Tamarack Valley Energy Announces Fourth Quarter and Year End 2021 Financial Results and Operational Update

CALGARY, AB, March 3, 2022 /CNW/ – Tamarack Valley Energy Ltd. (“Tamarack” or the “Company“) (TSX: TVE) is pleased to announce its audited financial and operating results for the three months and year ended December 31, 2021. Selected financial and operating information is outlined below and should be read with Tamarack’s audited annual consolidated financial statements and related management’s discussion and analysis for the three and twelve months ended December 31, 2021, which are available on SEDAR at www.sedar.com and on Tamarack’s website at www.tamarackvalley.ca. The Company’s annual information form (“AIF”) for the year ended December 31, 2021 will be filed on SEDAR today and will also be available on Tamarack’s website.

Brian Schmidt, President and CEO of Tamarack commented: “2021 was a transformational year for Tamarack with the successful repositioning and integration of approximately $0.7 billion of strategic acquisitions in the Clearwater and Charlie Lake oil plays, further enhancing sustainable free funds flow⁽¹⁾ growth and return of capital to shareholders. Operationally we exceeded our full year guidance and maintained a strong balance sheet, exiting the year at less than one times net debt to Q4/21 annualized adjusted funds flow⁽¹⁾ while transitioning to a Sustainability Linked borrowing structure on our credit facility further demonstrating our commitment to responsible development.”

2021 Financial and Operating Highlights

• Tamarack closed three separate acquisitions to further consolidate the Company’s position in the Clearwater oil play in 2021, along with the acquisition of Crestwynd Exploration which closed February 15^th, 2022, growing our land position in excess of 445 net sections in Nipisi, West Marten Hills and Southern Clearwater.
• Announced the transformational entrance into the Charlie Lake light oil play with the acquisition of Anegada Oil Corp. which closed on June 1^st, which in combination with further tuck-ins across 2021, has established a significant footprint with approximately 325 net sections at year end 2021.
• Achieved fourth quarter and annual production of 40,384 boe/d⁽²⁾ and 34,562 boe/d⁽³⁾ respectively, representing an 83% and 57% increase compared to the same periods in 2020.
• Generated adjusted funds flow⁽¹⁾ of $124.1 million in Q4/21 ($0.31 per share basic and $0.30 per share diluted) and $340.3 million for the year ($0.96 per share basic and $0.94 per share diluted) compared to $28.9 million ($0.13 per share basic and diluted) and $122.7 million ($0.55 per share basic and diluted) for the same period in 2020.
• Generated free funds flow⁽¹⁾, excluding acquisition expenditures, of $82.4 million and net income of $140.4 million during the quarter and $149.1 million and $390.5 million for free funds flow⁽¹⁾ and net income on the year, respectively.
• Invested $41.7 million and $191.2 million in exploration and development expenditures (“E&D”), excluding acquisitions, during Q4/21 and full year 2021, respectively, which contributed to drilling 106 (101.8 net) wells, comprised of 43 (40.0 net) Clearwater oil wells, 40 (40.0 net) Viking oil wells, 13 (13.0 net) Charlie Lake oil wells, two (0.8 net) Fahler gas wells and eight (8.0 net) water source wells during the year.
• Enhanced our financial strength through 2021, exiting the year with net debt⁽¹⁾ of $463.3 million and a net debt to Q4/21 annualized adjusted funds flow⁽¹⁾   ratio of 0.9x.
• Transitioned to a Sustainability Linked Loan on our $600 million credit facility that incorporates sustainability-linked incentive pricing terms related to emissions, decommissioning management and Indigenous workforce participation performance targets.

Financial & Operating Results

Risk Management

The Company continues to manage commodity price risk and volatility through a prudent hedging management program, with approximately 50% of gross oil production hedged against WTI on average for the remainder of 2022, through instruments including puts and enhanced collars. Tamarack also has WTI-MSW and WCS differential hedges in place on approximately 46% of our production in 2022. For 2023, we have entered into WTI put floors and enhanced collars as we systematically roll our risk management program forward on approximately 10% of our first quarter production. Our strategy provides protection to the downside exposure while maximizing upside. Additional details of the current hedges in place can be found in the corporate presentation on the Company website (www.tamarackvalley.ca).

Return of Capital

In accordance with the Company’s dividend program, monthly dividends of $0.0083/share were declared in January and February 2022. At current strip prices, Tamarack anticipates reaching the debt target of $325-375 million mid-year 2022, enabling the declaration of an enhanced dividend and/or share buybacks.

