Good day, and thank you for standing by. Welcome to the Tourmaline Q1 2020 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Scott Kirker. Please go ahead.
Thanks, Christina. Thank you, Mike Rose. Welcome everyone to our discussion of Tourmaline Oil Corp.'s results for the three months ended March 31, 2021, and 2020. I'm Scott Kirker, and I'm the general counsel for Tourmaline. Before we get started, I refer you to the advisories on forward-looking statements contained in the news release, as well as the advisories contained in the Tourmaline annual information form and our MD&A available on SEDAR+ and on our website. I would draw your attention to the material factors and assumptions in those advisories. I'm here with Mike Rose, Tourmaline's President and Chief Executive Officer, Brian Robinson, Vice President of Finance and Chief Financial Officer, and Jamie Heard, Tourmaline's Senior Capital Markets Analyst. We'll start by speaking to some of the highlights of the last quarter and our year so far. After Mike's remarks, we'll be open for questions. Go ahead, Mike.
Thanks, Scott. Good morning, everybody. Thank you for dialing in, and we're pleased to go through our first quarter results. The highlights: first quarter cash flow was a record CAD 629 million, or CAD 2.11 per fully diluted share. Tourmaline generated record free cash flow of CAD 233.5 million in the first quarter, which was utilized to fund the dividend increase announced on March 10th and to reduce net debt by approximately CAD 153 million in the quarter. First quarter 2021 average production of a little over 411,000 BOEs per day was ahead of the upper range of the full-year guidance of 390,000-410,000 BOEs per day. First quarter liquids production was also ahead at approximately 92,000 barrels per day.
Moving to some specifics on production, driven by stronger-than-anticipated well performance, March production actually averaged just under 418,000 BOEs per day, and there were no storage withdrawal volumes or acquisition volumes in those totals. Given stronger production performance in all three operated complexes, second quarter 2021 production of 400,000-405,000 BOEs per day is now anticipated from the base EP program. As is the case every year, second quarter 2021 production will be impacted by planned pipeline maintenance and company plant turnarounds, which are incorporated into those guidance estimates. Second quarter production estimates also include the impact of injections in California and Dawn, which are expected to reduce quarterly production volumes by approximately 4,500 BOEs per day, and it's those same storage positions, which proved very valuable this past winter. Looking specifically at some of the financial results, first quarter cash flow was CAD 629.3 million.
That was a 122% increase over the first quarter of 2020 and a 59% increase over the previous quarter's cash flow. First quarter 2021 after-tax net earnings were a little under CAD 248 million, or CAD 0.83 per fully diluted share. That compares favorably to a net loss of just under CAD 36 million in the first quarter of last year. Our full-year 2021 forecast cash flow remains at CAD 2.2 billion, yielding approximately CAD 1.1 billion of free cash flow for the full year. OpEx in Q1 2021 was 364 per BOE. The company's focus on further dropping operating costs by continuing to integrate the acquired Jupiter Modern asset into the Deep Basin complex, as well as ultimately reducing gas volumes going to third-party processing in the Greater Gundy complex when the phase II plant expansion starts up. Some specifics on the capital program and the financial outlook.
First quarter 2021 EP capital spending was CAD 385.7 million. We expended CAD 30 million on Gundy facility pre-builds in the first quarter, and that puts us now in a position to start up the phase II deep cut expansion in early January 2022, and that's ahead of the original mid Q2 2022 completion target. This would allow us to take advantage of potentially stronger winter 2022 natural gas pricing, similar to what just happened this past winter. Do note that 75% of the Gundy phase II expansion volumes will ultimately flow to Malin and PG&E hubs via incremental long-term transport on the GTN system that Tourmaline has secured. We will finalize timing for this 45,000 BOE per day project startup, as well as provide revised 2021, 2022, and five-year plan guidance reflecting both the impact of increased production volumes and improved strip pricing, and we'll do that during this quarter.
Tourmaline did not complete any significant acquisitions during the first quarter. Net debt at March 31, 2021 was CAD 1.63 billion, and that's down 8.6% from exit 2020 net debt, and our plan is to continue to reduce debt during the year, and we're targeting a net debt-to-cash flow ratio at year-end of approximately 0.5 times, and we are well on the way with that initiative. Also, during the first quarter, the company issued CAD 250 million of senior unsecured notes at a very attractive fixed rate of 2.077% for seven years. The most recent five-year EP plan delivers free cash flow of CAD 1.1 billion in 2021 and CAD 4.1 billion over the full five years of the plan, and the free cash flow will be utilized for further modest dividend increases, continued debt reduction, potential accretive acquisitions, select emission reduction, environmental performance improvement investments, and potential tactical share buybacks.
