9 million was 111% higher than
second quarter 2012 cash flow. Q2 2013 earnings of $30.0 million were
2,865% higher than second quarter 2012. Operating netback(2) in the
second quarter of 2013 improved to $21.28 per boe. The Company's
top-tier cost performance continued with Q2 2013 operating expenses
of $4.29/boe and cash G&A of $0.82/boe. 
Exploration and production capital spending for the second quarter
was $125.2 million, less than quarterly cash flow. Total capital
spending for the second quarter including property acquisitions was
$158.8 million. Full-year 2013 capital spending of $847.5 million is
also anticipated, reflecting the increased EP activity levels,
including
 the operating of 14 to 15 drilling rigs during the second
half of 2013, and acquisitions for the regional Charlie Lake oil
play. Net debt at the end of the second quarter of 2013 was $345.5
million, significantly less than 1.0 times forecast 2013 cash flow of
$612.2 million. The Company's forecast 2013 cash flow was reduced
from the previously disclosed amount of $642.8 million (July 4, 2013
press release) primarily due to third-party gas handling limitations
at Spirit River resulting in a change in forecast product mix. The
Company's bank credit facility was increased to $750.0 million during
the second quarter providing additional financial capacity.  
The Company's commodity price protection efforts have continued. In
aggregate, Tourmaline has 216.3 mmcfpd not exposed to current daily
AECO pricing in the August-to-December 2013 period (97.3 mmcfpd @
$3.74/mcf in longer term hedges, 26.0 mmcfpd @ $3.50/mcf in monthly
deals, floors of $3.23/mcf on 19 mmcfpd, 65.0 mmcfpd accessing
Station 2 in NEBC and 9.0 mmcfpd on the Alliance system). 


 
(1) Excluding interest and financing charges.                             
                                                                          
(2) See "Non-GAAP Financial Measures" in the attached Management's        
    Discussion and Analysis.                                              
                                                                          
                                                                          
CORPORATE SUMMARY - SECOND QUARTER 2013                                     
----------------------------------------------------------------------------
               Three Months Ended June                                      
                                   30,           Six Months Ended June 30,  
                  2013     2012 Change           2013         2012  Change  
             ---------------------------------------------------------------
OPERATIONS                                                                  
Production                                                                  
  Natural gas                                                               
   (mcf/d)     378,872  266,771     42%       373,112      256,631      45% 
  Crude oil                                                                 
   and NGL                                                                  
   (bbls/d)      7,033    6,560      7%         7,226        6,112      18% 
  Oil                                                                       
   equivalent                                                               
   (boe/d)      70,178   51,022     38%        69,411       48,884      42% 
                                                                            
Product                                                                     
 prices(1)                                                                  
  Natural gas                                                               
   ($/mcf)    $   3.92 $   2.23     76%  $       3.71 $       2.38      56% 
  Crude oil                                                                 
   and NGL                                                                  
   ($/bbl)    $  87.06 $  77.75     12%  $      87.93 $      84.11       5% 
                                                                            
Operating                                                                   
 expenses                                                                   
 ($/boe)      $   4.29 $   4.83    (11)% $       4.28 $       5.00     (14)%
                                                                            
Transportatio                                                               
 n expenses                                                                 
 ($/boe)      $   1.97 $   1.85      6%  $       2.00 $       1.82      10% 
                                                                            
Operating                                                                   
 netback                                                                    
 ($/boe)(3)   $  21.28 $  14.22     50%  $      20.75 $      14.84      40% 
                                                                            
Cash general                                                                
 &                                                                          
 administrati                                                               
 ve expenses                                                                
 ($/boe)(2)   $   0.82 $   0.69     19%  $       0.81 $       0.79       3% 
                                                                            
                                                                            
FINANCIAL                                                                   
 ($000,                                                                     
 EXCEPT PER                                                                 
 SHARE)                                                                     
Revenue        190,790  100,461     90%       365,776      204,599      79% 
Royalties       14,854    3,399    337%        26,217       11,870     121% 
                                                                            
Cash flow(3)   128,870   61,121    111%       245,469      122,957     100% 
Cash flow per                                                               
 share(3)     $   0.68 $   0.37     84%  $       1.32 $       0.75      76% 
                                                                            
Net earnings    30,004    1,012  2,865%        82,188        3,988   1,961% 
Net earnings                                                                
 per share    $   0.16 $   0.01  1,500%  $       0.44 $       0.02   2,100% 
                                                                            
Capital                                                                     
 expenditures  158,751   53,831    195%       349,214      270,255      29% 
                                                                            
Weighted                                                                    
 average                                                                    
 shares                                                                     
 outstanding                                                                
 (diluted)                                185,301,611  163,921,951      13% 
                                                                            
Net debt(3)                                  (345,525)    (334,867)      3% 
                                                                            
                                                                            
(1) Product prices include realized gains and losses on financial         
    instrument contracts.                                                 
                                                                          
(2) Excluding interest and financing charges.                             
                                                                          
(3) See "Non-GAAP Financial Measures" in the attached Management's
        
    Discussion and Analysis.                                              

 
Forward-Looking Information 
This press release contains forward-looking information within the
meaning of applicable securities laws. The use of any of the words
"expect", "anticipate", "continue", "estimate", "objective",
"ongoing", "may", "will", "project", "should", "believe", "plans",
"intends" and similar expressions are intended to identify
forward-looking information. More particularly and without
limitation, this press release contains forward-looking information
concerning Tourmaline's plans and other aspects of its anticipated
future operations, management focus, objectives, strategies,
financial, operating and production results and business
opportunities, including anticipated petroleum and natural gas
production, cash flows, net debt levels, capital efficiency and
capital spending, projected operating costs, disposition initiatives,
the timing for facility expansions, as well as Tourmaline's future
and completion prospects and plans, including the number and type of
wells to be drilled in core areas, business strategy, future
development and growth opportunities, prospects and asset base. The
forward-looking information is based on certain key expectations and
assumptions made by Tourmaline, including expectations and
assumptions concerning: prevailing commodity prices and currency
exchange rates; applicable royalty rates and tax laws; interest
rates; future well production rates and reserve volumes; operating
costs; the timing of receipt of regulatory approvals; the performance
of existing wells; the success obtained in drilling new wells; the
sufficiency of budgeted capital expenditures in carrying out planned
activities; the availability and cost of labour and services; the
state of the economy and the exploration and production business; the
availability and cost of financing; and ability to market oil and
natural gas successfully. 
Statements relating to "reserves" are also deemed to be
forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions, that the reserves
described exist in the quantities predicted or estimated and that the
reserves can be profitably produced in the future. 
Undue reliance should not be placed on the forward-looking
information because Tourmaline can give no assurances that they will
prove to be correct. Since forward-looking information addresses
future events and conditions, by its very nature it involves inherent
risks and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors and risks.
These include, but are not limited to: the risks associated with the
oil and gas industry in general such as operational risks in
development, exploration and production; delays or changes in plans
with respect to exploration or development projects or capital
expenditures; the uncertainty of estimates and projections relating
to reserves, production, costs and expenses; health, safety and
environmental risks; commodity price and currency exchange rate
fluctuations; marketing and transportation; loss of markets;
environmental risks; competition; incorrect assessment of the value
of acquisitions; failure to realize the anticipated benefits of
acquisitions; ability to access sufficient capital from internal and
external sources; failure to obtain required regulatory and other
approvals; and changes in legislation, including but not limited to
tax laws, royalties and environmental regulations.  
Also included in this press release is an estimate of Tourmaline's
2013 cash flow, which is based on the various assumptions as to
production levels, capital expenditures, and other assumptions
disclosed in this press release and including commodity price
assumptions for natural gas (AECO - $3.66/mcf) and crude oil (WTI -
$95.00/bbl US) and an exchange rate assumption of $0.99 (US/CDN). To
the extent such estimate constitutes a financial outlook, it was
approved by management of Tourmaline on August 7, 2013 and is
included to provide readers with an understanding of Tourmaline's
anticipated cash flow based on the capital expenditure and other
assumptions described herein and readers are cautioned that the
information may not be appropriate for other purposes.  
Readers are cautioned that the foregoing list of factors is not
exhaustive. Additional information on these and other factors that
could affect Tourmaline, or its operations or financial results, are
included in the Management's Discussion and Analysis forming part of
this press release (See "Forward-Looking Statements" therein) and
reports on file with applicable securities regulatory authorities
including Tourmaline's most recent Annual Information Form, which may
be accessed through the SEDAR website (www.sedar.com) or Tourmaline's
website (www.tourmalineoil.com). 
The forward-looking information contained in this press release is
made as of the date hereof and Tourmaline undertakes no obligation to
update publicly or revise any forward-looking information, whether as
a result of new information, future events or otherwise, unless
expressly required by applicable securities laws.  
Additional Reader Advisories 
See also "Forward-Looking Statements", "Boe Conversions" and
"Non-GAAP Financial Measures" in the attached Management's Discussion
and Analysis.  
"Cash flow", "operating netback" and "net debt" as used in this press
release are financial measures commonly used in the oil and gas
industry, which do not have any standardized meaning prescribed by
International Financial Reporting Standards ("IFRS"). See "Non-GAAP
Financial Measures" in the attached Management's Discussion and
Analysis for the definition and description of these terms. 
Production tests are not necessarily indicative of long-term
performance or ultimate recovery. 
Certain Definitions: 


 
bbl                   barrel                                      
bdp                   barrels per day                             
boe                   barrel of oil equivalent                    
boepd or boe/d        barrel of oil equivalent per day            
bopd or bbl/d         barrel of oil, condensate or liquids per day
gj                    gigajoule                                   
gjs/d                 gigajoules per day                          
mbbls                 thousand barrels                            
mboe                  thousand barrels of oil equivalent          
mcf                   thousand cubic feet                         
mcfe                  thousand cubic feet equivalent              
mmboe                 million barrels of oil equivalent           
mmbtu                 million British thermal units               
mmbtu/d               million British thermal units per day       
mmcf                  million cubic feet                          
mmcfpd or mmcf/d      million cubic feet per day                  

