Tourmaline Enjoys Record Cash Flow and Earnings in the First Quarter of 2014

Tourmaline Enjoys Record Cash Flow and Earnings in the First Quarter of 2014 
NEWS RELEASE TRANSMITTED BY Marketwired 
FOR: Tourmaline Oil Corp. 
TSX SYMBOL:  TOU 
MAY 7, 2014 
Tourmaline Enjoys Record Cash Flow and Earnings in the First Quarter of 2014 
CALGARY, ALBERTA--(Marketwired - May 7, 2014) - Tourmaline Oil Corp. (TSX:TOU)
("Tourmaline" or the "Company") is pleased to announce
record financial and operating results for the first quarter of 2014. 
Highlights 
/T/ 
--  Record cash flow(1) of $252.6 million in the first quarter of 2014, a 
117% increase over first quarter 2013 cash flow of $116.6 million.  
--  First quarter 2014 earnings of $89.9 million, a 72% increase over first 
quarter of 2013.  
--  Record first quarter 2014 average production of 102,563 boepd, a 49% 
increase over average production for first quarter of 2013, and a 19% 
increase over the fourth quarter of 2013.  
--  Record oil and liquid production at 8,690 bopd of oil and 6,207 boepd of 
NGLs or 15% of total corporate boepd. 
--  20 of 21 Q1 2014 Deep Basin horizontals with 30 days of production 
history have a 30-day IP rate of 10.2 mmcfpd, compared to the current 
Company template forecast of 5.0 mmcfpd.  
--  Tourmaline drilled 34 gas wells, 6 oil wells and no dry holes in Q1 
2014.  
/T/ 
Financial Update 
/T/ 
--  The Company is forecasting 2014 full year cash flow of $1.09 billion and 
cash flow of $1.48 billion in 2015.  
--  The Company is in the process of expanding its credit facility from $900 
million to $1.3 billion, and expects to complete the process during the 
second quarter of 2014.  
--  The Company will continue to operate with a debt to cash flow ratio of 
less than 1.0 times.  
--  Q1 2014 operating costs of $4.93 per boe were slightly higher than 
forecast due to incremental liquid processing costs associated with 
increased volumes accessing the third-party deep cut facility at Wild 
River and higher costs associated with temporary production and testing 
operations at Spirit River and Mulligan.  
--  First quarter capital spending of $466.4 million was $75 million higher 
than originally forecast largely due to the addition of a 17th drilling 
rig with associated completion spread; participation in 5 unbudgeted 
third-party-operated Deep Basin horizontals; significant participation 
at Crown Land sales in the Alberta Deep Basin and in NEBC, as well as 
upfront expenditures related to facility expansions scheduled to come 
on-stream in the second half of 2014. The B.C land sales have added 
additional prospective acreage for the Company's new Montney condensate-    rich turbidite lobe. 
--  Continued industry-leading all-in cash cost structure of $7.71/boe 
(operating costs, transportation, general and administrative, and 
financing costs).  
(1) See "non-GAAP Financial Measures" in the attached Management's          
Discussion and Analysis.                                                     
CORPORATE SUMMARY - FIRST QUARTER                                           
 2014                                                                       
--------------------------------------------------------------------------   
Three Months Ended March 31   
--------------------------------------   
2014           2013   Change   
--------------------------------------  
OPERATIONS                                                                  
Production                                                                  
 Natural gas (mcf/d)                       525,999        367,287       43% 
 Crude oil and NGL (bbl/d)                  14,897          7,421      101% 
 Oil equivalent (boe/d)                    102,563         68,636       49%  
Product prices(1)                                                           
 Natural gas ($/mcf)                 $        5.38  $        3.50       54% 
 Crude oil and NGL ($/bbl)           $       70.49  $       88.75      (21)% 
Operating expenses ($/boe)           $        4.93  $        4.27       15%  
Transportation costs ($/boe)         $        1.66  $        2.02      (18)% 
Operating netback ($/boe)(3)         $       27.94  $       20.20       38%  
Cash general and administrative                                             
 expenses ($/boe)(2)                 $        0.58  $        0.80      (28)% 
FINANCIAL ($000, EXCEPT PER SHARE)                                          
Revenue                                    349,267        174,987      100% 
Royalties                                   30,564         11,363      169%  
Cash flow(3)                               252,587        116,599      117% 
Cash flow per share (diluted)(3)     $        1.28  $        0.64      100%  
Net earnings                                89,868         52,184       72% 
Net earnings per share (diluted)     $        0.45  $        0.29       55%  
Capital expenditures                       466,396        190,463      145%  
Weighted average shares outstanding                                         
 (diluted)                             197,932,293    181,774,427        9%  
Net debt(3)                               (818,594)      (324,260)     152%  
(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.                                                     
/T/ 
Conference Call Tomorrow at 8:30 a.m. MT (10:30 a.m. ET) 
Tourmaline will host a conference call tomorrow, May 8, 2014 starting at 8:30
a.m. MT (10:30 a.m. ET). To participate, please dial 1-800-766-6630 (toll-free
in North America), or local dial-in 416-340-8527, a few minutes prior to the
conference call.  
The conference call ID number is 4190549. 
Forward-Looking Information 
This press release contains forward-looking information within the meaning of
applicable securities laws. The use of any of the words "forecast",
"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 for
various periods, cash flows, capital spending, projected operating and drilling
costs, the timing for facility expansions and facility start-up dates, as well
as Tourmaline's future drilling prospects and plans, 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 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;
anticipated timing and results of capital expenditures; the sufficiency of
budgeted capital expenditures in carrying out planned activities; the timing,
location and extent of future drilling operations; the successful completion of
acquisitions and dispositions; 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, labor and services; 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. 
Although Tourmaline believes that the expectations and assumptions on which
such forward-looking information is based are reasonable, 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 exchange rate
fluctuations; interest rate fluctuations; marketing and transportation; loss of
markets; environmental risks; competition; incorrect assessment of the value of
acquisitions; failure to complete or realize the anticipated benefits of
acquisitions or dispositions; 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. Readers are cautioned that the
foregoing list of factors is not exhaustive. 
Also included in this press release are estimates of Tourmaline's 2014
annual cash flow and capital spending as well as, preliminary guidance on 2015
anticipated cash flows, which are based on the various assumptions as to
production levels, including estimated average production of 120,000 boepd for
2014 and 159,500 boepd for 2015, capital expenditures, and other assumptions
disclosed in this press release and including commodity price assumptions for
natural gas (AECO - $4.64 /mcf for 2014 and $4.43/mcf for 2015), and crude oil
(WTI (US) - $97.40/bbl for 2014 and $93.38/bbl for 2015) and an exchange rate
assumption of (US/CAD) $0.92 for 2014 and $0.90 for 2015. To the extent any
such estimate constitutes a financial outlook, it was approved by management
and the Board of Directors of Tourmaline on April 24, 2014 and is included to
provide readers with an understanding of Tourmaline's anticipated cash
flows based on the capital expenditure and other assumptions described herein
and readers are cautioned that the information may not be appropriate for other
purposes.  
Additional information on these and other factors that could affect Tourmaline,
or its operations or financial results, are included in the Company's most
recently filed Management's Discussion and Analysis (See
"Forward-Looking Statements" therein), Annual Information Form (See
"Risk Factors" and "Forward-Looking Statements" therein)
and other reports on file with applicable securities regulatory authorities and
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. 
See also "Forward-Looking Statements" in the attached
Management's Discussion and Analysis.  
Additional Reader Advisories 
Boe Conversions 
Boes 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. As the value ratio between natural gas and crude
oil based on the current prices of natural gas and crude oil is significantly
different from the energy equivalency of 6:1, utilizing a 6:1 conversion basis
may be misleading as an indication of value. 
Production Tests 
Any references in this release to IP rates are useful in confirming the
presence of hydrocarbons, however, such rates are not determinative of the
rates at which such wells will continue to produce and decline thereafter and
are not necessarily indicative of long-term performance or ultimate recovery.
While encouraging, readers are cautioned not to place reliance on such rates in
calculating the aggregate production for the Company. Such rates are based on
field estimates and may be based on limited data available at this time. 
Non-GAAP Financial Measures 
This press release includes references to financial measures commonly used in
the oil and gas industry, "cash flow", "operating netback"
and "net debt", which do not have standardized meanings prescribed by
International Financial Reporting Standards ("GAAP"). Accordingly,
the Company's use of these terms may not be comparable to similarly
defined measures presented by other companies. Management uses the terms
"cash flow", "operating netback", and "net debt",
for its own performance measures and to provide shareholders and potential
investors with a measurement of the Company's efficiency and its ability
to generate the cash necessary to fund a portion of its future growth
expenditures or to repay debt. Investors are cautioned that the non-GAAP
measures should not be construed as an alternative to net income determined in
accordance with GAAP as an indication of the Company's performance. See
"Non-GAAP Financial Measures" in the attached Management's
Discussion and Analysis for the definition and description of these terms.  