Operations Update

Clearwater

Peavine Metis Settlement Strategic Land Agreement – Tamarack has entered into a strategic partnership with the Peavine Metis Settlement in the High Prairie area that covers 29.5 sections of land, which are prospective for the Clearwater formation. These lands offset competitor appraisal wells that have illustrated the potential of the play in the area. Tamarack is committed to building and maintaining strong partnerships with the Metis community, and we look forward to creating opportunity for economic participation and inclusion through the development of the resource with the Peavine Metis Settlement. Tamarack plans to begin its appraisal program in 2022.

West Marten Hills Exploration – The West Marten Hills 02/8-33-075-3W5 well was drilled with eight one-mile laterals in the Clearwater F sand. On its initial 15 days of production, post load recovery, it has averaged approximately 175 bbl/d of 19-degree API heavy oil. This well, alongside competitor activity, de-risks a significant portion of the Company’s West Marten Hills lands. The Company plans to drill an additional eight wells at West Marten Hills in 2022.

West Nipisi – Tamarack has brought on two wells in West Nipisi as part of the waterflood program, each producing approximately 320 bbl/d of 19-degree API heavy oil over the last 30 days. Tamarack is drilling three injectors (injection to commence Q2/22), with an additional twelve wells planned under its 2022 Clearwater waterflood configuration.

Southern Clearwater – Tamarack is active in the Jarvie, Perryvale and Meanook areas of the Southern Clearwater with four rigs currently running. Six well have been rig released to date, with eight wells expected to be on-stream by the end of the first quarter. The Company plans to drill forty-seven wells in the area in 2022.

Charlie Lake

Tamarack continues to delineate lands in the Pipestone area, bringing on four net wells since December 2021 with results exceeding expectations. The 13-12-073-10W6 well initiated production with a light oil rate of approximately 1,400 bbl/d (~1,700 boe/d⁽⁵⁾). Development drilling at Wembley continues to deliver rates exceeding internal budget type curves with the most recent 5-30-073-07W6 well averaging 918 bbl/d of light oil (1,428 boe/d⁽⁶⁾) in the first eighteen days of production. Tamarack is also drilling its first Upper Charlie Lake well in the Saddle Hills area, with production expected in the second quarter.

Waterflood

Tamarack has drilled twenty-one net wells through its winter program targeting the Viking (14.0 net) and Sparky (7.0 net) at its Veteran and Eyehill properties. Current waterflood production continues to perform as expected, averaging ~ 5,000 bopd.

Environmental, Social and Governance

Phase one of the Nipisi gas conservation project was brought on-line in October of 2021, capturing approximately 2 mmcf/d of natural gas. Phase two of the project, which is anticipated to conserve an additional 1 mmcf/d of natural gas is scheduled to be operational by the end of the second quarter.

2022 Outlook⁽⁷⁾

Our 2022 guidance remains unchanged as Tamarack targets production of 45,000 to 46,000 boe/d⁽⁸⁾ capital expenditures of $250 to $270 million⁽⁸⁾, with the exception of interest expense which has changed slightly as a result of the sustainability linked notes issued in February 2022. Based on the forward strip, the Company expects to generate over $480 million of before tax free funds flow⁽¹⁾ in 2022 ($410 million after tax).

Investor Webcast

Tamarack will host a webcast at 9:00 AM MT (11:00 AM ET) on March 4, 2022 to discuss the fourth quarter and year end results and operations update. Participants can access the live webcast via this link or through links provided on the Company’s website. A recorded archive of the webcast will be available on the Company’s website following the live webcast.

We would like to thank our employees, shareholders and other stakeholders for all of their support over the past year and look forward to continuing to develop our high-quality assets to create shareholder value in a sustainable and responsible way.

About Tamarack Valley Energy Ltd.

Tamarack is an oil and gas exploration and production company committed to creating long-term value for its shareholders through sustainable free funds flow generation, financial stability and the return of capital. The Company has an extensive inventory of low-risk, oil development drilling locations focused primarily on Charlie Lake, Clearwater and EOR plays in Alberta. Operating as a responsible corporate citizen is a key focus to ensure we deliver on our environmental, social and governance (ESG) commitments and goals. For more information, please visit the Company’s website at www.tamarackvalley.ca.

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