 
MANAGEMENT'S DISCUSSION AND ANALYSIS 
This management's discussion and analysis ("MD&A") should be read in
conjunction with Tourmaline's unaudited interim condensed
consolidated financial statements and related notes for the six
months ended June 30, 2013 and the consolidated financial statements
for the year ended December 31, 2012. Both the consolidated financial
statements and the MD&A can be found at www.sedar.com. This MD&A is
dated August 7, 2013. 
The financial information contained herein has been prepared in
accordance with International Financial Reporting Standards ("IFRS")
and sometimes referred to in this MD&A as Generally Accepted
Accounting Principles ("GAAP") as issued by the International
Accounting Standards Board ("IASB"). All dollar amounts are expressed
in Canadian currency, unless otherwise noted.  
Certain financial measures referred to in this MD&A are not
prescribed by IFRS. See "Non-GAAP Financial Measures" for information
regarding the following non-GAAP financial measures us
ed in this
MD&A: "cash flow", "operating netback", "working capital (adjusted
for the fair value of financial instruments)" and "net debt".  
Additional information relating to Tourmaline can be found at
www.sedar.com. 
Forward-Looking Statements - Certain information regarding Tourmaline
set forth in this document, including management's assessment of the
Company's future plans and operations, contains forward-looking
statements that involve substantial known and unknown risks and
uncertainties. The use of any of the words "anticipate", "continue",
"estimate", "expect", "may", "will", "project", "should", "believe"
and similar expressions are intended to identify forward-looking
statements. Such statements represent Tourmaline's internal
projections, estimates or beliefs concerning, among other things, an
outlook on the estimated amounts and timing of capital investment,
anticipated future debt, expenses, production, cash flow and revenues
or other expectations, beliefs, plans, objectives, assumptions,
intentions or statements about future events or performance. These
statements are only predictions and actual events or results may
differ materially. Although Tourmaline believes that the expectations
reflected in the forward-looking statements are reasonable, it cannot
guarantee future results, levels of activity, performance or
achievement since such expectations are inherently subject to
significant business, economic, competitive, political and social
uncertainties and contingencies. Many factors could cause
Tourmaline's actual results to differ materially from those expressed
or implied in any forward-looking statements made by, or on behalf
of, Tourmaline. 
In particular, forward-looking statements included in this MD&A
include, but are not limited to, statements with respect to: the size
of, and future net revenues and cash flow from, crude oil, NGL
(natural gas liquids) and natural gas reserves; future prospects; the
focus of and timing of capital expenditures; expectations regarding
the ability to raise capital and to continually add to reserves
through acquisitions and development; access to debt and equity
markets; projections of market prices and costs; the performance
characteristics of the Company's crude oil, NGL and natural gas
properties; crude oil, NGL and natural gas production levels and
product mix; Tourmaline's future operating and financial results;
capital investment programs; supply and demand for crude oil, NGL and
natural gas; future royalty rates; drilling, development and
completion plans and the results therefrom; future land expiries;
dispositions and joint venture arrangements; amount of operating,
transportation and general and administrative expenses; treatment
under governmental regulatory regimes and tax laws; and estimated tax
pool balances. In addition, statements relating to "reserves" are
deemed to be forward-looking statements, as they involve the implied
assessment, based on certain estimates and assumptions, that the
reserves described can be profitably produced in the future. 
These forward-looking statements are subject to numerous risks and
uncertainties, most of which are beyond the Company's control,
including the impact of general economic conditions; volatility in
market prices for crude oil, NGL and natural gas; industry
conditions; currency fluctuation; imprecision of reserve estimates;
liabilities inherent in crude oil and natural gas operations;
environmental risks; incorrect assessments of the value of
acquisitions and exploration and development programs; competition;
the lack of availability of qualified personnel or management;
changes in income tax laws or changes in tax laws and incentive
programs relating to the oil and gas industry; hazards such as fire,
explosion, blowouts, cratering, and spills, each of which could
result in substantial damage to wells, production facilities, other
property and the environment or in personal injury; stock market
volatility; ability to access sufficient capital from internal and
external sources; the receipt of applicable approvals; and the other
risks considered under "Risk Factors" in Tourmaline's most recent
annual information form available at www.sedar.com. 
With respect to forward-looking statements contained in this MD&A,
Tourmaline has made assumptions regarding: future commodity prices
and royalty regimes; availability of skilled labour; timing and
amount of capital expenditures; future exchange rates; the impact of
increasing competition; conditions in general economic and financial
markets; availability of drilling and related equipment and services;
effects of regulation by governmental agencies; and future operating
costs. 
Management has included the above summary of assumptions and risks
related to forward-looking information provided in this MD&A in order
to provide shareholders with a more complete perspective on
Tourmaline's future operations and such information may not be
appropriate for other purposes. Tourmaline's actual results,
performance or achievement could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, no assurance can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what benefits that the Company will
derive therefrom. Readers are cautioned that the foregoing lists of
factors are not exhaustive.  
These forward-looking statements are made as of the date of this MD&A
and the Company disclaims any intent or obligation to update publicly
any forward-looking statements, whether as a result of new
information, future events or results or otherwise, other than as
required by applicable securities laws. 
Boe Conversions - Per barrel of oil equivalent amounts have been
calculated using a conversion rate of six thousand cubic feet of
natural gas to one barrel of oil equivalent (6:1). Barrel of oil
equivalents (boe) may be misleading, particularly if used in
isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. In addition, as the value ratio between natural gas and
crude oil based on current prices of natural gas and crude oil is
significantly different from the energy equivalency of 6:1, utilizing
a conversion on a 6:1 basis may be misleading as an indication of
value. 
PRODUCTION 


 
                    Three Months Ended June 30,   Six Months Ended June 30, 
                    --------------------------------------------------------
                         2013     2012   Change      2013     2012   Change 
----------------------------------------------------------------------------
Natural gas (mcf/d)   378,872  266,771       42%  373,112  256,631       45%
Oil and NGL (bbl/d)     7,033    6,560        7%    7,226    6,112       18%
----------------------------------------------------------------------------
Oil equivalent                                                              
 (boe/d)               70,178   51,022       38%   69,411   48,884       42%
----------------------------------------------------------------------------

 
Production for the three months ended June 30, 2013 averaged 70,178
boe/d, a 38% increase over the average production for the same
quarter of 2012 of 51,022 boe/d. Production was 90% natural gas
weighted in the second quarter of 2013. For the six months ended June
30, 2013, production increased 42% to 69,411 boe/d from 48,884 boe/d
for the same period of 2012. The Company's significant production
growth, when compared to 2012, can be attributed to new wells that
have been brought on-stream since June 30, 2012, as well as property
and corporate acquisitions.  
Production guidance for 2013 remains unchanged at 80,000 boe/d
despite the lower than anticipated production in the second quarter.
The second quarter production was affected by a delay in the start-up
of the NEBC Doe plant as well as some unscheduled downtime at
third-party facilities. 
REVENUE 


 
                   Three Months Ended June 30,    Six Months Ended June 30, 
                ------------------------------------------------------------
(000s)                 2013       2012  Change       2013      2012  Change 
----------------------------------------------------------------------------
Revenue from:                                                               
  Natural gas    $  135,068 $   54,042     150% $ 250,777 $ 111,030     126%
  Oil and NGL        55,721     46,419      20%   114,999    93,569      23%
----------------------------------------------------------------------------
Total revenue                                                               
 from gas, oil                                                              
 and NGL sales   $  190,789 $  100,461      90% $ 365,776 $ 204,599      79%
----------------------------------------------------------------------------

 
Revenue for the three months ended June 30, 2013 increased 90% to
$190.8 million from $100.5 million for the same quarter of 2012. For
the six months ended June 30, 2013, revenue was $365.8 million, a 79%
increase over revenue of $204.6 million for the same period of 2012.
Revenue growth is consistent with the increase in production and
increased commodity prices over the same periods. Revenue includes
all petroleum, natural gas and NGL sales and realized gains on
financial instruments. 
TOURMALINE PRICES: 


 
                     Three Months Ended June 30,  Six Months Ended June 30, 
                    --------------------------------------------------------
                         2013     2012    Change      2013    2012   Change 
----------------------------------------------------------------------------
Natural gas ($/mcf)  $   3.92 $   2.23        76% $   3.71 $  2.38       56%
Oil and NGL ($/bbl)  $  87.06 $  77.75        12% $  87.93 $ 84.11        5%
Oil equivalent                                                              
 ($/boe)             $  29.88 $  21.64        38% $  29.11 $ 23.00       27%
----------------------------------------------------------------------------

 
The realized average natural gas price for the three and six months
ended June 30, 2013 was 76% and 56%, respectively, higher than the
same periods of the prior year. Realized crude oil and NGL prices
increased 12% and 5% for the three and six months ended June 30,
2013, respectively, compared to the same periods of 2012. 
The realized natural gas price for the quarter ended June 30, 2013
was 10% (June 30, 2012 - 17%) higher than the AECO index price of
which approximately 8% (June 30, 2012 - 8%) relates to a premium
received due to higher heat content. The realized gain on commodity
contracts has decreased from the same period in the prior year as the
market price of natural gas has increased relative to the prices per
the commodity contracts settled in the period. Realized prices
exclude the effect of unrealized gains or losses. Once these gains
and losses are realized they are included in the per unit amounts. 
BENCHMARK GAS AND OIL PRICES: 


 
                                                Three Months Ended June 30, 
                                              ------------------------------
                                                   2013     2012     Change 
----------------------------------------------------------------------------
Natural gas                                                                 
  NYMEX Henry Hub (USD$/mcf)                   $   4.02 $   2.35         71%
  AECO (CAD$/mcf)                              $   3.55 $   1.91         86%
Oil                                                                         
  NYMEX (USD$/bbl)                             $  94.17 $  93.35          1%
  Edmonton Par (CAD$/bbl)                      $  92.95 $  84.97          9%
----------------------------------------------------------------------------

 
RECONCILIATION OF AECO INDEX TO TOURMALINE'S REALIZED GAS PRICES: 


 
                                               Three Months Ended June 30,  
                                           ---------------------------------
($/mcf)                                           2013       2012   Change  
----------------------------------------------------------------------------
AECO index                                  $     3.55 $     1.91       86 %
Heat/quality differential                         0.30       0.15      100 %
Realized gain                                     0.07       0.17      (59)%
----------------------------------------------------------------------------
Tourmaline realized natural gas price       $     3.92 $     2.23       76 %
----------------------------------------------------------------------------

 
CURRENCY - EXCHANGE RATES:  


 
                                               Three Months Ended June 30,  
                                           ---------------------------------
                                                  2013       2012   Change  
----------------------------------------------------------------------------
CAD$/USD$                                   $   0.9772 $   0.9898       (1)%
----------------------------------------------------------------------------

 
ROYALTIES 


 
                            Three Months Ended June   Six Months Ended June 
                                                30,                     30, 
                          --------------------------------------------------
(000s)                            2013         2012         2013       2012 
----------------------------------------------------------------------------
Natural gas                 $    7,512   $   (3,072)  $   12,047 $   (2,101)
Oil and NGL                      7,342        6,471       14,170     13,971 
----------------------------------------------------------------------------
Total royalties             $   14,854   $    3,399   $   26,217 $   11,870 
----------------------------------------------------------------------------
Royalties as a percentage                                                   
 of revenue                        7.8%         3.4%         7.2%       5.8%
----------------------------------------------------------------------------

 
For the quarter ended June 30, 2013, the average effective royalty
rate increased to 7.8% compared to 3.4% for the same quarter of 2012.
For the six months ended June 30, 2013, the average effective royalty
was 7.2% compared to 5.8% for the same period of 2012.  
The Company continues to benefit from the New Well Royalty Reduction
Program and the Natural Gas Deep Drilling Program in Alberta as well
as the Deep Royalty Credit Program in British Columbia. The average
effective royalty rate increased in 2013 over 2012 due to increased
commodity prices, as well as the maximum allowable benefit has b
een
reached on some higher producing wells resulting in increased
royalties. Also, in 2012, there were additional royalty incentives
received during the second quarter on some of the Company's producing
wells which significantly reduced the royalty rate for that period. 
The Company expects its royalty rate for 2013 to be approximately 10%
as additional wells will no longer qualify for royalty incentive
programs due to production maximums being reached and other wells
coming off royalty holidays, thereby increasing the Company's overall
royalty rate. The royalty rate is sensitive to commodity prices,
however, and as such, a change in commodity prices will impact the
actual rate. 
OTHER INCOME 
For the quarter ended June 30, 2013, other income was $1.2 million
(three months ended June 30, 2012 - $1.2 million), the majority of
which relates to processing income.  
For the six months ended June 30, 2013, other income was $2.6 million
(six months ended June 30, 2012 - $2.7 million), which includes $2.5
million in processing income (six months ended June 30, 2012 - $2.0
million). The slight increase in processing income in 2013 is due to
third party volumes processed at a Company-operated facility acquired
in late 2012. Notwithstanding this, the Company expects processing
income to decrease as the Company's production grows, thus reducing
capacity for third-party volumes in Tourmaline owned-and-operated
facilities. 
OPERATING EXPENSES 


 
                 Three Months Ended June 30,     Six Months Ended June 30,  
                ------------------------------------------------------------
(000s) except                                                               
 per unit                                                                   
 amounts              2013      2012  Change        2013      2012  Change  
----------------------------------------------------------------------------
Operating                                                                   
 expenses        $  27,409 $  22,419      22%  $  53,776 $  44,500      21% 
----------------------------------------------------------------------------
Per boe          $    4.29 $    4.83     (11)% $    4.28 $    5.00     (14)%
----------------------------------------------------------------------------