Certain Definitions 
/T/ 
bbls      barrels                                                           
boe       barrel of oil equivalent                                          
boepd     barrel of oil equivalent per day                                  
bopd      barrel of oil, condensate or liquids per day                      
gjsd      gigajoules per day                                                
mmboe     millions of barrels of oil equivalent                             
mbbls     thousand barrels                                                  
mmcf      million cubic feet                                                
mcf       thousand cubic feet                                               
mmcfpd    million cubic feet per day                                        
mmcfpde   million cubic feet per day equivalent                             
mcfe      thousand cubic feet equivalent                                    
mmbtu     million British thermal units                                     
mstboe    thousand stock tank barrels of oil equivalent                      
/T/ 
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 three months ended
March 31, 2014 and the consolidated financial statements for the year ended
December 31, 2013. Both the consolidated financial statements and the MD&A
can be found at www.sedar.com. This MD&A is dated May 7, 2014. 
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 used in this MD&A: "cash
flow", "operating netback", "working capital (adjusted for
the fair value of financial instruments)", "net debt",
"adjusted EBITDA", "senior debt", "total debt",
and "total capitalization". 
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 
/T/ 
Three Months Ended March 31,  
--------------------------------  
2014        2013  Change 
--------------------------------------------------------- 
Natural gas (mcf/d)           525,999     367,287      43%
Oil (bbl/d)                     8,690       5,688      53%
NGL (bbl/d)                     6,207       1,733     258%
--------------------------------------------------------- 
Oil equivalent (boe/d)        102,563      68,636      49%
---------------------------------------------------------  
/T/ 
Production for the three months ended March 31, 2014 averaged 102,563 boe/d, a
49% increase over the average production for the same quarter of 2013 of 68,636
boe/d. The Company's significant production growth, when compared to 2013,
can be attributed to new wells that have been brought on-stream since March 31,
2013, as well as property acquisitions. Production was 85% natural gas weighted
in the first quarter of 2014 compared to 89% natural gas weighted in the first
quarter of 2013. The accelerated growth in oil and NGL production is the result
of increased drilling in the Spirit River/Peace River High Charlie Lake oil
plays, the additional incremental liquids recovered in the Wild River area via
deep cut processing, which began in late 2013, and stronger than anticipated
condensate recoveries from new wells tied-in in N.E.B.C. 
Full-year average production guidance for 2014 remains unchanged at 120,000
boe/d (as disclosed in the Company's MD&A dated March 17, 2014).  
REVENUE 
/T/ 
Three Months Ended March 31,  
------------------------------------ 
(000s)                                           2014          2013  Change 
--------------------------------------------------------------------------- 
Revenue from:                                                               
 Natural gas                            $     254,762 $     115,709     120%
 Oil and NGL                                   94,505        59,278      59%
--------------------------------------------------------------------------- 
Total revenue from natural gas, oil and                                     
 NGL sales                              $     349,267 $     174,987     100%
---------------------------------------------------------------------------  
/T/ 
Revenue for the three months ended March 31, 2014 increased 100% to $349.3
million from $175.0 million for the same quarter of 2013. Revenue growth is
consistent with the increase in production and strong growth in natural gas
prices for the same periods, partially offset by weaker NGL prices. Revenue
includes all petroleum, natural gas and NGL sales and realized gains on
financial instruments. 
/T/ 
TOURMALINE PRICES:                                         
Three Months Ended March 31,   
-------------------------------   
2014       2013   Change  
--------------------------------------------------------  
Natural gas ($/mcf)       $     5.38 $     3.50       54% 
Oil ($/bbl)               $    94.17 $    94.96       (1)%
NGL ($/bbl)               $    37.34 $    68.36      (45)%
--------------------------------------------------------  
Oil equivalent ($/boe)    $    37.84 $    28.33       34% 
--------------------------------------------------------   
BENCHMARK GAS AND OIL PRICES:                                      
Three Months Ended March 31, 
----------------------------- 
2014      2013   Change
------------------------------------------------------------------
Natural gas                                                       
 NYMEX Henry Hub (USD$/mcf)          $     4.72$     3.48      36%
 AECO (CAD$/mcf)                     $     5.59$     3.20      75%
Oil                                                               
 NYMEX (USD$/bbl)                    $    98.61$    94.36       5%
 Edmonton Par (CAD$/bbl)             $    99.85$    88.55      13%
------------------------------------------------------------------ 
RECONCILIATION OF AECO INDEX TO TOURMALINE'S REALIZED GAS PRICES:     
Three Months Ended March 31,   
--------------------------------  
($/mcf)                                   2014        2013   Change  
-------------------------------------------------------------------  
AECO index                          $     5.59  $     3.20       75% 
Heat/quality differential                 0.39        0.27       44% 
Realized gain (loss)                     (0.60)       0.03   (2,100)%
-------------------------------------------------------------------  
Tourmaline realized natural gas                                      
 price                              $     5.38  $     3.50       54% 
-------------------------------------------------------------------   
CURRENCY - EXCHANGE RATES:                            
Three Months Ended March 31,   
-------------------------------   
2014       2013   Change  
---------------------------------------------------  
CAD$/USD$            $   0.9067 $   0.9922       (9)%
---------------------------------------------------   
/T/ 
The realized average natural gas price for the three months ended March 31,
2014 was $5.38/mcf, which is 54% higher than the comparative period. The higher
natural gas price reflects the higher AECO prices experienced during the
quarter. Included in the realized price is a loss on commodity contracts in the
first quarter of 2014 of $28.5 million compared to a gain of $2.5 million for
the same period of the prior year. There has been an increased focus on hedging
activities in an effort to obtain more predictable cash flows to support the
larger capital budget and realize the benefit of the recent natural gas rally.
As a result, a larger volume of natural gas has been subject to pricing per the
commodity contracts in place, creating realized losses as the price of natural
gas increases. 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. Partially offsetting the loss on commodity contracts was a 7%
premium received due to the higher heat content (March 31, 2013 - 8%).  
Realized crude oil prices were relatively unchanged while NGL prices decreased
45%, from $68.36/bbl to $37.34/bbl, for the three months ended March 31, 2014,
compared to the same period of 2013. The proportion of ethane in the NGL mix,
which is priced significantly lower than the other products, increased from
approximately 9% in the first quarter of 2013 to 38% in the first quarter of
2014 due to deep cut processing in the Wild River area of Alberta, resulting in
a corresponding decrease in the realized NGL pricing. The economics of the deep
cut processing activities are favourable when compared to leaving the ethane in
the natural gas stream.  
ROYALTIES 
/T/ 
Three Months Ended March 31,  
----------------------------- 
(000s)                                              2014           2013 
----------------------------------------------------------------------- 
Natural gas                                $      19,584  $       4,535 
Oil and NGL                                       10,980          6,828 
----------------------------------------------------------------------- 
Total royalties                            $      30,564  $      11,363 
----------------------------------------------------------------------- 
Royalties as a percentage of revenue                 8.8%           6.5%
-----------------------------------------------------------------------  
/T/ 
For the quarter ended March 31, 2014, the average effective royalty rate
increased to 8.8% compared to 6.5% for the same quarter of 2013.  
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 2014 over the same period of 2013 mainly due to increased natural
gas prices, and the impact of some wells reaching production maximums or coming
off royalty holidays. 
The Company expects its royalty rate for 2014 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
also sensitive to commodity prices, however, and as such, a change in commodity
prices will impact the actual rate. 
OTHER INCOME 
/T/ 
Three Months Ended March 31, 
-------------------------------
(000s)                       2014       2013   Change
-----------------------------------------------------
Other income           $    4,899 $    1,319     271%
----------------------------------------------------- 
/T/ 
For the three months ended March 31, 2014, other income was $4.9 million (three
months ended March 31, 2013 - $1.3 million), the majority of which relates to
processing income. The increase in processing income is mainly due to fees
charged to working interest partners on Tourmaline operated wells where gas is
being processed through the Company-owned Banshee gas processing plant.
Tourmaline has experienced a rapid growth in production volumes from wells in
that area. 
OPERATING EXPENSES 
/T/ 
Three Months Ended March 31,  
------------------------------- 
(000s) except per-unit amounts         2014       2013   Change 
--------------------------------------------------------------- 
Operating expenses               $   45,489 $   26,367       73%
--------------------------------------------------------------- 
Per boe                          $     4.93 $     4.27       15%
---------------------------------------------------------------  
/T/ 
Operating expenses include all periodic lease and field-level expenses and
exclude income recoveries from processing third-party volumes. For the first
quarter of 2014, total operating expenses were $45.5 million compared to $26.4
million for the first quarter of 2013 reflecting increased costs relating to
the growing production base. 