 
Operating expenses include all periodic lease and field-level
expenses and exclude income recoveries from processing third-party
volumes. For the second quarter of 2013, total operating expenses
increased 22% from $22.4 million in the second quarter of 2012 to
$27.4 million in 2013 due to the increased variable costs relating to
new production. On a per-boe basis, the costs decreased 11% from
$4.83/boe for the second quarter of 2012 to $4.29/boe in the second
quarter of 2013 due to increased production and increased operational
efficiencies.  
Tourmaline's operating expenses in the second quarter of 2013 include
third-party processing, gathering and compression fees of
approximately $7.5 million or 27% of total operating costs (June 30,
2012 - $4.0 million or 18% of total operating costs). Production in
NEBC has increased since 2012, and volumes off loaded to third-party
facilities in this area are subject to higher processing costs. The
start up of the NEBC Doe gas plant in July 2013 will allow for
additional volumes to flow through this Company owned-and-operated
facility thereby reducing third party processing charges.
Additionally, the Company expects to complete a new natural gas and
liquids handling facility in late 2014 at Spirit River, which is also
expected to reduce overall third-party processing charges. 
For the six months ended June 30, 2013, total operating expenses were
$53.8 million, or $4.28/boe, compared to $44.5 million, or $5.00/boe
for the same period of 2012. Although total operating expenses
increased along with production, the costs per boe decreased 14%
reflecting increased operational efficiencies. 
The Company expects its full year 2013 operating costs to average
approximately $4.25/boe, which is consistent with previous guidance.
Actual costs per boe can change, however, depending on a number of
factors including the Company's actual production levels. 
TRANSPORTATION 


 
                   Three Months Ended June 30,    Six Months Ended June 30, 
                  ----------------------------------------------------------
(000s) except per                                                           
 unit amounts           2013      2012  Change       2013      2012  Change 
----------------------------------------------------------------------------
Gas transportation $   8,762 $   6,215      41% $  17,047 $  12,083      41%
Oil and NGL                                                                 
 transportation        3,845     2,396      60%     8,030     4,076      97%
----------------------------------------------------------------------------
Total                                                                       
 transportation    $  12,607 $   8,611      46% $  25,077 $  16,159      55%
----------------------------------------------------------------------------
Per boe            $    1.97 $    1.85       6% $    2.00 $    1.82      10%
----------------------------------------------------------------------------

 
Transportation costs for the three months ended June 30, 2013 were
$12.6 million or $1.97/boe (three months ended June 30, 2012 - $8.6
million or $1.85/boe, respectively). Transportation costs for the six
months ended June 30, 2013 were $25.1 million or $2.00/boe (six
months ended June 30, 2012 - $16.2 million or $1.82/boe,
respectively). The increase in total transportation costs for the
three and six months ended June 30, 2013 can be attributed to
increased production as well as increased oil and NGL transportation
costs. Pipeline and infrastructure constraints have resulted in a
greater use of more expensive truck transportation.  
GENERAL & ADMINISTRATIVE EXPENSES ("G&A") 


 
                 Three Months Ended June 30,      Six Months Ended June 30, 
              --------------------------------------------------------------
(000s) except                                                               
 per unit                                                                   
 amounts            2013       2012   Change       2013       2012   Change 
----------------------------------------------------------------------------
G&A expenses   $   8,829  $   6,043       46% $  17,436  $  12,883       35%
Administrative                                                              
 and capital                                                                
 recovery           (312)      (149)     109%      (726)      (338)     115%
Capitalized                                                                 
 G&A              (3,301)    (2,698)      22%    (6,553)    (5,499)      19%
----------------------------------------------------------------------------
Total G&A                                                                   
 expenses      $   5,216  $   3,196       63% $  10,157  $   7,046       44%
----------------------------------------------------------------------------
Per boe        $    0.82  $    0.69       19% $    0.81  $    0.79        3%
----------------------------------------------------------------------------

 
G&A expenses for the second quarter of 2013 were $5.2 million
($0.82/boe) compared to $3.2 million ($0.69/boe) for the same quarter
of the prior year. For the six months ended June 30, 2013, G&A
expenses were $10.2 million ($0.81/boe) compared to $7.0 million
($0.79/boe) for the same period of 2012. The higher costs relate to
increased staffing levels, which have been put in place primarily to
support a larger exploration and production program in 2013 and 2014. 
G&A costs for 2013 are expected to be similar to 2012 on a
dollar-per-boe basis. Actual costs per boe can change, however,
depending on a number of factors including the Company's actual
production levels. 
SHARE-BASED PAYMENTS  


 
                                   Three Months Ended Six Months Ended June 
                                             June 30,                   30, 
                                --------------------------------------------
(000s) except per unit amounts        2013       2012       2013       2012 
----------------------------------------------------------------------------
Share-based payments             $   8,964  $   7,416  $  16,144  $  15,032 
Capitalized share-based payments    (4,482)    (3,708)    (8,072)    (7,516)
----------------------------------------------------------------------------
Total share-based payments       $   4,482  $   3,708  $   8,072  $   7,516 
----------------------------------------------------------------------------
Per boe                          $    0.70  $    0.80  $    0.64  $    0.84 
----------------------------------------------------------------------------

 
Tourm
aline uses the fair value method for the determination of
non-cash related share-based payments expense. During the second
quarter of 2013, 1,845,000 stock options were granted to employees,
officers, directors and key consultants at a weighted-average
exercise price of $40.86, and 766,861 options were exercised,
bringing $9.5 million of cash into treasury. The Company recognized
$4.5 million of share-based payment expense in the second quarter of
2013 compared to $3.7 million in the second quarter of 2012.
Capitalized share-based payment expense for the second quarter of
2013 was $4.5 million compared to $3.7 million for the same quarter
of the prior year. 
For the six months ended June 30, 2013, share-based compensation
expense totalled $8.1 million and capitalized share-based payments
were $8.1 million (2012 - $7.5 million and $7.5 million,
respectively). The increase in share-based compensation in 2013
compared to 2012 reflects the increased number of employees due to
increased activity along with an overall increase in the fair value
of options granted.  
DEPLETION, DEPRECIATION AND AMORTIZATION ("DD&A")  


 
                              Three Months Ended June  Six Months Ended June
                                                  30,                    30,
                              ----------------------------------------------
(000s) except per unit amounts       2013        2012       2013        2012
----------------------------------------------------------------------------
Total depletion, depreciation                                               
 and amortization               $  82,317   $  61,790  $ 163,740   $ 117,797
Less mineral lease expiries        (7,444)          -    (15,026)          -
----------------------------------------------------------------------------
Depletion, depreciation and                                                 
 amortization                   $  74,873   $  61,790  $ 148,714   $ 117,797
----------------------------------------------------------------------------
Per boe                         $   11.72   $   13.31  $   11.84   $   13.24
----------------------------------------------------------------------------

 
DD&A expense, net of mineral lease expiries expense, was $74.9
million for the second quarter of 2013 compared to $61.8 million for
the same period of 2012 due to higher production volumes, as well as
a larger capital asset base being depleted. The per-unit DD&A rate
(excluding the impact of mineral lease expiries) for the second
quarter of 2013 was $11.72/boe compared to $13.31/boe for the second
quarter of 2012.  
For the six months ended June 30, 2013, DD&A expense was $148.7
million (June 30, 2012 - $117.8 million) with an effective rate of
$11.84/boe (June 30, 2012 - $13.24/boe). The lower DD&A rate, for the
three and six months ended June 30, 2013, compared to the same
periods of 2012, reflects strong reserve additions derived from
Tourmaline's exploration and production program. 
FINANCE EXPENSES 


 
                   Three Months Ended June 30,    Six Months Ended June 30, 
                  ----------------------------------------------------------
(000s)                  2013      2012  Change       2013      2012  Change 
----------------------------------------------------------------------------
Interest expense   $   2,321 $   2,284       2% $   5,580 $   3,753      49%
Accretion expense        488       308      58%       879       615      43%
Transaction costs                                                           
 on corporate and                                                           
 property                                                                   
 acquisitions              -         -       -%       670       172     290%
Other                    219       213       3%       397       396       -%
----------------------------------------------------------------------------
Total finance                                                               
 expenses          $   3,028 $   2,805       8% $   7,526 $   4,936      52%
----------------------------------------------------------------------------

 
Finance expenses are comprised of interest expense, accretion of
provisions and transaction costs associated with corporate and
property acquisitions. Finance expenses for the three months ended
June 30, 2013 totalled $3.0 million, which are consistent with 2012
second quarter finance expenses of $2.8 million. Finance expenses for
the six month period increased from $4.9 million in 2012 to $7.5
million in 2013, primarily due to a $1.8 million increase in interest
expense resulting from a higher balance drawn on the credit facility
during the first quarter of 2013. The effective interest rate of
3.28% for the second quarter of 2013 is relatively unchanged from the
3.33% for the same period in 2012. 
DEFERRED INCOME TAXES 
For the three and six months ended June 30, 2013, the provision for
deferred income tax expense was $14.3 million and $33.9 million,
respectively, compared to an expense of $1.8 million and $5.0
million, respectively, for the same periods in 2012. The increase was
due to higher pre-tax earnings in 2013 and an increase in the
Company's effective tax rate during the second quarter of 2013 due to
the Province of British Columbia increasing its provincial tax rate
from 10% to 11%. 
CASH FLOW FROM OPERATING ACTIVITIES, CASH FLOW AND NET EARNINGS 


 
                   Three Months Ended June 30,    Six Months Ended June 30, 
                  ----------------------------------------------------------
(000s) except per                                                           
 unit amounts           2013      2012  Change       2013      2012  Change 
----------------------------------------------------------------------------
Cash flow from                                                              
 operating                                                                  
 activities        $ 128,432 $  42,566     202% $ 222,195 $ 102,093     118%
  Per share(1)     $    0.68 $    0.26     162% $    1.20 $    0.62      94%
Cash flow (2)      $ 128,870 $  61,121     111% $ 245,469 $ 122,957     100%
  Per share (1)                                                             
   (2)             $    0.68 $    0.37      84% $    1.32 $    0.75      76%
Net earnings       $  30,004 $   1,012   2,865% $  82,188 $   3,988   1,961%
  Per share (1)    $    0.16 $    0.01   1,500% $    0.44 $    0.02   2,100%
Operating netback                                                           
 per boe (2)       $   21.28 $   14.22      50% $   20.75 $   14.84      40%
----------------------------------------------------------------------------
(1) Fully diluted                    
                                     
(2) See "Non-GAAP Financial Measures"

 
Cash flow for the three months ended June 30, 2013 was $128.9 million
or $0.68 per diluted share compared to $61.1 million or $0.37 per
diluted share for the same period of 2012. Cash flow for the six
months ended June 30, 2013 increased to $245.5 million or $1.32 per
diluted share compared to June 30, 2012 cash flow of $123.0 million
or $0.75 per diluted share. The increase in cash flow in 2013
reflects higher commodity prices over 2012, as well as increased
production. 
After-tax earnings for the three months ended June 30, 2013 are
higher at $30.0 million ($0.16 per diluted share) compared to $1.0
million ($0.01 per diluted share) for the same period of 2012, due
mainly to higher commodity prices and increased production. After-tax
earnings for the six month period ending June 30, 2013 were $82.2
million ($0.44 per diluted share) compared to $4.0 million ($0.02 per
diluted share) in 2012. The significant increase is attributable to
increased commodity prices and production as well as the gain
realized on the sale of a non-core asset in Elmworth, Alberta. 
CAPITAL EXPENDITURES  


 
                                
   Three Months Ended Six Months Ended June 
                                             June 30,                   30, 
                                 -------------------------------------------
(000s)                                 2013      2012       2013       2012 
----------------------------------------------------------------------------
Land and seismic                  $   8,277 $   4,461  $  16,782  $  15,299 
Drilling and completions             54,975    24,490    236,003    172,785 
Facilities                           58,568    22,149    131,703     88,156 
Property acquisitions                33,533        58     35,983        974 
Property dispositions                     -       (50)   (77,945)   (12,568)
Other                                 3,398     2,723      6,688      5,609 
----------------------------------------------------------------------------
Total cash capital expenditures   $ 158,751 $  53,831  $ 349,214  $ 270,255 
----------------------------------------------------------------------------

 
During the second quarter of 2013, the Company invested $158.8
million of cash consideration compared to $53.8 million for the same
period of 2012. Expenditures on exploration and production were
$121.8 million compared to $51.1 million for the same quarter of
2012, which is consistent with the Company's aggressive growth
strategy and includes expenditures on Phase 1 of the Spirit River gas
facility expansion, which was completed in June 2013. The increase in
expenditures also includes costs related to the NEBC gas facility,
which started up in July 2013. 
The following table summarizes the drill, complete and tie-in
activities for the period: 


 
                                            Three Months Ended June 30, 2013
                                            --------------------------------
                                                       Gross             Net
----------------------------------------------------------------------------
Drilled                                                   10            8.73
Completed                                                  9            7.80
Tied-in                                                   10           10.00
----------------------------------------------------------------------------

 
LIQUIDITY AND CAPITAL RESOURCES  
On March 12, 2013, the Company issued 5.78 million common shares at a
price of $34.25 per share and 0.835 million flow-through common
shares at a price of $42.15 per share, for total gross proceeds of
$233.2 million. The proceeds were used to temporarily reduce bank
debt and will be used to fund the Company's 2013 exploration and
development program. 
The Company has a covenant-based bank credit facility in place with a
syndicate of bankers, the details of which are described in note 9 of
the Company's consolidated financial statements for the year ended
December 31, 2012. In June 2013, the facility was increased to $750
million from $575 million, under the same terms and covenants, with
an initial maturity of June 2016. 
At June 30, 2013, Tourmaline had negative working capital of $53.7
million, after adjusting for the fair value of financial instruments
(the unadjusted working capital deficiency was $50.9 million)
(December 31, 2012 - $103.7 million and $98.9 million, respectively).
Management believes the Company has sufficient liquidity and capital
resources to fund the remainder of its 2013 exploration and
development program through expected cash flow from operations and
its unutilized bank credit facility. As at June 30, 2013, the
Company's bank debt balance was $291.8 million (December 31, 2012 -
$360.6 million), and net debt was $345.5 million (December 31, 2012 -
$464.3 million).  
SHARES OUTSTANDING 
As at August 7, 2013, the Company has 184,468,636 common shares
outstanding and 14,333,544 stock options granted and outstanding. 
COMMITMENTS AND CONTRACTUAL OBLIGATIONS 
In the normal course of business, Tourmaline is obligated to make
future payments. These obligations represent contracts and other
commitments that are known and non-cancellable. 


 
                                                          greater           
Payments Due by Year                    2-3        4-5     than 5           
 (000s)                   1 Year      Years      Years      Years      Total
----------------------------------------------------------------------------
Operating leases       $   2,365  $   7,928  $  10,166  $   8,635  $  29,094
Flow-through                                                                
 obligations              19,189     35,195          -          -     54,384
Firm transportation                                                         
 and processing                                                             
 agreements               38,369     83,701     83,720    242,316    448,106
Bank debt(1)                   -    320,447          -          -    320,447
----------------------------------------------------------------------------
                       $  59,923  $ 447,271  $  93,886  $ 250,951  $ 852,031
----------------------------------------------------------------------------
(1) Includes interest expense at an annual rate of 2.88% being the rate   
    applicable to outstanding bank debt at June 30, 2013.                 

 
OFF BALANCE SHEET ARRANGEMENTS 
The Company has certain lease arrangements, all of which are
reflected in the commitments and contractual obligations table, which
were entered into in the normal course of operations. All leases have
been treated as operating leases whereby the lease payments are
included in operating expenses or general and administrative expenses
depending on the nature of the lease. 
FINANCIAL RISK MANAGEMENT 
The Board of Directors has overall responsibility for the
establishment and oversight of the Company's risk management
framework. The Board has implemented and monitors compliance with
risk management policies. 
The Company's risk management policies are established to identify
and analyze the risks faced by the Company, to set appropriate risk
limits and controls, and to monitor risks and adherence to market
conditions and the Company's activities. The Company's financial
risks are discussed in note 5 of the Company's audited consolidated
financial statements for the year ended December 31, 2012.  
As at June 30, 2013, the Company has entered into certain financial
derivative and physical delivery sales contracts in order to manage
commodity risk. These instruments are not used for trading or
speculative purposes. The Company has not designated its financial
derivative contracts as effective accounting hedges, even though the
Company considers all commodity contracts to be effective economic
hedges. Such financial derivative commodity contracts are recorded on
the consolidated statement of financial position at fair value, with
changes in the fair value being recognized as an unrealized gain or
loss on the consolidated statement of income and comprehensive
income. The contracts that the Company has entered into in the first
six months of 2013 are detailed in note 3 of the Company's interim
condensed consolidated financial statements for the three and six
months ended June 30, 2013. 
The following table provides a summary of the unrealized gains and
losses on financial instruments for the three and six months ended
June 30, 2013 and 2012: 


 
                                   Three Months Ended Six Months Ended June 
                                             June 30,                   30, 
                                 -------------------------------------------
(000s)                                 2013      2012       2013       2012 
----------------------------------------------------------------------------
Unrealized gain (loss) on                                                   
 financial instruments            $   3,321 $   7,343  $    (498) $   4,977 
Unreali
zed (loss) on investments                                            
 held for trading                         -       (84)         -       (103)
----------------------------------------------------------------------------
Total                             $   3,321 $   7,259  $    (498) $   4,874 
----------------------------------------------------------------------------

 
The Company has entered into physical contracts to manage commodity
risk. These contracts are considered normal sales contracts and are
not recorded at fair value in the consolidated financial statements.
Physical contracts entered into since December 31, 2012 to June 30,
2013 have been disclosed in note 3 of the Company's interim condensed
consolidated financial statements for the three and six months ended
June 30, 2013. 
The Company has entered into several financial derivative and
physical delivery sales contracts subsequent to June 30, 2013. These
contracts are detailed in note 3 of the Company's interim condensed
consolidated financial statements for the quarter ended June 30,
2013. 
APPLICATION OF CRITICAL ACCOUNTING ESTIMATES 
Certain accounting policies require that management make appropriate
decisions with respect to the formulation of estimates and
assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Management reviews its estimates on a regular
basis. The emergence of new information and changed circumstances may
result in actual results or changes to estimates that differ
materially from current estimates. The Company's use of estimates and
judgments in preparing the interim condensed consolidated financial
statements is discussed in note 1 of the consolidated financial
statements for the year ended December 31, 2012. 
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER
FINANCIAL REPORTING 
The Company's Chief Executive Officer and Chief Financial Officer
have designed, or caused to be designed under their supervision,
disclosure controls and procedures ("DC&P"), as defined by National
Instrument 52-109 Certification, to provide reasonable assurance
that: (i) material information relating to the Company is made known
to the Company's Chief Executive Officer and Chief Financial Officer
by others, particularly during the periods in which the annual and
interim filings are being prepared; and (ii) information required to
be disclosed by the Company in its annual filings, interim filings or
other reports filed or submitted by it under securities legislation
is recorded, processed, summarized and reported within the time
period specified in securities legislation. All control systems by
their nature have inherent limitations and, therefore, the Company's
DC&P are believed to provide reasonable, but not absolute, assurance
that the objectives of the control systems are met. 
The Company's Chief Executive Officer and Chief Financial Officer
have designed, or caused to be designed under their supervision,
internal controls over financial reporting ("ICFR"), as defined by
National Instrument 52-109, to provide reasonable assurance regarding
the reliability of the Company's financial reporting and the
preparation of financial statements for external purposes in
accordance with IFRS. There were no changes in the Company's ICFR
during the period beginning on April 1, 2013 and ending on June 30,
2013 that have materially affected, or are reasonably likely to
materially affect, the Company's ICFR. 
It should be noted that a control system, including the Company's
disclosure and internal controls and procedures, no matter how well
conceived can provide only reasonable, but not absolute assurance
that the objectives of the control system will be met and it should
not be expected that the disclosure and internal controls and
procedures will prevent all errors or fraud. 
ADOPTION OF NEW ACCOUNTING STANDARDS  
On January 1, 2013, the Company adopted new standards with respect to
consolidations (IFRS 10), joint arrangements (IFRS 11), disclosure of
interests in other entities (IFRS 12), fair value measurements (IFRS
13) and amendments to financial instrument disclosures (IFRS 7). The
adoption of these standards had no impact on the amounts recorded in
the interim condensed consolidated financial statements or on the
comparative periods. 
BUSINESS RISKS AND UNCERTAINTIES  
Tourmaline monitors and complies with current government regulations
that affect its activities, although operations may be adversely
affected by changes in government policy, regulations or taxation. In
addition, Tourmaline maintains a level of liability, property and
business interruption insurance which is believed to be adequate for
Tourmaline's size and activities, but is unable to obtain insurance
to cover all risks within the business or in amounts to cover all
possible claims. 
See "Forward-Looking Statements" in this MD&A and "Risk Factors" in
Tourmaline's most recent annual information form for additional
information regarding the risks to which Tourmaline and its business
and operations are subject. 
IMPACT OF NEW ENVIRONMENTAL REGULATIONS  
Environmental legislation, including the Kyoto Accord, the federal
government's "EcoACTION" plan and Alberta's Bill 3 - Climate Change
and Emissions Management Amendment Act, is evolving in a manner
expected to result in stricter standards and enforcement, larger
fines and liability and potentially increased capital expenditures
and operating costs. Given the evolving nature of the debate related
to climate change and the resulting requirements, it is not possible
to determine the operational or financial impact of those
requirements on Tourmaline. 
NON-GAAP FINANCIAL MEASURES 
This MD&A includes references to financial measures commonly used in
the oil and gas industry such as "cash flow", "operating netback",
"working capital (adjusted for the fair value of financial
instruments)" and "net debt", which do not have any standardized
meaning prescribed by GAAP. Management believes that in addition to
net income and cash flow from operating activities, the
aforementioned non-GAAP financial measures are useful supplemental
measures in assessing Tourmaline's ability to generate the cash
necessary to repay debt or fund future growth through capital
investment. Readers are cautioned, however, that these measures
should not be construed as an alternative to net income or cash flow
from operating activities determined in accordance with GAAP as an
indication of Tourmaline's performance. Tourmaline's method of
calculating these measures may differ from other companies and
accordingly, they may not be comparable to measures used by other
companies. For these purposes, Tourmaline defines cash flow as cash
flow from operating activities before changes in non-cash operating
working capital, defines operating netback as revenue (excluding
processing income) less royalties, transportation costs and operating
expenses and defines working capital (adjusted for the fair value of
financial instruments) as working capital adjusted for the fair value
of financial instruments. Net debt is defined as long-term bank debt
plus working capital (adjusted for the fair value of financial
instruments). 
Cash Flow 
A summary of the reconciliation of cash flow from operating
activities (per the statements of cash flow), to cash flow, is set
forth below: 


 
                                    Three Months Ended Six Months Ended June
                                              June 30,                   30,
                                --------------------------------------------
(000s)                                 2013       2012       2013       2012
----------------------------------------------------------------------------
Cash flow from operating                                                    
 activities (per GAAP)            $ 128,432  $  42,566  $ 222,195  $ 102,093
Change in non-cash operating                                                
 working capital      
                  438     18,555     23,274     20,864
----------------------------------------------------------------------------
Cash flow                         $ 128,870  $  61,121  $ 245,469  $ 122,957
----------------------------------------------------------------------------

 
Operating Netback 
Operating netback is calculated on a per-boe basis and is defined as
revenue (excluding processing income) less royalties, transportation
costs and operating expenses, as shown below: 


 
                                   Three Months Ended Six Months Ended June 
                                             June 30,                   30, 
                                --------------------------------------------
($/boe)                               2013       2012       2013       2012 
----------------------------------------------------------------------------
Revenue, excluding processing                                               
 income                          $   29.88  $   21.64  $   29.11  $   23.00 
Royalties                            (2.33)     (0.73)     (2.09)     (1.33)
Transportation costs                 (1.97)     (1.85)     (2.00)     (1.82)
Operating expenses                   (4.29)     (4.83)     (4.28)     (5.00)
----------------------------------------------------------------------------
Operating netback(1)             $   21.28  $   14.22  $   20.75  $   14.84 
----------------------------------------------------------------------------
(1) May not add due to rounding.