On a per-boe basis, the costs increased 15% from $4.27/boe for the first
quarter of 2013 to $4.93/boe in the first quarter of 2014. The production of
oil and NGLs incurs higher per-unit operating costs compared to natural gas,
therefore, as the Company's production profile becomes more heavily
weighted to oil and NGLs, we anticipate an increase in per-unit operating
expenses. In addition, Tourmaline has been actively growing production in the
Spirit River area of Alberta and has been securing processing contracts in
preparation for that growth, the result of which has been that take-or-pay fees
were incurred on temporarily unutilized capacity, which will be accessed as the
production in the area continues to grow. There has also been an increase in
water and emulsion trucking and additional treating costs resulting from
establishing temporary facilities in the expanded areas in which Tourmaline is
operating. Once permanent oil, natural gas and water handling facilities are
constructed in late 2014 and 2015, these higher costs are expected to decrease.
The per-unit operating costs in the Wild River area have also increased as
approximately 70 mmcfpd of natural gas has been processed through third-party
fractionation facilities in an effort to recover more valuable natural gas
liquids. The Company's operating expenses in the first quarter of 2014
include third-party processing, gathering, and compression fees of
approximately $12.3 million or 27% of total operating costs (March 31, 2013 -
$8.3 million or 31% of total operating costs).  
The Company expects its full year 2014 operating costs to average approximately
$4.40/boe, which has increased from previous guidance of $4.15/boe (as
disclosed in the Company's MD&A dated March 17, 2014). Forecast
operating costs have been increased to reflect the growth in oil and NGL
production as well as additional costs for processing and fractionation of
liquids extracted through deep cut facilities. The Company continues to invest
capital in Company owned-and-operated plants in an effort to increase
processing capacity and maintain its low operating cost structure. Actual costs
per boe can change, however, depending on a number of factors including the
Company's actual production levels. 
TRANSPORTATION 
/T/ 
Three Months Ended March 31,   
----------------------------------  
(000s) except per-unit amounts          2014        2013    Change  
------------------------------------------------------------------  
Natural gas transportation       $    10,766 $     8,285        30% 
Oil and NGL transportation             4,563       4,185         9% 
------------------------------------------------------------------  
Total transportation             $    15,329 $    12,470        23% 
------------------------------------------------------------------  
Per boe                          $      1.66 $      2.02       (18)%
------------------------------------------------------------------   
/T/ 
Transportation costs for the three months ended March 31, 2014 were $15.3
million or $1.66/boe (three months ended March 31, 2013 - $12.5 million or
$2.02/boe, respectively). The increase in total transportation costs for the
three months ended March 31, 2014 is a result of higher production volumes.
Transportation costs in the first quarter of 2013 included charges for
unutilized transportation. This charge is lower in 2014 with the increased
production and is also reflected in a lower per-unit cost. 
GENERAL & ADMINISTRATIVE EXPENSES ("G&A") 
/T/ 
Three Months Ended March 31,   
---------------------------------  
(000s) except per-unit amounts               2014        2013    Change  
-----------------------------------------------------------------------  
G&A expenses                           $   10,493  $    8,607        22% 
Administrative and capital recovery          (827)       (414)      100% 
Capitalized G&A                            (4,356)     (3,252)       34% 
-----------------------------------------------------------------------  
Total G&A expenses                     $    5,310  $    4,941         7% 
-----------------------------------------------------------------------  
Per boe                                $     0.58  $     0.80       (28)%
-----------------------------------------------------------------------   
/T/ 
G&A expenses for the first quarter of 2014 were $5.3 million ($0.58/boe)
compared to $4.9 million ($0.80/boe) for the same quarter of the prior year.
The increase in G&A expenses in 2014 compared to 2013 is primarily due to
staff additions needed to manage the larger production, reserve and land base,
as well as the higher active drilling rig count. The Company increased its
staff count by approximately 30% from the first quarter of 2013 to the first
quarter of 2014. The Company's G&A expenses per boe continue to trend
downward as Tourmaline's production base continues to grow faster than its
accompanying G&A costs.  
G&A costs for 2014 are expected to be approximately $0.60/boe. Actual costs
per boe can change, however, depending on a number of factors including the
Company's actual production levels. 
SHARE-BASED PAYMENTS 
/T/ 
Three Months Ended March 31,  
----------------------------- 
(000s) except per-unit amounts               2014           2013 
---------------------------------------------------------------- 
Share-based payments                $      13,402  $       7,180 
Capitalized share-based payments           (6,701)        (3,590)
---------------------------------------------------------------- 
Total share-based payments          $       6,701  $       3,590 
---------------------------------------------------------------- 
Per boe                             $        0.73  $        0.58 
----------------------------------------------------------------  
/T/ 
The Company uses the fair value method for the determination of non-cash
related share-based payments expense. During the first quarter of 2014, 375,000
stock options were granted to employees, officers, directors and key
consultants at a weighted-average exercise price of $46.97 and 1,146,475
options were exercised, bringing $19.1 million of cash into treasury. The
Company recognized $6.7 million of share-based payments expense in the first
quarter of 2014 compared to $3.6 million in the first quarter of 2013.
Share-based payments in the first quarter of 2014 are higher compared to the
same period of 2013, which reflects the increased value attributed to the
options and a higher number of options outstanding. 
DEPLETION, DEPRECIATION AND AMORTIZATION ("DD&A") 
/T/ 
Three Months Ended March 31,  
----------------------------- 
(000s) except per-unit amounts                          2014           2013 
--------------------------------------------------------------------------- 
Total depletion, depreciation and amortization $     115,535  $      81,423 
Less mineral lease expiries                           (7,570)        (7,582)
--------------------------------------------------------------------------- 
Depletion, depreciation and amortization       $     107,965  $      73,841 
--------------------------------------------------------------------------- 
Per boe                                        $       11.70  $       11.95 
---------------------------------------------------------------------------  
/T/ 
DD&A expense, net of mineral lease expiries, was $108.0 million for the
first quarter of 2014 compared to $73.8 million for the same period of 2013 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) of $11.70/boe was slightly lower for the first quarter of 2014 versus
the first quarter of 2013 ($11.95/boe), reflecting strong reserve additions
derived from Tourmaline's exploration and production program.  
Mineral lease expiries for the three months ended March 31, 2014 were $7.6
million, which is consistent with the expiries in the same quarter of the prior
year of $7.6 million. Tourmaline expects to continue to see mineral lease
expiries of a similar magnitude on a go-forward basis. 
FINANCE EXPENSES 
/T/ 
Three Months Ended March 31,  
------------------------------------- 
(000s)                                         2014         2013     Change 
--------------------------------------------------------------------------- 
Interest expense                       $      4,940 $      3,437         44%
Accretion expense                               538          391         38%
Transaction costs on corporate and                                          
 property acquisitions                            -          670          -%
--------------------------------------------------------------------------- 
Total finance expenses                 $      5,478 $      4,498         22%
---------------------------------------------------------------------------  
/T/ 
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 March 31, 2014 totalled $5.5 million, which
increased over 2013 first quarter finance expenses of $4.5 million due to a
higher average bank debt outstanding partially offset by a lower average
effective interest rate. The average bank debt outstanding in the first quarter
of 2014 was $571.1 million (2013 - $381.2 million), with an average effective
interest rate of 3.06% (2013 - 3.29%). 
DEFERRED INCOME TAXES 
For the three months ended March 31, 2014, the provision for deferred income
tax expense was $33.0 million compared to an expense of $19.6 million for the
same period in 2013. The increase is consistent with the higher pre-tax
earnings recorded in the first quarter of 2014 compared to the first quarter of
2013. 
CASH FLOW FROM OPERATING ACTIVITIES, CASH FLOW AND NET EARNINGS 
/T/ 
Three Months Ended March 31,  
---------------------------------- 
(000s) except per-unit amounts                   2014        2013    Change 
--------------------------------------------------------------------------- 
Cash flow from operating activities       $   249,390 $    93,763       166%
 Per share (1)                            $      1.26 $      0.52       142%
Cash flow (2)                             $   252,587 $   116,599       117%
 Per share (1) (2)                        $      1.28 $      0.64       100%
Net earnings                              $    89,868 $    52,184        72%
 Per share (1)                            $      0.45 $      0.29        55%
Operating netback per boe (2)             $     27.94 $     20.20        38%
--------------------------------------------------------------------------- 
(1) Fully diluted                                                           
(2) See "Non-GAAP Financial Measures"                                        
/T/ 
Cash flow for the three months ended March 31, 2014 was $252.6 million or $1.28
per diluted share compared to $116.6 million or $0.64 per diluted share for the
same period of 2013. The increase in cash flow in 2014 reflects higher natural
gas prices over 2013, as well as increased production. After-tax earnings for
the three months ended March 31, 2014 are higher at $89.9 million ($0.45 per
diluted share) compared to $52.2 million ($0.29 per diluted share) for the same
period of 2013, due mainly to higher natural gas prices and increased
production. 