 
Working Capital (Adjusted for the Fair Value of Financial
Instruments) 
A summary of the reconciliation of working capital to working capital
(adjusted for the fair value of financial instruments) is set forth
below: 


 
                                                      As at           As at 
                                                   June 30,    December 31, 
(000s)                                                 2013            2012 
----------------------------------------------------------------------------
Working capital (deficit)                     $     (50,851)  $     (98,913)
Fair value of financial instruments - short-                                
 term asset                                          (2,825)         (4,814)
----------------------------------------------------------------------------
Working capital (deficit) (adjusted for the                                 
 fair value of financial instruments)         $     (53,676)  $    (103,727)
----------------------------------------------------------------------------

 
Net Debt 
A summary of the reconciliation of net debt is set forth below: 


 
                                                      As at           As at 
                                                   June 30,    December 31, 
(000s)                                                 2013            2012 
----------------------------------------------------------------------------
Bank debt                                     $    (291,849)  $    (360,573)
Working capital (deficit)                           (50,851)        (98,913)
Fair value of financial instruments - short-                                
 term asset                                          (2,825)         (4,814)
----------------------------------------------------------------------------
Net debt                                      $    (345,525)  $    (464,300)
----------------------------------------------------------------------------

 
SELECTED QUARTERLY INFORMATION 


 
                                               2013 
                            ----------------------- 
($000s, unless otherwise                            
 noted)                              Q2          Q1 
----------------------------------------------------
PRODUCTION                                          
Natural gas (mcf)            34,477,391  33,055,857 
Oil and NGL(bbls)               640,001     667,907 
Oil equivalent (boe)          6,386,233   6,177,216 
Natural gas (mcf/d)             378,872     367,287 
Oil and NGL (bbls/d)              7,033       7,421 
Oil equivalent (boe/d)           70,178      68,636 
----------------------------------------------------
FINANCIAL                                           
Revenue, net of royalties       180,505     161,124 
Cash flow from operating                            
 activities                     128,432      93,763 
Cash flow (1)                   128,870     116,599 
  Per diluted share                0.68        0.64 
Net earnings (loss)              30,004      52,184 
  Per basic share                  0.16        0.29 
  Per diluted share                0.16        0.29 
Total assets                  3,811,192   3,735,641 
Working capital                 (50,851)   (165,385)
Working capital (adjusted                           
 for the fair value of                              
 financial instruments) (1)     (53,676)   (166,049)
Capital expenditures            158,751     190,463 
Total outstanding shares                            
 (000s)                         184,175     183,408 
----------------------------------------------------
PER UNIT                                            
Natural gas ($/mcf)                3.92        3.50 
Oil and NGL ($/bbl)               87.06       88.75 
Revenue ($/boe)                   29.88       28.33 
Operating netback ($/boe)                           
 (1)                              21.28       20.20 
----------------------------------------------------
 
                                                                       2012 
                            ----------------------------------------------- 
($000s, unless otherwise                                                    
 noted)                              Q4          Q3          Q2          Q1 
----------------------------------------------------------------------------
PRODUCTION                                                                  
Natural gas (mcf)            27,879,639  23,501,484  24,276,149  22,430,621 
Oil and NGL(bbls)               618,483     515,157     596,992     515,408 
Oil equivalent (boe)          5,265,090   4,432,071   4,643,016   4,253,845 
Natural gas (mcf/d)             303,040     255,451     266,771     246,490 
Oil and NGL (bbls/d)              6,723       5,600       6,560       5,664 
Oil equivalent (boe/d)           57,230      48,175      51,022      46,746 
----------------------------------------------------------------------------
FINANCIAL                                                                   
Revenue, net of royalties       134,864      91,863     105,567      94,781 
Cash flow from operating                                                    
 activities                     104,671      66,713      42,566      59,527 
Cash flow (1)                    93,807      63,515      61,121      61,836 
  Per diluted share                0.54        0.38        0.37        0.38 
Net earnings (loss)              16,301      (4,770)      1,012       2,976 
  Per basic share                  0.10       (0.03)       0.01        0.02 
  Per diluted share                0.09       (0.03)       0.01        0.02 
Total assets                  3,580,253   2,992,552   2,862,502   2,878,261 
Working capital                 (98,913)    (98,184)    (15,311)   (176,029)
Working capital (adjusted                                                   
 for the fair value of                                                      
 financial instruments) (1)    (103,727)   (101,577)    (19,809)   (175,696)
Capital expenditures            296,108     175,277      53,831     216,424 
Total outstanding shares                                                    
 (000s)                         174,813     165,678     160,459     158,807 
----------------------------------------------------------------------------
PER UNIT                                                                    
Natural gas ($/mcf)                3.29        2.52        2.23        2.54 
Oil and NGL ($/bbl)               83.28       83.34       77.75       91.48 
Revenue ($/boe)                   27.18       23.04       21.64       24.48 
Operating netback ($/boe)                                                   
 (1)                              19.17       15.68       14.22       15.52 
----------------------------------------------------------------------------
 
                                               2011 
                            ----------------------- 
($000s, unless otherwise                            
 noted)                              Q4          Q3 
----------------------------------------------------
PRODUCTION                                          
Natural gas (mcf)            18,437,079  17,058,132 
Oil and NGL(bbls)               415,074     316,890 
Oil equivalent (boe)          3,487,920   3,159,912 
Natural gas (mcf/d)             200,403     185,414 
Oil and NGL (bbls/d)              4,512       3,444 
Oil equivalent (boe/d)           37,912      34,347 
----------------------------------------------------
FINANCIAL                                           
Revenue, net of royalties        98,309      98,225 
Cash flow from operating                            
 activities                      61,801      77,622 
Cash flow (1)                    73,311      62,686 
  Per diluted share                0.45        0.40 
Net earnings (loss)              16,074       8,688 
  Per basic share                  0.10        0.06 
  Per diluted share                0.10        0.06 
Total assets                  2,711,024   2,517,607 
Working capital                (146,317)   (120,080)
Working capital (adjusted                           
 for the fair value of                              
 financial instruments) (1)    (146,593)   (123,858)
Capital expenditures            232,167     249,162 
Total outstanding shares                            
 (000s)                         158,578     151,906 
----------------------------------------------------
PER UNIT                                            
Natural gas ($/mcf)                3.76        4.25 
Oil and NGL ($/bbl)               93.05       87.01 
Revenue ($/boe)                   30.95       31.67 
Operating netback ($/boe)                           
 (1)                              21.39       21.21 
----------------------------------------------------
(1) See Non-GAAP Financial Measures.

 
The oil and gas exploration and production industry is cyclical in
nature. The Company's financial position, results of operations and
cash flows are principally impacted by production levels and
commodity prices, particularly natural gas prices. 
Overall, the Company has had continued annual growth over the last
two years summarized in the table above. The small decrease in
production from the second quarter to the third quarter of 2012 was
due to weather-related tie-in delays, as well as production
disruptions related to sour gas handling issues at Spirit River and a
one-time equipment issue at Sunrise. The Company's average annual
production has increased from 31,007 boe per day in 2011 to 50,804
boe per day in 2012 and 69,411 boe per day in the first six months of
2013. The production growth can be attributed primarily to the
Company's exploration and development activities, as well as from
acquisitions of producing properties. 
The Company's cash flows from operating activities were $228.4
million in 2011, $273.5 million in 2012 and 2013 estimated cash flows
(based on the first six months annualized) are $444.4 million, due
mainly to strong growth in production levels and strengthening
commodity prices. Commodity price changes can indirectly impact
expected production by changing the amount of funds available to
reinvest in exploration, development and acquisition activities in
the future. Changes in commodity prices impact revenues and cash
flows available for exploration, and also the economics of potential
capital projects as low commodity prices can potentially reduce the
quantities of reserves that are commercially recoverable. The
Company's capital program is dependent on cash flows generated from
operations and access to capital markets. 
CONSOLIDATED FINANCIAL STATEMENTS 
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION  


 
(000s) (unaudited)                         June 30, 2013   December 31, 2012
----------------------------------------------------------------------------
Assets                                                                      
Current assets:                                                             
  Accounts receivable                 $           75,151  $           83,868
  Assets held for sale                                 -              33,007
  Prepaid expenses and deposits                    5,886               5,309
  Fair value of financial                                                   
   instruments (notes 2 and 3)                     2,825               4,814
----------------------------------------------------------------------------
Total current assets                              83,862             126,998
Long-term asset                                    2,580               2,580
Exploration and evaluation assets                                           
 (note 4)                                        685,577             639,933
Property, plant and equipment (note                                         
 5)                                            3,039,173           2,810,742
----------------------------------------------------------------------------
Total Assets                          $        3,811,192  $        3,580,253
----------------------------------------------------------------------------
Liabilities and Shareholders' Equity                                        
Current liabilities:                                                        
  Accounts payable and accrued                                              
   liabilities                        $          134,713  $          225,911
----------------------------------------------------------------------------
Total current liabilities                        134,713             225,911
Bank debt (note 7)                               291,849             360,573
Decommissioning obligations (note 6)              69,032              64,757
Long-term obligation                               5,276               7,139
Fair value of financial instruments                                         
 (notes 2 and 3)                                     521               2,012
Deferred premium on flow-through                                            
 shares                                           10,523               8,755
Deferred taxes                                   212,686             176,391
Shareholders' equity:                                                       
  Share capital (note 9)                       2,865,254           2,599,614
  Non-controlling interest (note 8)               16,943              16,298
  Contributed surplus                             74,327              70,923
  Retained earnings                              130,068              47,880
----------------------------------------------------------------------------
Total shareholders' equity                     3,086,592           2,734,715
----------------------------------------------------------------------------
Total Liabilities and Shareholders'                                         
 Equity                               $        3,811,192  $        3,580,253
----------------------------------------------------------------------------
Commitments (note 12)                                                       
Subsequent events (note 3)                                                  
See accompanying notes to the interim condensed consolidated financial      
statements.                          