CAPITAL EXPENDITURES  
/T/ 
Three Months Ended March 31,  
---------------------------- 
(000s)                                       2014          2013 
--------------------------------------------------------------- 
Land and seismic                    $      29,754 $       8,505 
Drilling and completions                  281,149       181,028 
Facilities                                150,433        73,135 
Property acquisitions                         585         2,450 
Property dispositions                           -       (77,945)
Other                                       4,475         3,290 
--------------------------------------------------------------- 
Total cash capital expenditures     $     466,396 $     190,463 
---------------------------------------------------------------  
/T/ 
During the first quarter of 2014, the Company invested $466.4 million of cash
consideration compared to $190.5 million, net of dispositions, for the same
period of 2013. Expenditures on exploration and production were $461.3 million
compared to $262.7 million for the same quarter of 2013, which is consistent
with the Company's aggressive growth strategy. The increase in drilling
and completion costs reflects the higher rig count from 10 drilling rigs in the
first quarter of 2013 to 17 drilling rigs in the first quarter of 2014. The
growth in facilities expenditures includes work on the expansion of the
facility at West Doe and a new sour gas processing facility in Spirit River
(both planned for Q3 2014 start-up), an oil battery at Mulligan in the Spirit
River area, as well as several large pipeline lateral projects intended to
optimize transportation of, and related logistics for getting, natural gas to
Tourmaline operated processing facilities. 
The following table summarizes the drill, complete and tie-in activities for
the period: 
/T/ 
Three Months Ended      Three Months Ended 
March 31, 2014          March 31, 2013 
Gross         Net       Gross         Net
--------------------------------------------------------------------
Drilled                       40       36.15          27       25.21
Completed                     45       40.45          32       29.49
Tied-in                       27       21.62          14       13.52
-------------------------------------------------------------------- 
/T/ 
LIQUIDITY AND CAPITAL RESOURCES  
On February 12, 2014, the Company issued 4.615 million common shares at a price
of $47.50 per share for total gross proceeds of $219.2 million. The proceeds
were used to temporarily reduce bank debt and will be used to fund the
Company's remaining 2014 exploration and development program. 
On April 24, 2014, the Company closed the acquisition of Santonia Energy Inc.
("Santonia") with the issuance of 3.228 million Tourmaline shares
with a closing price on that date of $54.94 per Tourmaline share, for
consideration of $177.4 million. 
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, 2013. The
facility has a limit of $900 million with an initial maturity of June 2016. The
Company is currently in discussions with the syndicate of lenders as part of
its annual lending review with the aim of significantly increasing the size of
the bank credit facility.  
As at March 31, 2014, the Company had negative working capital of $248.1
million, after adjusting for the fair value of financial instruments (the
unadjusted working capital deficiency was $255.2 million) (December 31, 2013 -
$242.6 million and $245.3 million, respectively). As at March 31, 2014, the
Company had $570.5 million drawn on its credit facility (December 31, 2013 -
$590.3 million), and net debt was $818.6 million (December 31, 2013 - $832.9
million). Management believes the Company has sufficient liquidity and capital
resources to fund the remainder of its 2014 exploration and development
programs through expected cash flow from operations and its unutilized bank
credit facility. 
SHARES AND STOCK OPTIONS OUTSTANDING 
As at May 7, 2014, the Company has 199,929,029 common shares outstanding and
14,104,029 stock options granted and outstanding. 
COMMITMENTS AND CONTRACTUAL OBLIGATIONS 
In the normal course of business, the Company is obligated to make future
payments. These obligations represent contracts and other commitments that are
known and non-cancellable. 
/T/ 
greater            
Payments Due by            1         2-3         4-5      than 5            
 Year (000s)            Year       Years       Years       Years       Total
----------------------------------------------------------------------------
Operating leases $     3,698 $     9,865 $    10,162 $     4,934 $    28,659
Firm                                                                        
 transportation                                                             
 and processing                                                             
 agreements           69,884     312,506     178,758     394,998     956,146
Bank debt(1)               -     612,866           -           -     612,866
---------------------------------------------------------------------------- 
$    73,582 $   935,237 $   188,920 $   399,932 $ 1,597,671
---------------------------------------------------------------------------- 
(1) Includes interest expense at an annual rate of 3.06% being the rate     
applicable to outstanding bank debt at March 31, 2014.                       
/T/ 
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, 2013. 
As at March 31, 2014, 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 in place at March 31, 2014 are summarized and disclosed in
note 5 of the Company's interim condensed consolidated financial
statements for the three months ended March 31, 2014 and 2013. 
The following table provides a summary of the unrealized losses on financial
instruments for the three months ended March 31, 2014 and 2013: 
/T/ 
Three Months Ended March 31,  
----------------------------- 
(000s)                                              2014           2013 
----------------------------------------------------------------------- 
Unrealized loss on financial instruments   $      (6,266) $      (3,819)
-----------------------------------------------------------------------  
/T/ 
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 in place at
March 31, 2014 have been summarized and disclosed in note 3 of the
Company's interim condensed consolidated financial statements for the
three months ended March 31, 2014 and 2013. 
Financial derivative and physical delivery contracts entered into subsequent to
March 31, 2014 are detailed in note 3 of the Company's interim condensed
consolidated financial statements for the three months ended March 31, 2014 and
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, 2013. 
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. 
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 DC&P or ICFR during the period
beginning on January 1, 2014 and ending on March 31, 2014 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. 
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 
The oil and gas industry is currently subject to regulation pursuant to a
variety of provincial and federal environmental legislation, all of which is
subject to governmental review and revision from time to time. Such legislation
provides for, among other things, restrictions and prohibitions on the spill,
release or emission of various substances produced in association with certain
oil and gas industry operations, such as sulphur dioxide and nitrous oxide. In
addition, such legislation sets out the requirements with respect to oilfield
waste handling and storage, habitat protection and the satisfactory operation,
maintenance, abandonment and reclamation of well and facility sites. Compliance
with such legislation can require significant expenditures and a breach of such
requirements may result in suspension or revocation of necessary licenses and
authorizations, civil liability and the imposition of material fines and
penalties.
The use of fracture stimulations has been ongoing safely in an environmentally
responsible manner in western Canada for decades. With the increase in the use
of fracture stimulations in horizontal wells there is increased communication
between the oil and natural gas industry and a wider variety of stakeholders
regarding the responsible use of this technology. This increased attention to
fracture stimulations may result in increased regulation or changes of law
which may make the conduct of the Company's business more expensive or
prevent the Company from conducting its business as currently conducted.
Tourmaline focuses on conducting transparent, safe and responsible operations
in the communities in which its people live and work. 
NON-GAAP FINANCIAL MEASURES 
This MD&A or documents referred to in this MD&A make reference to the
terms "cash flow", "operating netback", "working
capital (adjusted for the fair value of financial instruments)", "net
debt", "adjusted EBITDA", "senior debt", "total
debt", and "total capitalization" which are not recognized
measures under GAAP, and do not have a standardized meaning prescribed by GAAP.
Accordingly, the Company's use of these terms may not be comparable to
similarly defined measures presented by other companies. Management uses the
terms "cash flow", "operating netback", "working
capital (adjusted for the fair value of financial instruments)" and
"net debt", for its own performance measures and to provide
shareholders and potential investors with a measurement of the Company's
efficiency and its ability to generate the cash necessary to fund a portion of
its future growth expenditures or to repay debt. Investors are cautioned that
the non-GAAP measures should not be construed as an alternative to net income
determined in accordance with GAAP as an indication of the Company's
performance. The terms "adjusted EBITDA", "senior debt",
"total debt", and "total capitalization" are not used by
management in measuring performance but are used in the financial covenants
under the Company's credit facility. Under the Company's credit
facility "adjusted EBITDA" means generally net income or loss,
excluding extraordinary items, plus interest expense and income taxes and
adjusted for non-cash items and gains or losses on dispositions, "senior
debt" means generally the indebtedness, liabilities and obligations of the
Company to the lenders under the credit facility and certain other secured
indebtedness, liabilities and obligations of the Company ("bank
debt"), "total debt" means generally bank debt plus any other
indebtedness of the Company, and "total capitalization" means
generally the sum of the Company's shareholders' equity and all other
indebtedness of the Company including bank debt, all determined on a
consolidated basis in accordance with GAAP. 