 
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME  


 
                                   Three Months Ended Six Months Ended June 
                                             June 30,                   30, 
----------------------------------------------------------------------------
(000s) except per-share amounts                                             
 (unaudited)                          2013       2012       2013       2012 
----------------------------------------------------------------------------
Revenue:                                                                    
  Oil and natural gas sales      $ 186,821  $  96,324  $ 359,312  $ 195,097 
  Royalties                        (14,854)    (3,399)   (26,217)   (11,870)
----------------------------------------------------------------------------
  Net revenue from oil and                                                  
   natural gas sales               171,967     92,925    333,095    183,227 
  Realized gain on financial                                                
   instruments                       3,968      4,137      6,464      9,502 
  Unrealized gain (loss) on                                                 
   financial instruments(note 3)     3,321      7,259       (498)     4,874 
  Other income                       1,249      1,246      2,568      2,745 
----------------------------------------------------------------------------
Total net revenue                  180,505    105,567    341,629    200,348 
Expenses:                                                                   
  Operating                         27,409     22,419     53,776     44,500 
  Transportation                    12,607      8,611     25,077     16,159 
  General and administration         5,216      3,196     10,157      7,046 
  Share-based payments               4,482      3,708      8,072      7,516 
  (Gain) loss on divestitures          777        (66)   (43,410)    (7,272)
  Depletion, depreciation and                                               
   amortization                     82,317     61,790    163,740    117,797 
----------------------------------------------------------------------------
Total expenses                     132,808     99,658    217,412    185,746 
----------------------------------------------------------------------------
Income from operations              47,697      5,909    124,217     14,602 
Finance expenses                     3,028      2,805      7,526      4,936 
----------------------------------------------------------------------------
Income before taxes                 44,669      3,104    116,691      9,666 
Deferred taxes                      14,265      1,781     33,858      4,955 
----------------------------------------------------------------------------
Net income and comprehensive                                                
 income for the period before                                               
 non-controlling interest           30,404      1,323     82,833      4,711 
----------------------------------------------------------------------------
Net income and comprehensive                                                
 income attributable to:                                                    
  Shareholders of the Company       30,004      1,012     82,188      3,988 
  Non-controlling interest (note                                            
   8)                                  400        311        645        723 
----------------------------------------------------------------------------
                                 $  30,404  $   1,323  $  82,833  $   4,711 
----------------------------------------------------------------------------
                                                                            
Net income per share                                                        
 attributable to common                                                     
 shareholders (note 10)                                                     
----------------------------------------------------------------------------
  Basic                          $    0.16  $    0.01  $    0.46  $    0.03 
----------------------------------------------------------------------------
  Diluted                        $    0.16  $    0.01  $    0.44  $    0.02 
----------------------------------------------------------------------------
See accompanying notes to the interim condensed consolidated financial      
statements.                                                                 

 
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 


 
(000s) (unaudited)                                                          
----------------------------------------------------------------------------
                                                           Non-             
                    Share  Contributed    Retained  Controlling       Total 
                  Capital      Surplus    Earnings     Interest      Equity 
----------------------------------------------------------------------------
Balance at                                                                  
 December 31,                                                               
 2012        $  2,599,614 $     70,923 $    47,880 $     16,298 $ 2,734,715 
Issue of                                                                    
 common                                                                     
 shares (note                                                               
 9)               226,564            -           -            -     226,564 
Share issue                                                                 
 costs, net                                                                 
 of tax            (7,175)           -           -            -      (7,175)
Share-based                                                                 
 payments               -        8,072           -            -       8,072 
Capitalized                                                                 
 share-based                                                                
 payments               -        8,072           -            -       8,072 
Options                                                                     
 exercised                                                                  
 (note 9)          46,251      (12,740)          -            -      33,511 
Income                                                                      
 attributable                                                               
 to common                                                                  
 shareholders           -            -      82,188            -      82,188 
Income                                                                      
 attributable                                                               
 to non-                                                                    
 controlling                                                                
 interest               -            -           -          645         645 
----------------------------------------------------------------------------
Balance at                                                                  
 June 30,                                                                   
 2013        $  2,865,254 $     74,327 $   130,068 $     16,943 $ 3,086,592 
----------------------------------------------------------------------------
                                                                            
                                                                            
(000s) (unaudited)                                                          
----------------------------------------------------------------------------
                                                           Non-             
                     Share  Contributed   Retained  Cont
rolling       Total 
                   Capital      Surplus   Earnings     Interest      Equity 
----------------------------------------------------------------------------
Balance at                                                                  
 December 31,                                                               
 2011          $ 2,140,660 $     47,776 $   32,361 $     15,079 $ 2,235,876 
Issue of common                                                             
 shares (note                                                               
 9)                 31,867            -          -            -      31,867 
Share issue                                                                 
 costs, net of                                                              
 tax                (1,608)           -          -            -      (1,608)
Share-based                                                                 
 payments                -        7,516          -            -       7,516 
Capitalized                                                                 
 share-based                                                                
 payments                -        7,516          -            -       7,516 
Options                                                                     
 exercised                                                                  
 (note 9)            5,871       (1,636)         -            -       4,235 
Income                                                                      
 attributable                                                               
 to common                                                                  
 shareholders            -            -      3,988            -       3,988 
Income                                                                      
 attributable                                                               
 to non-                                                                    
 controlling                                                                
 interest                -            -          -          723         723 
----------------------------------------------------------------------------
Balance at June                                                             
 30, 2012      $ 2,176,790 $     61,172 $   36,349 $     15,802 $ 2,290,113 
----------------------------------------------------------------------------
See accompanying notes to the interim condensed consolidated financial      
statements.                                                                 

 
CONSOLIDATED STATEMENTS OF CASH FLOW  


 
                            Three Months Ended June   Six Months Ended June 
                                                30,                     30, 
----------------------------------------------------------------------------
(000s) (unaudited)                 2013        2012        2013        2012 
----------------------------------------------------------------------------
Cash provided by (used in):                                                 
Operations:                                                                 
  Net income                 $   30,004  $    1,012  $   82,188  $    3,988 
  Items not involving cash:                                                 
    Depletion and                                                           
     depreciation                82,317      61,790     163,740     117,797 
    Accretion                       488         308         879         615 
    Share-based payments          4,482       3,708       8,072       7,516 
    Deferred taxes               14,265       1,781      33,858       4,955 
    Unrealized (gain) loss                                                  
     on financial                                                           
     instruments(note 3)         (3,321)     (7,259)        498      (4,874)
    Realized (gain) on sale                                                 
     of investments                   -         (38)          -         (38)
    (Gain) loss on                                                          
     divestitures                   777         (66)    (43,410)     (7,272)
    Non-controlling interest        400         311         645         723 
Decommissioning expenditures       (542)       (426)     (1,001)       (453)
Changes in non-cash                                                         
 operating working capital         (438)    (18,555)    (23,274)    (20,864)
----------------------------------------------------------------------------
Total cash flow from                                                        
 operating activities           128,432      42,566     222,195     102,093 
Financing:                                                                  
  Issue of common shares          9,547      42,673     266,671      44,613 
  Share issue costs                   -      (1,700)     (9,566)     (2,145)
  Increase (decrease) in                                                    
   bank debt                    133,638     108,388     (68,724)    233,309 
----------------------------------------------------------------------------
Total cash flow from                                                        
 financing activities           143,185     149,361     188,381     275,777 
Investing:                                                                  
  Exploration and evaluation    (29,949)     (8,413)    (56,810)    (34,031)
  Property, plant and                                                       
   equipment                    (95,269)    (45,410)   (334,366)   (247,818)
  Property acquisitions         (33,533)        (58)    (35,983)       (974)
  Proceeds from divestitures          -          50      77,945      12,568 
  Proceeds from sale of                                                     
   investments                        -         168           -         168 
  Repayment of long-term                                                    
   obligation                      (931)       (932)     (1,863)     (1,863)
  Changes in non-cash                                                       
   investing working capital   (111,935)   (137,332)    (59,499)   (105,920)
----------------------------------------------------------------------------
Total cash flow from                                                        
 investing activities          (271,617)   (191,927)   (410,576)   (377,870)
Changes in cash                       -           -           -           - 
Cash, beginning of period             -           -           -           - 
----------------------------------------------------------------------------
Cash, end of period          $        -  $        -  $        -  $        - 
----------------------------------------------------------------------------
Cash is defined as cash and cash equivalents.                               
See accompanying notes to the interim condensed consolidated financial      
statements.                                                                 

 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 


 
As at June 30, 2013 and for the three and six months ended June 30, 2013 and
2012                                                                        
(tabular amounts in thousands of dollars, unless otherwise noted)           
(unaudited)                                                                 
----------------------------------------------------------------------------

 
Corporate Information: 
Tourmaline Oil Corp. (the "Company") was incorporated under the laws
of the Province of Alberta on July 21, 2008. The Company is engaged
in the acquisition, exploration, development and production of
petroleum and natural gas properties. These consolidated financial
statements reflect only the Company's proportionate interest in such
activities. 
The Company's reg
istered office is located at Suite 2400, 525 - 8th
Avenue S.W., Calgary, Alberta, Canada T2P 1G1. 
1. BASIS OF PREPARATION  
These unaudited interim condensed consolidated financial statements
have been prepared in accordance with International Accounting
Standard ("IAS") 34, "Interim Financial Reporting". These unaudited
interim condensed consolidated financial statements do not include
all of the information and disclosure required in the annual
financial statements and should be read in conjunction with the
Company's consolidated financial statements for the year ended
December 31, 2012. 
The accounting policies and significant accounting judgments,
estimates, and assumptions used in these unaudited interim condensed
consolidated financial statements are consistent with those described
in Notes 1 and 2 of the Company's consolidated financial statements
for the year ended December 31, 2012, except as detailed below.  
On January 1, 2013, the Company adopted new standards with respect to
consolidations (IFRS 10), joint arrangements (IFRS 11), disclosure of
interests in other entities (IFRS 12), fair value measurements (IFRS
13) and amendments to financial instrument disclosures (IFRS 7). The
adoption of these standards had no impact on the amounts recorded in
the interim condensed consolidated financial statements or on the
comparative periods. 
The unaudited interim condensed consolidated financial statements
were authorized for issue by the Board of Directors on August 7,
2013. 
2. DETERMINATION OF FAIR VALUE  
A number of the Company's accounting policies and disclosures require
the determination of fair value, for both financial and non-financial
assets and liabilities. Fair values have been determined for
measurement purposes based on the following method. When applicable,
further information about the assumptions made in determining fair
values is disclosed in the notes specific to that asset or liability. 
Measurement: 
Tourmaline classifies the fair value of transactions according to the
following hierarchy based on the amount of observable inputs used to
value the instrument. 


 
--  Level 1 - Quoted prices are available in active markets for identical
    assets or liabilities as of the reporting date. Active markets are those
    in which transactions occur in sufficient frequency and volume to
    provide pricing information on an ongoing basis. 
--  Level 2 - Pricing inputs are other than quoted prices in active markets
    included in Level 1. Prices are either directly or indirectly observable
    as of the reporting date. Level 2 valuations are based on inputs,
    including quoted forward prices for commodities, time value and
    volatility factors, which can be substantially observed or corroborated
    in the marketplace.
    
--  Level 3 - Valuations in this level are those with inputs for the asset
    or liability that are not based on observable market data. 

 
3. FINANCIAL RISK MANAGEMENT  
The Board of Directors has overall responsibility for the
establishment and oversight of the Company's risk management
framework. The Board has implemented and monitors compliance with
risk management policies. 
The Company's risk management policies are established to identify
and analyze the risks faced by the Company, to set appropriate risk
limits and controls, and to monitor risks and adherence to market
conditions and the Company's activities. The Company's financial
risks are consistent with those discussed in note 5 of the Company's
audited consolidated financial statements for the year ended December
31, 2012. 
As at June 30, 2013, the Company has entered into certain financial
derivative and physical delivery sales contracts in order to manage
commodity risk. These instruments are not used for trading or
speculative purposes. The Company has not designated its financial
derivative contracts as effective accounting hedges, even though the
Company considers all commodity contracts to be effective economic
hedges. As a result, all such commodity contracts are recorded on the
interim consolidated statement of financial position at fair value,
with changes in the fair value being recognized as an unrealized gain
or loss on the interim consolidated statement of income and
comprehensive income. 
The Company has entered into the following financial derivative
contracts from December 31, 2012 to June 30, 2013: 


 
(000s)                                                                     
---------------------------------------------------------------------------
Type of         Quantity        Time Period(1)   Contract Price  Fair Value
 Contract                                                                  
---------------------------------------------------------------------------
Financial Swap  200 bbls/d      April 2013 -     USD$97.865/bbl         134
                                March 2014(2)    average                   
Financial Swap  200 bbls/d      July 2013 - June USD$98.00/bbl          341
                                2014(3)                                    
Financial Swap  200 bbls/d      January -        USD$94.50/bbl          219
                                December 2014(4)                           
Financial Swap  5,000 mmbtu/d   April 2013 -     USD$4.12/mmbtu         568
                                March 2014                                 
Financial       900 bbls/d      January -        USD$80.00/bbl         (22)
 Costless                       December 2014    floor                     
 Collar                                          USD$97.74/bbl             
                                                 ceiling average           
---------------------------------------------------------------------------
(1) Transactions with common terms have been aggregated and presented as  
    the weighted average price.                                           
                                                                          
(2) The counter-party to these contracts holds options at March 31, 2014  
    to extend a swap on 100 bbls/d (per contract) of oil for one year at  
    WTI USD$100/bbl.                                                      
                                                                          
(3) The counter-party to this contract holds an option at December 31,    
    2014 to extend a swap on 200 bbls/d of oil for one year at WTI        
    USD$114.95/bbl.                                                       
                                                                          
(4) The counter-party to this contract holds an option at December 31,    
    2014 to extend a swap on 200 bbls/d of oil for one year at WTI        
    USD$100/bbl.                                                          

 
The following contracts were entered into subsequent to June 30, 2013
and are therefore not reflected in the consolidated statements of
income and comprehensive income: 


 
----------------------------------------------------------------------------
Type of Contract   Quantity           Time Period        Contract Price     
----------------------------------------------------------------------------
Financial Costless 200 bbls/d         January - December USD$85.00/bbl floor
Collar                                2014               USD$96.80/bbl      
                                                         ceiling            
Financial Swap     400 bbls/d         October - December USD$97.55/bbl      
                                      2013                                  
Financial Swap     200 bbls/d         January - December USD$95.15/bbl      
                                      2014(1)                               
Financial Swap     200 bbls/d         January - December USD$94.75/bbl      
                                      2014                                  
----------------------------------------------------------------------------
(1) The counter-party to this
 contract holds an option at December 31,    
    2014 to extend a swap on 200 bbls/d of oil for one year at WTI        
    USD$100/bbl.                                                          

 
The Company has entered into two interest rate swap arrangements. The
following table outlines the realized and unrealized losses on these
interest rate contracts recorded on the consolidated statement of
income and comprehensive income for the six months ended June 30,
2013: 


 
(000s)                                                                      
----------------------------------------------------------------------------
                                                           Six Months Ended 
                                                              June 30, 2013 
                                                       -------------------- 
                                    Company     Counter                     
                  Type                Fixed       Party          Unrealized 
             (Floating             Interest    Floating Realized       Gain 
Term         to Fixed)    Amount   Rate (%)  Rate Index   (Loss)     (Loss) 
----------------------------------------------------------------------------
May 29,                                                                     
 2012- May                                     Floating                     
 29, 2014         Swap  $150,000       1.35%       Rate      (95)        55 
May 29,                                                                     
 2014-May                                      Floating                     
 29, 2015         Swap  $150,000       1.72%       Rate        -        (57)
----------------------------------------------------------------------------

 
The following table provides a summary of the unrealized gains and
losses on financial instruments for the three and six months ended
June 30, 2013 and 2012: 


 
                                  Three Months Ended  Six Months Ended June 
                                            June 30,                    30, 
                              ----------------------------------------------
(000s)                               2013       2012        2013       2012 
----------------------------------------------------------------------------
Unrealized gain (loss) on                                                   
 financial instruments          $   3,321  $   7,343   $    (498) $   4,977 
Unrealized (loss) on                                                        
 investments held for trading           -        (84)          -       (103)
----------------------------------------------------------------------------
Total                           $   3,321  $   7,259   $    (498) $   4,874 
----------------------------------------------------------------------------

 
As at June 30, 2013, if the future strip prices for oil were
$1.00/bbl higher and prices for natural gas were $0.10/mcf higher,
with all other variables held constant, an adjustment would have been
recorded to unrealized gain (loss) on financial instruments resulting
in a reduction to before-tax earnings of $2.2 million (June 30, 2012
- $0.6 million). An equal and opposite impact would have occurred to
unrealized gain (loss) and the fair value of the derivative contracts
liability if oil prices were $1.00/bbl lower and gas prices were
$0.10/mcf lower. 
Financial assets and liabilities are only offset if Tourmaline has
the current legal right to offset and intends to settle on a net
basis or settle the asset and liability simultaneously. Tourmaline
offsets derivative contracts assets and liabilities when the
counterparty, commodity, currency and timing of settlement are the
same. The following table provides a summary of the Company's
offsetting derivative contracts positions. 


 
                                June 30, 2013              December 31, 2012
              --------------------------------------------------------------
                         Derivative Contracts           Derivative Contracts
              --------------------------------------------------------------
(000s)            Asset   Liability       Net    Asset   Liability       Net
----------------------------------------------------------------------------
Gross amount   $  7,889  $   (5,585) $  2,304 $  7,623  $   (4,821) $  2,802
Amount offset    (5,064)      5,064         -   (2,809)      2,809         -
----------------------------------------------------------------------------
Net amount     $  2,825  $     (521) $  2,304 $  4,814  $   (2,012) $  2,802
----------------------------------------------------------------------------

 
In addition to the financial commodity contracts discussed above, the
Company has entered into physical contracts to manage commodity risk.
These contracts are considered normal sales contracts and are not
recorded at fair value in the consolidated financial statements. 
The Company has entered into the following physical contracts from
December 31, 2012 to June 30, 2013: 


 
----------------------------------------------------------------------------
Type of Contract   Quantity           Time Period(1)     Contract Price     
----------------------------------------------------------------------------
AECO Fixed Price   20,000 gjs/d       April 2013 - March CAD$3.31/gj average
                                      2014(2)                               
AECO Fixed Price   25,000 gjs/d       April - October    CAD$3.72/gj average
                                      2013(3)                               
AECO Fixed Price   10,000 gjs/d       April - October    CAD$3.36/gj        
                                      2013                                  
AECO Fixed Price   25,000 gjs/d       November 2013 -    CAD$3.84/gj average
                                      March 2014                            
AECO Fixed Price   20,000 gjs/d       January - December CAD$3.7394/gj      
                                      2014(4)                               
AECO Fixed Price   5,000 gjs/d        January - December CAD$4.00/gj        
                                      2014                                  
AECO Fixed Price   5,000 gjs/d        January - December CAD$4.00/gj        
                                      2015                                  
(Buyer) AECO/Nymex 30,000 mmbtu/d     April - October    Nymex less         
Differential Swap                     2013               USD$0.42/mmbtu     
                                                         average            
(Buyer) AECO/Nymex 10,000 mmbtu/d     January 2015 -     Nymex less         
Differential Swap                     December 2022      USD$0.445/mmbtu    
                                                         average            
AECO Call Option   8,000 gjs/d        January - December CAD$5.00/gj strike 
                                      2016               price              
----------------------------------------------------------------------------
(1) Transactions with common terms have been aggregated and presented as  
    the weighted average price.                                           
                                                                          
(2) The counter-party to these contracts holds options at March 31, 2014  
    to extend a swap on these contracts (one for 10,000 gjs/d and two for 
    5,000 gjs/d each) for one year at an average of CAD$3.75/gj.          
                                                                          
(3) The counter-party to these contracts hold options at October 31, 2013 
    to extend a swap on these contracts (two for 10,000 gjs/d and one for 
    5,000 gjs/d)for one year at an average of $4.00/gj. Subsequently, the 
    counter-party to these contracts holds another option at October 31,  
    2014 to extend a further swap on these contracts (two for 10,000 gjs/d
    and one for 5,000 gjs/d) at an a
verage of $4.00/gj.                   
                                                                          
(4) The counter-party to these contracts holds the option at December 31, 
    2013 to fix the average price of CAD$3.7513/gjs on 10,000 gjs/d of    
    this contract or allow the price to follow the month-ahead index.     

 
The Company has entered into the following physical contracts
subsequent to June 30, 2013: 


 
----------------------------------------------------------------------------
Type of Contract   Quantity           Time Period(1)     Contract Price     
----------------------------------------------------------------------------
AECO Fixed Price   20,000 gjs/d       April - October    CAD$3.41/gj average
                                      2014                                  
AECO Fixed Price   20,000 gjs/d       August - October   CAD$3.10/gj        
                                      2013                                  
AECO Call Option   20,000 gjs/d       November 2013 -    CAD$4.00/gj strike 
                                      October 2014       price              
(Buyer) AECO/Nymex 10,000 mmbtu/d     November 2013 -    Nymex less         
Differential Swap                     March 2014         USD$0.47/mmbtu     
(Buyer) AECO/Nymex 10,000 mmbtu/d     January - December Nymex less         
Differential Swap                     2014               USD$0.50/mmbtu     
(Buyer) AECO/Nymex 5,000 mmbtu/d      January 2015 -     Nymex less         
Differential Swap                     December 2022      USD$0.4775/mmbtu   
(Buyer) AECO/SoCal 10,000 mmbtu/d     November 2013 -    SoCal GDD less     
GDD Differential                      October 2016       USD$0.725/mmbtu    
Swap                                                                        
----------------------------------------------------------------------------
(1) Transactions with common terms have been aggregated and presented as  
    the weighted average price.                                           

 
4. EXPLORATION AND EVALUATION ASSETS  


 
(000s)                                                                      
----------------------------------------------------------------------------
As at December 31, 2012                                        $    639,933 
  Capital expenditures                                               59,281 
  Transfers to property, plant and equipment (note 5)               (17,802)
  Acquisitions                                                       20,602 
  Divestitures                                                       (1,411)
  Expired mineral leases                                            (15,026)
----------------------------------------------------------------------------
As at June 30, 2013                                            $    685,577 
----------------------------------------------------------------------------

 
General and administrative expenditures for the six months ended June
30, 2013 of $2.7 million (December 31, 2012 - $5.2 million) have been
capitalized and included as exploration and evaluation assets.
Non-cash share-based payment expenses in the amount of $2.5 million
(December 31, 2012 - $5.8 million) were also capitalized and included
in exploration and evaluation assets. Expired mineral lease expenses
have been included in the "Depletion, depreciation and amortization"
line item on the consolidated statements of income and comprehensive
income. 
5. PROPERTY, PLANT AND EQUIPMENT  
Cost 


 
(000s)                                                                      
----------------------------------------------------------------------------
As at December 31, 2012                                        $  3,305,685 
  Capital expenditures                                              339,967 
  Transfers from exploration and evaluation (note 4)                 17,802 
  Change in decommissioning liabilities (note 6)                      4,403 
  Acquisitions                                                       17,641 
  Divestitures                                                       (3,640)
----------------------------------------------------------------------------
As at June 30, 2013                                            $  3,681,858 
----------------------------------------------------------------------------

 
Accumulated Depletion, Depreciation and Amortization 


 
(000s)                                                                      
----------------------------------------------------------------------------
As at December 31, 2012                                        $    494,943 
  Depletion, depreciation and amortization expense (net of                  
   mineral lease expiries)                                          148,714 
  Divestitures                                                         (972)
----------------------------------------------------------------------------
As at June 30, 2013                                            $    642,685 
----------------------------------------------------------------------------

 
Net Book Value 


 
(000s)                                                                      
----------------------------------------------------------------------------
As at December 31, 2012                                         $  2,810,742
As at June 30, 2013                                             $  3,039,173
----------------------------------------------------------------------------

 
General and administrative expenditures for the six months ended June
30, 2013 of $3.9 million (December 31, 2012 - $6.1 million) have been
capitalized and included as costs of oil and natural gas properties.
Also included in oil and natural gas properties is non-cash
share-based payment expense of $5.6 million (December 31, 2012 - $9.1
million). 
Future development costs for the six months ended June 30, 2013 of
$2,471 million (December 31, 2012 - $2,233 million) were included in
the depletion calculation. 
6. DECOMMISSIONING OBLIGATIONS  
The Company's decommissioning obligations result from net ownership
interests in petroleum and natural gas assets including well sites,
gathering systems and processing facilities. The Company estimates
the total undiscounted amount of cash flow required to settle its
decommissioning obligations is approximately $103.2 million (December
31, 2012 - $92.7 million), with some abandonments expected to
commence in 2021. A risk-free rate of 2.89% (December 31, 2012 -
2.49%) and an inflation rate of 2.0% (December 31, 2012 - 2.0%) were
used to calculate the fair value of the decommissioning obligations. 