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: 
/T/ 
Three Months Ended March 31, 
----------------------------
(000s)                                                    2014          2013
----------------------------------------------------------------------------
Cash flow from operating activities (per GAAP)   $     249,390 $      93,763
Change in non-cash operating working capital             3,197        22,836
----------------------------------------------------------------------------
Cash flow                                        $     252,587 $     116,599
---------------------------------------------------------------------------- 
/T/ 
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: 
/T/ 
Three Months Ended March 31,  
----------------------------- 
($/boe)                                          2014           2013 
-------------------------------------------------------------------- 
Revenue, excluding processing income    $       37.84  $       28.33 
Royalties                                       (3.31)         (1.84)
Transportation costs                            (1.66)         (2.02)
Operating expenses                              (4.93)         (4.27)
-------------------------------------------------------------------- 
Operating netback                       $       27.94  $       20.20 
--------------------------------------------------------------------- 
/T/ 
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: 
/T/ 
As at            As at  
March 31,     December 31, 
(000s)                                                2014             2013 
--------------------------------------------------------------------------- 
Working capital (deficit)                  $      (255,240) $      (245,314)
Fair value of financial instruments -                                       
 short-term liability                                7,146            2,691 
--------------------------------------------------------------------------- 
Working capital (deficit) (adjusted for                                     
 the fair value of financial instruments)  $      (248,094) $      (242,623)
---------------------------------------------------------------------------  
/T/ 
Net Debt 
A summary of the reconciliation of net debt is set forth below: 
/T/ 
As at            As at  
March 31,     December 31, 
(000s)                                                2014             2013 
--------------------------------------------------------------------------- 
Bank debt                                  $      (570,500) $      (590,319)
Working capital (deficit)                         (255,240)        (245,314)
Fair value of financial instruments -                                       
 short-term liability                                7,146            2,691 
--------------------------------------------------------------------------- 
Net debt                                   $      (818,594) $      (832,942)
---------------------------------------------------------------------------  
SELECTED QUARTERLY INFORMATION                                               
2014                       2013                       
------------------------------------------------------------
($000s, unless                                                              
 otherwise                                                                  
 noted)                  Q1          Q4          Q3          Q2          Q1 
----------------------------------------------------------------------------
PRODUCTION                                                                  
Natural gas                                                                 
 (mcf)           47,339,926  41,062,993  36,486,443  34,477,391  33,055,857 
Oil and                                                                     
 NGL(bbls)        1,340,699   1,076,395     735,727     640,001     667,907 
Oil equivalent                                                              
 (boe)            9,230,686   7,920,228   6,816,800   6,386,233   6,177,216 
Natural gas                                                                 
 (mcf/d)            525,999     446,337     396,592     378,872     367,287 
Oil and NGL                                                                 
 (bbls/d)            14,897      11,700       7,997       7,033       7,421 
Oil equivalent                                                              
 (boe/d)            102,563      86,089      74,096      70,178      68,636 
----------------------------------------------------------------------------
FINANCIAL                                                                   
Revenue, net of                                                             
 royalties          317,336     219,069     167,138     180,505     161,124 
Cash flow from                                                              
 operating                                                                  
 activities         249,390     128,852     128,192     128,432      93,763 
Cash flow (1)       252,587     160,732     120,560     128,870     116,599 
 Per diluted                                                                
  share                1.28        0.83        0.64        0.68        0.64 
Net earnings                                                                
 (loss)              89,868      56,763       9,163      30,004      52,184 
 Per basic share       0.47        0.30        0.05        0.16        0.29 
 Per diluted                                                                
  share                0.45        0.29        0.05        0.16        0.29 
Total assets      5,082,535   4,696,471   4,210,171   3,811,192   3,735,641 
Working capital                                                             
 (deficit)         (255,240)   (245,314)   (206,250)    (50,851)   (165,385)
Working capital                                                             
 (deficit)(adjus                                                            
 ted for the                                                                
 fair value of                                                              
 financial                                                                  
 instruments)                                                               
 (1)               (248,094)   (242,623)   (204,507)    (53,676)   (166,049)
Cash capital                                                                
 expenditures       466,396     497,941     468,261     158,751     190,463 
Total                                                                       
 outstanding                                                                
 shares (000s)      195,567     189,805     184,621     184,175     183,408 
----------------------------------------------------------------------------
PER UNIT                                                                    
Natural gas                                                                 
 ($/mcf)               5.38        3.84        3.30        3.92        3.50 
Oil and NGL                                                                 
 ($/bbl)              70.49       71.83       91.65       87.06       88.75 
Revenue ($/boe)       37.84       29.69       27.58       29.88       28.33 
Operating                                                                   
 netback ($/boe)                                                            
 (1)                  27.94       21.29       18.59       21.28       20.20 
---------------------------------------------------------------------------- 
SELECTED QUARTERLY INFORMATION                       
2012                 
----------------------------------- 
($000s, unless                                      
 otherwise                                          
 noted)                  Q4          Q3          Q2 
--------------------------------------------------- 
PRODUCTION                                          
Natural gas                                         
 (mcf)           27,879,639  23,501,484  24,276,149 
Oil and                                             
 NGL(bbls)          618,483     515,157     596,992 
Oil equivalent                                      
 (boe)            5,265,090   4,432,071   4,643,016 
Natural gas                                         
 (mcf/d)            303,040     255,451     266,771 
Oil and NGL                                         
 (bbls/d)             6,723       5,600       6,560 
Oil equivalent                                      
 (boe/d)             57,230      48,175      51,022 
--------------------------------------------------- 
FINANCIAL                                           
Revenue, net of                                     
 royalties          134,864      91,863     105,567 
Cash flow from                                      
 operating                                          
 activities         104,671      66,713      42,566 
Cash flow (1)        93,807      63,515      61,121 
 Per diluted                                        
  share                0.54        0.38        0.37 
Net earnings                                        
 (loss)              16,301      (4,770)      1,012 
 Per basic share       0.10       (0.03)       0.01 
 Per diluted                                        
  share                0.09       (0.03)       0.01 
Total assets      3,580,253   2,992,552   2,862,502 
Working capital                                     
 (deficit)          (98,913)    (98,184)    (15,311)
Working capital                                     
 (deficit)(adjus                                    
 ted for the                                        
 fair value of                                      
 financial                                          
 instruments)                                       
 (1)               (103,727)   (101,577)    (19,809)
Cash capital                                        
 expenditures       296,108     175,277      53,831 
Total                                               
 outstanding                                        
 shares (000s)      174,813     165,678     160,459 
--------------------------------------------------- 
PER UNIT                                            
Natural gas                                         
 ($/mcf)               3.29        2.52        2.23 
Oil and NGL                                         
 ($/bbl)              83.28       83.34       77.75 
Revenue ($/boe)       27.18       23.04       21.64 
Operating                                           
 netback ($/boe)                                    
 (1)                  19.17       15.68       14.22 
---------------------------------------------------  
(1) See Non-GAAP Financial Measures.                                        
/T/ 
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 Company's average annual production has
increased from 50,804 boe per day in 2012 to 74,796 boe per day in 2013 and
102,563 boe per day in the first three months of 2014. The production growth
can be attributed primarily to the Company's exploration and development
activities, and from acquisitions of producing properties. 
The Company's cash flows from operating activities were $273.5 million in
2012 and $479.2 million in 2013. Estimated 2014 cash flows from operating
activities (based on the first three months annualized) are $997.6 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. 
/T/ 
CONSOLIDATED FINANCIAL STATEMENTS                                           
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION                                
March 31,     December 31,
(000s) (unaudited)                                     2014             2013
----------------------------------------------------------------------------
Assets                                                                      
Current assets:                                                             
 Accounts receivable                       $        160,636 $        136,041
 Prepaid expenses and deposits                        5,482            6,918
 Fair value of financial instruments (note                                  
  3)                                                      5              166
----------------------------------------------------------------------------
Total current assets                                166,123          143,125
Fair value of financial instruments (note                                   
 3)                                                      16              663
Long-term asset                                       2,307            2,373
Exploration and evaluation assets (notes 4                                  
 and 5)                                             740,683          700,525
Property, plant and equipment (note 5)            4,173,406        3,849,785
----------------------------------------------------------------------------
Total Assets                               $      5,082,535 $      4,696,471
----------------------------------------------------------------------------
Liabilities and Shareholders' Equity                                        
Current liabilities:                                                        
 Accounts payable and accrued liabilities  $        414,212 $        385,582
 Fair value of financial instruments (note                                  
  3)                                                  7,151            2,857
----------------------------------------------------------------------------
Total current liabilities                           421,363          388,439
Bank debt (note 7)                                  570,500          590,319
Long-term obligation                                  2,483            3,414
Fair value of financial instruments (note                                   
 3)                                                   6,380            5,216
Decommissioning obligations (note 6)                 82,845           76,037
Deferred taxes                                      295,652          265,025
Shareholders' equity:                                                       
 Share capital (note 9)                           3,300,866        3,062,432
 Non-controlling interest (note 8)                   18,545           17,877
 Contributed surplus                                 98,039           91,718
 Retained earnings                                  285,862          195,994
----------------------------------------------------------------------------
Total shareholders' equity                        3,703,312        3,368,021
----------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $      5,082,535 $      4,696,471
---------------------------------------------------------------------------- 
Commitments (note 12)                                                       
Subsequent events (notes 3 and 13)                                          
See accompanying notes to the interim condensed consolidated financial      
statements.                                                                  
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME                   
Three Months Ended March 31, 
(000s) except per-share amounts (unaudited)             2014           2013 
--------------------------------------------------------------------------- 
Revenue:                                                                    
Oil and natural gas sales                      $     377,768  $     172,491 
Royalties                                            (30,564)       (11,363)
--------------------------------------------------------------------------- 
Net revenue from oil and natural gas sales           347,204        161,128 
Realized gain (loss) on financial instruments        (28,501)         2,496 
Unrealized loss on financial instruments (note                              
 3)                                                   (6,266)        (3,819)
Other income                                           4,899          1,319 
--------------------------------------------------------------------------- 
Total net revenue                                    317,336        161,124 
Expenses:                                                                   
 Operating                                            45,489         26,367 
 Transportation                                       15,329         12,470 
 General and administration                            5,310          4,941 
 Share-based payments                                  6,701          3,590 
 (Gain) on divestitures                                    -        (44,187)
 Depletion, depreciation and amortization            115,535         81,423 
--------------------------------------------------------------------------- 
Total expenses                                       188,364         84,604 
--------------------------------------------------------------------------- 
Income from operations                               128,972         76,520 
Finance expenses                                       5,478          4,498 
--------------------------------------------------------------------------- 
Income before taxes                                  123,494         72,022 
Deferred taxes                                        32,958         19,593 
--------------------------------------------------------------------------- 
Net income and comprehensive income before                                  
 non-controlling interest                             90,536         52,429 
--------------------------------------------------------------------------- 
Net income and comprehensive income                                         
 attributable to:                                                           
 Shareholders of the Company                          89,868         52,184 
 Non-controlling interest (note 8)                       668            245 
---------------------------------------------------------------------------  
$      90,536  $      52,429 
---------------------------------------------------------------------------  
Net income per share attributable to common                                 
 shareholders (note 10)                                                     
--------------------------------------------------------------------------- 
 Basic                                         $        0.47  $        0.29 
--------------------------------------------------------------------------- 
 Diluted                                       $        0.45  $        0.29 
---------------------------------------------------------------------------  
See accompanying notes to the interim condensed consolidated financial      
statements.                                                                  
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY                     
(000s) (unaudited)                                              
---------------------------------------------------------------- 
Share  Contributed     Retained 
Capital      Surplus     Earnings
----------------------------------------------------------------
Balance at December 31,                                         
 2013                     $  3,062,432 $     91,718 $    195,994
Issue of common shares                                          
 (note 9)                      219,222            -            -
Share issue costs, net of                                       
 tax                           (6,923)            -            -
Share-based payments                 -        6,701            -
Capitalized share-based                                         
 payments                            -        6,701            -
Options exercised (note                                         
 9)                             26,135      (7,081)            -
Income attributable to                                          
 common shareholders                 -            -       89,868
Income attributable to                                          
 non-controlling interest            -            -            -
----------------------------------------------------------------
Balance at March 31, 2014 $  3,300,866 $     98,039 $    285,862
---------------------------------------------------------------- 
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY        
(000s) (unaudited)                                 
--------------------------------------------------- 
Non-              
Controlling        Total 
Interest       Equity
---------------------------------------------------
Balance at December 31,                            
 2013                     $     17,877 $  3,368,021
Issue of common shares                             
 (note 9)                            -      219,222
Share issue costs, net of                          
 tax                                 -      (6,923)
Share-based payments                 -        6,701
Capitalized share-based                            
 payments                            -        6,701
Options exercised (note                            
 9)                                  -       19,054
Income attributable to                             
 common shareholders                 -       89,868
Income attributable to                             
 non-controlling interest          668          668
---------------------------------------------------
Balance at March 31, 2014 $     18,545 $  3,703,312
--------------------------------------------------- 
(000s) (unaudited)                                              
---------------------------------------------------------------- 
Share  Contributed     Retained 
Capital      Surplus     Earnings
----------------------------------------------------------------
Balance at December 31,                                         
 2012                     $  2,599,614 $     70,923 $     47,880
Issue of common shares         226,564            -            -
Share issue costs, net of                                       
 tax                           (7,175)            -            -
Share-based payments                 -        3,590            -
Capitalized share-based                                         
 payments                            -        3,590            -
Options exercised               33,053      (9,089)            -
Income attributable to                                          
 common shareholders                 -            -       52,184
Income attributable to                                          
 non-controlling interest            -            -            -
----------------------------------------------------------------
Balance at March 31, 2013 $  2,852,056 $     69,014 $    100,064
---------------------------------------------------------------- 
(000s) (unaudited)                                 
--------------------------------------------------- 
Non-              
Controlling        Total 
Interest       Equity
---------------------------------------------------
Balance at December 31,                            
 2012                     $     16,298 $  2,734,715
Issue of common shares               -      226,564
Share issue costs, net of                          
 tax                                 -      (7,175)
Share-based payments                 -        3,590
Capitalized share-based                            
 payments                            -        3,590
Options exercised                    -       23,964
Income attributable to                             
 common shareholders                 -       52,184
Income attributable to                             
 non-controlling interest          245          245
---------------------------------------------------
Balance at March 31, 2013 $     16,543 $  3,037,677
--------------------------------------------------- 
See accompanying notes to the interim condensed consolidated financial      
statements.                                                                  
CONSOLIDATED STATEMENTS OF CASH FLOW                                         
Three Months Ended March 31,  
----------------------------- 
(000s) (unaudited)                                      2014           2013 
--------------------------------------------------------------------------- 
Cash provided by (used in):                                                 
Operations:                                                                 
Net income                                     $      89,868  $      52,184 
Items not involving cash:                                                   
 Depletion, depreciation and amortization            115,535         81,423 
 Accretion                                               538            391 
 Share-based payments                                  6,701          3,590 
 Deferred taxes                                       32,958         19,593 
 Unrealized loss on financial instruments              6,266          3,819 
 (Gain) on divestitures                                    -        (44,187)
 Non-controlling interest                                668            245 
Decommissioning expenditures                              53           (459)
Changes in non-cash operating working capital         (3,197)       (22,836)
--------------------------------------------------------------------------- 
Total cash flow from operating activities            249,390         93,763 
Financing:                                                                  
 Issue of common shares                              238,276        257,124 
 Share issue costs                                    (9,254)        (9,566)
 Decrease in bank debt                               (19,819)      (202,362)
--------------------------------------------------------------------------- 
Total cash flow from financing activities            209,203         45,196 
Investing:                                                                  
 Exploration and evaluation                          (63,492)       (26,861)
 Property, plant and equipment                      (402,319)      (239,097)
 Property acquisitions                                  (585)        (2,450)
 Proceeds from divestitures                                -         77,945 
 Net repayment of long-term obligation                  (865)          (932)
 Changes in non-cash investing working capital         8,668         52,436 
--------------------------------------------------------------------------- 
Total cash flow from investing activities           (458,593)      (138,959)
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.                                                                  
/T/ 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
As at March 31, 2014 and for the three months ended March 31, 2014 and 2013 
(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 interim condensed consolidated financial statements
reflect only the Company's proportionate interest in such activities. 
The Company's registered 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, 2013. 
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, 2013, except as detailed below.  
On January 1, 2014, the Company adopted IFRIC 21, which addresses payments to
government bodies. There was no impact on the Company as a result of adopting
the new standard. 
The unaudited interim condensed consolidated financial statements were
authorized for issue by the Board of Directors on May 7, 2014. 
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 methods. 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. 
/T/ 
--  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.  
/T/ 
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, 2013. 