 
                                                  Six Months     Year Ended 
                                                       Ended   December 31, 
(000s)                                         June 30, 2013           2012 
----------------------------------------------------------------------------
Balance, beginning of period                    $     64,757   $     50,463 
  Obligation incurred                                  3,483          5,685 
  Obligation incurred on corporate                                          
   acquisitions                                            -          4,643 
  Obligation incurred on property acquisitions         3,542          4,235 
  Obligation divested                                     (6)          (319)
  Obligation settled                                  (1,001)          (993)
  Reclassification of obligation associated                                 
   with assets held for sale                               -           (285)
  Accretion expense                                      879          1,328 
  Change in future estimated cash outlays             (2,622)             - 
----------------------------------------------------------------------------
Balance, end of period                          $     69,032   $     64,757 
 
----------------------------------------------------------------------------

 
7. BANK DEBT 
The Company has a covenant-based bank credit facility in place with a
syndicate of bankers, the details of which are described in note 9 of
the Company's consolidated financial statements for the year ended
December 31, 2012. In June 2013, the facility was increased, under
the same terms and covenants, to $750 million with an initial
maturity of June 2016. 
As at June 30, 2013, Tourmaline's bank debt balance was $291.8
million (December 31, 2012 - $360.6 million). In addition, Tourmaline
has outstanding letters of credit of $4.2 million (December 31, 2012
- $4.4 million), which reduce the credit available on the facility.
As at June 30, 2013, the Company is in compliance with all debt
covenants. 
8. NON-CONTROLLING INTEREST 
Tourmaline owns 90.6 percent of Exshaw Oil Corp., a private company
engaged in oil and gas exploration in Canada. 
A reconciliation of the non-controlling interest is provided below: 


 
(000s)                                             Six Months     Year Ended
                                                        Ended   December 31,
                                                June 30, 2013           2012
----------------------------------------------------------------------------
Balance, beginning of period                    $      16,298  $      15,079
  Share of subsidiary's net income for the                                  
   period                                                 645          1,219
----------------------------------------------------------------------------
Balance, end of period                          $      16,943  $      16,298
----------------------------------------------------------------------------

 
9. SHARE CAPITAL 
(a) Authorized 
Unlimited number of Common Shares without par value. 
Unlimited number of non-voting Preferred Shares, issuable in series. 
(b) Common Shares Issued 


 
                             Six Months Ended                    Year Ended 
                                June 30, 2013             December 31, 2012 
                ------------------------------------------------------------
(000s except                                                                
 per-share          Number of                     Number of                 
 amounts)              Shares          Amount        Shares          Amount 
----------------------------------------------------------------------------
Balance,                                                                    
 beginning of                                                               
 period           174,813,059  $    2,599,614   158,577,586  $    2,140,660 
For cash on                                                                 
 public offering                                                            
 of common                                                                  
 shares(2)(4)       5,780,000         197,965     4,639,000         134,531 
For cash on                                                                 
 public offering                                                            
 of flow-through                                                            
 common                                                                     
 shares(1)                                                                  
 (3)(4)               835,000          28,599     2,452,000          62,685 
Issued on                                                                   
 corporate                                                                  
 acquisitions               -               -     7,401,682         244,404 
For cash on                                                                 
 exercise of                                                                
 stock options      2,746,744          33,511     1,742,791          17,712 
Contributed                                                                 
 surplus on                                                                 
 exercise of                                                                
 stock options              -          12,740             -           6,745 
Share issue                                                                 
 costs                      -          (9,566)            -          (9,497)
Tax effect of                                                               
 share issue                                                                
 costs                      -           2,391             -           2,374 
----------------------------------------------------------------------------
Balance, end of                                                             
 period           184,174,803  $    2,865,254   174,813,059  $    2,599,614 
----------------------------------------------------------------------------
(1) On April 4, 2012, the Company issued 1.4 million flow-through common  
    shares at $28.80 per share for total gross proceeds of $40.4 million. 
    The implied premium on the flow-through common shares was determined  
    to be $8.5 million or $6.07 per share. A total of 0.15 million shares 
    were purchased by insiders. As at June 30, 2013, the Company had spent
    the full committed amount. The expenditures were renounced to         
    investors in February 2013 with an effective renunciation date of     
    December 31, 2012.                                                    
                                                                          
(2) On August 30, 2012, the Company issued 4.039 million common shares at 
    a price of $29.00 per share for total gross proceeds of $117.1        
    million. A total of 39,000 shares were purchased by insiders.         
    Subsequently, on September 19, 2012, the Underwriters exercised their 
    over-allotment Option and purchased a further 0.6 million shares at a 
    price of $29.00 per share for total gross proceeds of $17.4 million.  
                                                                          
(3) On November 1, 2012, the Company issued 1.05 million flow-through     
    common shares at $36.90 per share for total gross proceeds of $38.7   
    million. The implied premium on the flow-through common shares was    
    determined to be $7.9 million or $7.55 per share. A total of 0.05     
    million shares were purchased by insiders. As at June 30, 2013, the   
    Company had spent $19.5 million on eligible expenditures and is       
    committed to spend the remainder of $19.2 million on qualified        
    exploration and development expenditures by December 31, 2013. The    
    expenditures were renounced to investors in February 2013, with an    
    effective renunciation date of December 31, 2012.                     
                                                                          
(4) On March 12, 2013, the Company issued 5.78 million common shares at a 
    price of $34.25 per share and 0.835 million flow-through common shares
    at a price of $42.15 per share, for total gross proceeds of $233.2    
    million. The implied premium on the flow-through common shares was    
    determined to be $6.6 million or $7.90 per share. A total of 30,000   
    common and 85,000 flow-through common shares were purchased by        
    insiders. As at June 30, 2013, the Company had not incurred any       
    eligible expenditures and is committed to spend the entire $35.2      
    million on qualified exploration and development expenditures by      
    December 31, 2014. The expenditures will be renounced to investors    
    with an effective renunciation date of December 31, 2013.             

 
10. EARNINGS PER SHARE 
Basic earnings-per-share was calculated as follows: 


 
                     Three Months Ended June 30,   Six Months Ended June 30,
                    --------------------------------
------------------------
                              2013          2012          2013          2012
----------------------------------------------------------------------------
Net earnings for the                                                        
 period (000s)       $      30,004 $       1,012 $      82,188 $       3,988
Weighted average                                                            
 number of common                                                           
 shares - basic        183,942,946   160,236,254   180,480,753   159,426,316
----------------------------------------------------------------------------
Earnings-per-share -                                                        
 basic               $        0.16 $        0.01 $        0.46 $        0.03
----------------------------------------------------------------------------

 
Diluted earnings-per-share was calculated as follows: 


 
                   Three Months Ended June 30,     Six Months Ended June 30,
                ------------------------------------------------------------
                           2013           2012           2013           2012
----------------------------------------------------------------------------
Net earnings for                                                            
 the period                                                                 
 (000s)           $      30,004  $       1,012  $      82,188  $       3,988
Weighted average                                                            
 number of                                                                  
 common shares -                                                            
 diluted            189,201,205    164,627,751    185,301,611    163,921,951
----------------------------------------------------------------------------
Earnings-per-                                                               
 share - fully                                                              
 diluted          $        0.16  $        0.01  $        0.44  $        0.02
----------------------------------------------------------------------------

 
There were 4,032,000 options excluded from the weighted-average share
calculation for the six months ended June 30, 2013 because they were
anti-dilutive (June 30, 2012 - 4,673,024). 
11. SHARE-BASED PAYMENTS 
The Company has a rolling stock option plan. Under the employee stock
option plan, the Company may grant options to its employees up to
18,417,480 shares of common stock. The exercise price of each option
equals the volume-weighted average market price for the five days
preceding the issue date of the Company's stock on the date of grant
and the option's maximum term is five years. Options are granted
throughout the year and vest 1/3 on each of the first, second and
third anniversaries from the date of grant. 


 
                                                   Six Months Ended June 30,
                         ---------------------------------------------------
                                               2013                     2012
                         ---------------------------------------------------
                                           Weighted                 Weighted
                                            Average                  Average
                           Number of       Exercise  Number of      Exercise
                             Options          Price    Options         Price
----------------------------------------------------------------------------
Stock options                                                               
 outstanding, beginning                                                     
 of period                15,325,232  $       19.87 14,213,523  $      16.82
  Granted                  2,105,000          40.19    905,000         23.13
  Exercised               (2,746,744)         12.19   (479,701)         8.83
  Forfeited                  (56,111)         24.95          -             -
----------------------------------------------------------------------------
Stock options                                                               
 outstanding, end of                                                        
 period                   14,627,377  $       24.19 14,638,822  $      17.47
----------------------------------------------------------------------------

 
The following table summarizes stock options outstanding and
exercisable at June 30, 2013: 


 
Range of                      Weighted                                      
Exercise Price      Number     Average     Weighted      Number     Weighted
               Outstanding   Remaining      Average Exercisable      Average
                 at Period Contractual     Exercise   at Period     Exercise
                       End        Life        Price         End        Price
----------------------------------------------------------------------------
$7.00 - $10.00   2,052,349        0.74 $       8.99   2,052,349 $       8.99
$12.00 - $18.35  4,069,290        1.78        16.55   3,381,401        16.18
$20.68 - $29.93  3,940,072        3.39        26.80   1,547,910        26.96
$30.76 - $41.89  4,565,666        4.45        35.60     138,999        30.92
----------------------------------------------------------------------------
                14,627,377        2.90 $      24.19   7,120,659 $      16.74
----------------------------------------------------------------------------

 
The fair value of options granted during the year was estimated on
the date of grant using the Black-Scholes option-pricing model with
the following weighted average assumptions and resulting values: 


 
                                                   June 30,        June 30, 
                                                       2013            2012 
----------------------------------------------------------------------------
Fair value of options granted (weighted                                     
 average)                                     $       13.94   $        7.95 
Risk-free interest rate                                2.57%           2.37%
Estimated hold period prior to exercise             4 years         4 years 
Expected volatility                                      40%             40%
Forfeiture rate                                           2%              2%
Dividend per share                            $        0.00   $        0.00 
----------------------------------------------------------------------------

 
12. COMMITMENTS 
In the normal course of business, Tourmaline is obligated to make
future payments. These obligations represent contracts and other
commitments that are known and non-cancellable. 


 
                                                           Greater          
Payments Due by Year                       2-3       4-5    Than 5          
 (000s)                       1 Year     Years     Years     Years     Total
----------------------------------------------------------------------------
Operating leases           $   2,365 $   7,928 $  10,166 $   8,635 $  29,094
Flow-through obligations      19,189    35,195         -         -    54,384
Firm transportation and                                                     
 processing agreements        38,369    83,701    83,720   242,316   448,106
Bank debt(1)                       -   320,447         -         -   320,447
----------------------------------------------------------------------------
                           $  59,923 $ 447,271 $  93,886 $ 250,951 $ 852,031
----------------------------------------------------------------------------
 

 
(1) Includes interest expense at an annual rate of 2.88% being the rate   
    applicable to outstanding bank debt at June 30, 2013.                 

 
About Tourmaline Oil Corp. 
Tourmaline is a Canadian intermediate crude oil and natural gas
exploration and production company focused on long-te
rm growth
through an aggressive exploration, development, production and
acquisition program in the Western Canadian Sedimentary Basin. 
Contacts:
Tourmaline Oil Corp.
Michael Rose
Chairman, President and Chief Executive Officer
(403) 266-5992 
Tourmaline Oil Corp.
Brian Robinson
Vice President, Finance and Chief Financial Officer
(403) 767-3587
robinson@tourmalineoil.com 
Tourmaline Oil Corp.
Scott Kirker
Secretary and General Counsel
(403) 767-3593
kirker@tourmalineoil.com 
Tourmaline Oil Corp.
(403) 266-5992
(403) 266-5952 (FAX)
www.tourmalineoil.com
 
 
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