As at March 31, 2014, 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 the following financial derivative contracts in place as at
March 31, 2014(1): 
/T/ 
---------------------------------------------------------------------------- 
2014            2015     2016
----------------------------------------------------------------------------
Gas                                                                         
Fixed price           mmbtu/d                47,236           5,000        - 
USD$/mmbtu              $4.14           $4.21          
Nymex call options    mmbtu/d                     -               -        -
 (writer)                                                                    
USD$/mmbtu                                            
----------------------------------------------------------------------------
Oil                                                                         
Financial swaps       bbls/d                  1,098             474        - 
USD$/bbl               $95.95          $91.77          
Costless collars      bbls/d                  1,100           1,000        - 
USD$/bbl      $80.91 - $97.57   $80.00-$95.18          
Financial call        bbls/d                      -             600      400
 swaptions(2)                                                                
USD$/bbl                              $104.98   $91.10
----------------------------------------------------------------------------
Total fair value                                                            
---------------------------------------------------------------------------- 
--------------------------------------------------------------  
Fair  
Value  
2017     2018   (000s) 
-------------------------------------------------------------- 
Gas                                                            
Fixed price           mmbtu/d              -        - $ (4,316) 
USD$/mmbtu                                
Nymex call options    mmbtu/d         20,000   20,000   (5,135)
 (writer)                                                       
USD$/mmbtu       $5.00    $5.00          
-------------------------------------------------------------- 
Oil                                                            
Financial swaps       bbls/d               -        -     (614) 
USD$/bbl                                  
Costless collars      bbls/d               -        -   (1,548) 
USD$/bbl                                  
Financial call        bbls/d               -        -     (665)
 swaptions(2)                                                   
USD$/bbl                                 
-------------------------------------------------------------- 
Total fair value                                     $ (12,278)
--------------------------------------------------------------  
(1)The volumes and prices reported are the weighted average volumes and     
prices for the period.                                                      
(2)This is a European swaption whereby the Company provides the option to   
extend an oil swap into the period subsequent to the call date.              
/T/ 
The Company has entered in to the following financial derivative contracts
subsequent to March 31, 2014: 
/T/ 
----------------------------------------------------------------------------
Type of                                                                     
Contract            Quantity       Time Period         Contract Price       
----------------------------------------------------------------------------
Costless collar -   300 bbls/d     January - December  USD$85.00/bbl floor  
 Oil                               2015                USD$91.35/bbl ceiling
---------------------------------------------------------------------------- 
/T/ 
The Company has the following interest rate swap arrangements: 
/T/ 
---------------------------------------------------------------------------- 
Company        Counter             
Type                 Fixed          Party        Fair 
(Floating      Amount  Interest       Floating       Value
Term              to Fixed)      (000s)  Rate (%)     Rate Index      (000s)
----------------------------------------------------------------------------
May 29, 2012 -         Swap $   150,000     1.35%  Floating Rate $      (33)
 May 29, 2014                                                               
May 29, 2014 -         Swap $   150,000     1.72%  Floating Rate       (756)
 May 29, 2015                                                               
May 29, 2014 -         Swap $   100,000     1.27%  Floating Rate        (58)
 May 29, 2015                                                               
May 29, 2015 -         Swap $   250,000    1.645%  Floating Rate       (385)
 May 29, 2016                                                               
----------------------------------------------------------------------------
Total fair value                                                 $   (1,232)
---------------------------------------------------------------------------- 
/T/ 
The following table provides a summary of the unrealized losses on financial
instruments for the three months ended March 31, 2014 and 2013: 
/T/ 
Three Months Ended March 31,  
----------------------------- 
(000s)                                              2014           2013 
----------------------------------------------------------------------- 
Unrealized loss on financial instruments   $      (6,266) $      (3,819)
-----------------------------------------------------------------------  
/T/ 
As at March 31, 2014, 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, after-tax earnings would have been $3.6 million (March 31, 2013 -
$1.7 million) lower. 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 $0.10/mcf lower. In
addition to the financial commodity contracts discussed above, the Company has
entered into physical contracts to manage commodity risk. These contracts are
considered normal sales contracts and are not recorded at fair value in the
consolidated financial statements. 
The Company has the following physical contracts in place at March 31, 2014(1): 
/T/ 
2014     2015     2016     2017     2018
----------------------------------------------------------------------------
Gas                                                                         
Fixed price - AECO  mcf/d        168,281   42,474    1,166        -        - 
CAD$/mcf       $4.11    $4.25    $4.06                   
Basis               mmbtu/d       81,109   51,233   48,333   20,000   20,000
 differentials(2)                                                            
USD$/mmbtu   $(0.49)  $(0.48)  $(0.48)  $(0.49)  $(0.49) 
AECO call options   mcf/d         22,861   41,552   34,136   37,928   14,223
 (writers/call                                                              
 swaptions)(3)                                                               
CAD$/mcf       $4.28    $4.55    $4.85    $4.67    $4.64
---------------------------------------------------------------------------- 
(1)Transactions with common terms have been aggregated and presented at the 
weighted average price.                                                     
(2)Tourmaline also has 20 mmcf/d of Nymex-AECO basis differentials at $0.49 
from 2019-2022.                                                             
(3)A financial call swaption is a European swaption whereby the Company     
provided the option to extend a gas swap into the period subsequent to the  
call date.                                                                   
/T/ 
The Company has entered into the following physical contracts subsequent to
March 31, 2014(1): 
/T/ 
----------------------------------------------------------------------------
Type of Contract   Quantity     Time Period           Contract Price        
----------------------------------------------------------------------------
Fixed price - AECO 25,000 GJs/d November 2014 - March CAD$4.730/gj average   
2015                                        
Fixed price - AECO 25,000 GJs/d January - December    CAD$4.156/gj average   
2015                                        
---------------------------------------------------------------------------- 
(1)Transactions with common terms have been aggregated and presented as the 
weighted average price.                                                      
/T/ 
4. EXPLORATION AND EVALUATION ASSETS  
/T/ 
(000s)                                                                     
-------------------------------------------------------------------------- 
As at December 31, 2013                                   $        700,525 
 Capital expenditures                                               63,492 
 Transfers to property, plant and equipment (note 5)               (16,100)
 Acquisitions                                                          336 
 Expired mineral leases                                             (7,570)
-------------------------------------------------------------------------- 
As at March 31, 2014                                      $        740,683 
--------------------------------------------------------------------------  
/T/ 
Exploration and evaluation ("E&E") assets consist of the
Company's exploration projects which are pending the determination of
proven and probable reserves, as well as undeveloped land. Additions represent
the Company's share of costs on E&E assets during the year. 
5. PROPERTY, PLANT AND EQUIPMENT ("PP&E")  
/T/ 
Cost                                                                        
(000s)                                                                     
---------------------------------------------------------------------------
As at December 31, 2013                                    $      4,664,800
 Capital expenditures                                               409,020
 Transfers from exploration and evaluation (note 4)                  16,100
 Change in decommissioning liabilities (note 6)                       6,164
 Acquisitions                                                           302
---------------------------------------------------------------------------
As at March 31, 2014                                       $      5,096,386
--------------------------------------------------------------------------- 
Accumulated Depletion, Depreciation and Amortization                        
(000s)                                                                     
---------------------------------------------------------------------------
As at December 31, 2013                                    $        815,015
 Depletion, depreciation and amortization expense                   107,965
---------------------------------------------------------------------------
As at March 31, 2014                                       $        922,980
--------------------------------------------------------------------------- 
Net Book Value                               
(000s)                                      
--------------------------------------------
As at December 31, 2013     $      3,849,785
As at March 31, 2014        $      4,173,406
-------------------------------------------- 
/T/ 
Future development costs for the three months ended March 31, 2014 of $3,501
million were included in the depletion calculation million (December 31, 2013 -
$3,197 million). 
Capitalization of G&A and Share-Based Payments  
A total of $4.4 million in G&A expenditures have been capitalized and
included in E&E and PP&E assets for the three months ended March 31,
2014 (December 31, 2013 - $15.0 million). Also included in E&E and PP&E
are non-cash share-based payments of $6.7 million (December 31, 2013 - $19.3
million). 
Impairment Assessment 
The Company has performed an impairment assessment of its property, plant, and
equipment on a CGU basis and has determined that there are no indicators of
impairment at March 31, 2014; therefore an impairment test was not performed.
Similarly, for the year ended December 31, 2013, the Company did not identify
any impairment indicators and as a result did not conduct an impairment test. 
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 $123.5 million (December 31, 2013 - $118.9 million), with some
abandonments expected to commence in 2021. A risk-free rate of 2.96% (December
31, 2013 - 3.24%) and an inflation rate of 2.0% (December 31, 2013 - 2.0%) were
used to calculate the fair value of the decommissioning obligations. 
/T/ 
As at         As at  
March 31,  December 31, 
(000s)                                                   2014          2013 
--------------------------------------------------------------------------- 
Balance, beginning of period                    $      76,037 $      64,757 
 Obligation incurred                                    2,795        10,193 
 Obligation incurred on property acquisitions              53         7,347 
 Obligation divested                                        -          (960)
 Obligation settled                                        53        (2,254)
 Accretion expense                                        538         2,038 
 Change in future estimated cash outlays                3,369        (5,084)
--------------------------------------------------------------------------- 
Balance, end of period                          $      82,845 $      76,037 
---------------------------------------------------------------------------  
/T/ 
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, 2013. The
facility has a limit of $900 million with an initial maturity of June 2016. 
As at March 31, 2014, the Company's bank debt balance was $570.5 million
(December 31, 2013 - $590.3 million). In addition, the Company has outstanding
letters of credit of $1.8 million (December 31, 2013 - $2.2 million), which
reduce the credit available on the facility. The average effective interest
rate for the three months ended March 31, 2014 was 3.06% (three months ended
March 31, 2013 - 3.29%). As at March 31, 2014, the Company is in compliance
with all debt covenants. 
8. NON-CONTROLLING INTEREST  
The Company 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: 
/T/ 
As at         As at 
March 31,  December 31,
(000s)                                                    2014          2013
----------------------------------------------------------------------------
Balance, beginning of period                     $      17,877 $      16,298
 Share of subsidiary's net income for the period           668         1,579
----------------------------------------------------------------------------
Balance, end of period                           $      18,545 $      17,877
---------------------------------------------------------------------------- 
/T/ 
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 
/T/ 
As at March 31, 2014      As at December 31, 2013  
--------------------------------------------------------- 
(000s) except per-       Number of                    Number of             
 share amounts              Shares      Amount           Shares      Amount 
--------------------------------------------------------------------------- 
Balance, beginning                                                          
 of period             189,804,864 $ 3,062,432      174,813,059 $ 2,599,614 
For cash on public                                                          
 offering of                                                                
 common                                                                     
 shares(1)(2)(3)         4,615,198     219,222        9,275,000     343,881 
For cash on public                                                          
 offering of flow-                                                          
 through common                                                             
 shares(1)(2)                    -           -        1,760,000      67,218 
For cash on                                                                 
 exercise of stock                                                          
 options                 1,146,475      19,054        3,956,805      47,023 
Contributed                                                                 
 surplus on                                                                 
 exercise of stock                                                          
 options                         -       7,081                -      17,819 
Share issue costs                -      (9,254)               -     (17,633)
Tax effect of                                                               
 share issue costs               -       2,331                -       4,510 
--------------------------------------------------------------------------- 
Balance, end of                                                             
 period                195,566,537 $ 3,300,866      189,804,864 $ 3,062,432 
---------------------------------------------------------------------------  
(1) 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 December 31, 2013, the      
Company had spent the full committed amount and the expenditures were       
renounced to investors in February 2014 with an effective renunciation date 
of December 31, 2013.                                                       
(2) On October 8, 2013, the Company issued 3.495 million common shares at a 
price of $41.75 per share and 0.925 million flow-through common shares at a 
price of $51.60 per share, for total gross proceeds of $193.6 million. The  
implied premium on flow-through common shares was determined to be $9.1     
million or $9.85 per share. A total of 45,000 common shares and 75,000 flow-through common shares were purchased by insiders. As at December 31, 2013,  
the Company had spent the full committed amount. The expenditures were      
renounced to investors in February 2014 with an effective renunciation date 
of December 31, 2013.                                                       
(3) On February 12, 2014, the Company issued 4.615 million common shares at 
a price of $47.50 per share for total gross proceeds of $219.2 million. A   
total of 15,198 common shares were purchased by insiders.                    
/T/ 
10. EARNINGS PER SHARE  
Basic earnings-per-share was calculated as follows: 
/T/ 
Three Months Ended March 31, 
---------------------------- 
2014          2013
----------------------------------------------------------------------------
Net earnings for the period (000s)               $      89,868 $      52,184
Weighted average number of common shares - basic   192,791,721   176,986,036
----------------------------------------------------------------------------
Earnings per share - basic                       $        0.47 $        0.29
---------------------------------------------------------------------------- 
/T/ 
Diluted earnings-per-share was calculated as follows: 
/T/ 
Three Months Ended March 31, 
---------------------------- 
2014          2013
----------------------------------------------------------------------------
Net earnings for the period (000s)               $      89,868 $      52,184
Weighted average number of common shares -                                  
 diluted                                           197,932,293   181,774,427
----------------------------------------------------------------------------
Earnings per share - fully diluted               $        0.45 $        0.29
---------------------------------------------------------------------------- 
/T/ 
There were 3,823,000 options excluded from the weighted-average share
calculation for the three months ended March 31, 2014 because they were
anti-dilutive (March 31, 2013 - 2,322,333). 
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 19,556,654 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. 
/T/ 
Three Months Ended March 31,                
---------------------------------------------------------- 
2014                        2013 
---------------------------------------------------------- 
Weighted                    Weighted 
Average                     Average 
Number of         Exercise    Number of       Exercise 
Options            Price      Options          Price
----------------------------------------------------------------------------
Stock options                                                               
 outstanding,                                                               
 beginning of                                                               
 period              16,028,651   $        27.95   15,325,232 $        19.87
 Granted                375,000            46.97      260,000          35.45
 Exercised           (1,146,475)           16.62   (1,979,883)         12.10
 Forfeited              (18,889)           30.11      (28,333)         25.27
----------------------------------------------------------------------------
Stock options                                                               
 outstanding, end                                                           
 of period           15,238,287   $        29.27   13,577,016 $        21.27
---------------------------------------------------------------------------- 
/T/ 
The weighted average trading price of the Company's common shares was
$48.49 during the three months ended March 31, 2014 (March 31, 2013 - $35.12). 
The following table summarizes stock options outstanding and exercisable at
March 31, 2014: 
/T/ 
Weighted                                       
Average    Weighted                  Weighted
Range of            Number   Remaining     Average        Number     Average
Exercise       Outstanding Contractual    Exercise   Exercisable    Exercise
 Price       at Period End        Life       Price at Period End       Price
----------------------------------------------------------------------------
$10.00 -                                                                    
 $18.35          4,127,582        0.89 $     15.40     4,127,582 $     15.40
$20.68 -                                                                    
 $29.93          3,618,374        2.65       26.86     2,093,868       27.15
$30.76 -                                                                    
 $39.57          2,949,331        3.50       32.95       935,664       31.81
$40.18 -                                                                    
 $48.99          4,543,000        4.47       41.39             -           -
---------------------------------------------------------------------------- 
15,238,287        2.88 $     29.27     7,157,114 $     20.98
---------------------------------------------------------------------------- 
/T/ 
The fair value of options granted during the three month period ended March 31,
2014 was estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted average assumptions and resulting values: 
/T/ 
March 31,     March 31,  
2014          2013 
--------------------------------------------------------------------------- 
Fair value of options granted (weighted average) $      16.63  $      12.29 
Risk-free interest rate                                  3.08%         2.55%
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 
---------------------------------------------------------------------------  
/T/ 
12. COMMITMENTS 
In the normal course of business, the Company is obligated to make future
payments. These obligations represent contracts and other commitments that are
known and non-cancellable. 
/T/ 
greater            
Payments Due by Year             1       2-3       4-5    than 5            
 (000s)                       Year     Years     Years     Years       Total
----------------------------------------------------------------------------
Operating leases         $   3,698 $   9,865 $  10,162 $   4,934 $    28,659
Firm transportation and                                                     
 processing agreements      69,884   312,506   178,758   394,998     956,146
Bank debt(1)                     -   612,866         -         -     612,866
---------------------------------------------------------------------------- 
$  73,582 $ 935,237 $ 188,920 $ 399,932 $ 1,597,671
---------------------------------------------------------------------------- 
(1) Includes interest expense at an annual rate of 3.06% being the rate     
applicable to outstanding bank debt at March 31, 2014.                       
/T/ 
13. SUBSEQUENT EVENTS 
On April 24, 2014, the Company closed the acquisition of Santonia Energy Inc.
("Santonia") with the issuance of 3.228 million Tourmaline shares
with a closing price on that date of $54.94 per Tourmaline share, for
consideration of $177.4 million. 
About Tourmaline Oil Corp. 
Tourmaline is a Canadian intermediate crude oil and natural gas exploration and
production company focused on long-term growth through an aggressive
exploration, development, production and acquisition program in the Western
Canadian Sedimentary Basin. 
-30-
FOR FURTHER INFORMATION PLEASE CONTACT: 
Tourmaline Oil Corp.
Michael Rose
Chairman, President and Chief Executive Officer
(403) 266-5992
info@tourmalineoil.com
or
Tourmaline Oil Corp.
Brian Robinson
Vice President, Finance and Chief Financial Officer
(403) 767-3587
robinson@tourmalineoil.com
or
Tourmaline Oil Corp.
Scott Kirker
Secretary and General Counsel
(403) 767-3593
kirker@tourmalineoil.com
or
Tourmaline Oil Corp.
Suite 3700, 250 - 6th Avenue S.W.
Calgary, Alberta T2P 3H7
(403) 266-5992
(403) 266-5952
www.tourmalineoil.com 
INDUSTRY:  Energy and Utilities - Oil and Gas  
SUBJECT:  ERN 
-0-
-0- May/07/2014 21:00 GMT
 
 
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