Looking at marketing, our average realized natural gas price in the first quarter was CAD 3.86 per MCF, as we benefited from both hedging and the company's broad market diversification portfolio that extends throughout North America. Natural gas fundamentals for 2021 and 2022 continue to improve. Approximately 55% of our natural gas volumes are exposed to spot prices in markets on the western half of the continent, those being PG&E, Malin, Sumas, Station 2, and AECO, and those are the hubs where the fundamentals continue to be most supportive for pricing. Completion of the ongoing NGTL buildout and ultimately Canadian West Coast LNG are expected to further strengthen pricing at these hubs. 95% of our PG&E deliveries continue to remain unhedged through 2021, and that's a market where fundamentals remain very, very strong.
NGL realizations in the first quarter were up 141% over the first quarter of 2020 and are expected to further strengthen through the balance of the year, and we are the largest NGL producer in Canada. A brief EP update: we operated 12 drilling rigs during the first quarter and we're currently operating four rigs through spring breakup. Well performance in all three complexes has on average exceeded expectations, driving the stronger production performance that we realized in March and April. We drilled one Montney pad this winter in the Laprise Conroy area in Northeast BC on the lands acquired in 2020 from Polar Star. The Laprise five-well pad tested at a combined final total productive capacity of a little over 45 million a day and just under 4,000 barrels per day of condensate, and that's after a three-day per well flow test.
Obviously, that was ahead of expectation. Average completed well cost for this initial quite remote pad were CAD 3.9 million per well, and we do expect further drill complete capital costs of approximately CAD 3.5 million per well or less with further drilling time optimization and stimulated well cost reduction via centralization of our frack water facilities. Deep Basin production reached a record in early April of this year at a little over 261,000 BOEs per day, driven in part by stronger-than-forecast performance on the acquired Jupiter Modern assets. That deal, as you recall, was done in Q4 of 2020. Some of the details are enclosed, and I won't read them. Of note, drilling costs on the Jupiter lands have averaged 43% less since we took the property over. Completion costs have averaged 50% less, and equipping costs are down 70%. A big win there.
In our environmental performance improvement business, the company's expanded the significant ongoing diesel displacement initiatives into the well stimulation EP business segment. We entered into a joint venture with Trican Well Service Limited to construct and utilize Canada's first low-emission gas-powered frack fleet, and we'll be using that prior to year-end in the Gundy complex. We continue to expand our water management initiatives, which reduce emissions. They save capital costs, and they significantly reduce fresh water usage. We now have 37 water facilities spread across the three core complexes, including eight produced water storage and recycling hubs. And some highlights are listed there, and they include a series of industry firsts in the overall water management business. And I think that's it for the formal comments, and we're more than willing to answer questions that you might have.
As a reminder to ask a question, you'll need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster, and your first question comes from the line of Patrick O'Rourke with ATB Capital Markets.
Good morning. Thanks for taking my call or my question. So I think one of the things that really stood out for me in the release was the very, very strong results at Conroy. I know you guys noted it as a flow test. Just wondering, are those wells currently tied in? And then in the deck, you talk about Conroy phase I and phase II. Phase II is more of a Gundy-style development. Just curious what would be entailed as of right now in phase I, which is more right in front of us than phase II, which is a little bit further out.
Sure. As far as that pad, initially, well, the pad tied in. There was only room for three of the first five wells to start with. I think they're all on now, and all that data is actually in the public domain. And so they've been very strong with very strong condensate rates, and they've been maintained. Conroy phase I is really optimizing on Polar Star and Chinook and reducing OpEx, delineation drilling to ascertain how inexpensively we can drill these pads in advance of a big ramp-up. And yes, you're right, Gundy-style facility. And right now, our timing for that is kind of it's coeval with LNG Canada startup because we're mindful not to grow basin supply. So when that extra pull of gas effect happens, we think prices are going to be very strong.
We're going to need the supply, and that's the right time to build Conroy, the big deep cut at Conroy.
Okay. Great. And then the other thing that really stood out to me in the release was the improvements that you guys have been able to make on the capital cost on the Jupiter acquired assets, to be able to drop them by, call it, 50% in a matter of months. What's the real driver there, and how durable is that? Are you guys building in any potential inflation going forward in the basin here?
It's all about our drilling and completion kind of engineering, well design, and execution. So those reductions on a per well basis will certainly be maintained. And in our five-year plan, we do build in 2.5% per annum inflation, and we actually always have. And so we think we've put in the appropriate contingency for potential cost increases over the next 12 months.
Is that turning out to be reflective of what you're seeing in the market when you're looking further out? I know there's been inflation in some of the input costs for the service companies like hot rolled steel and things of that nature. That's a pretty solid number to go with right now, that 2.5%.
Yeah. We think it's reasonable. I mean, those negotiations and repricing are kind of going on right now.
Okay. Perfect. Thank you.
Your next question comes from the line of Fai Lee with Odlum Brown.
Thank you. Hi, Mike. You mentioned the potential tactical share buybacks. I'm just wondering how you're thinking about that. Your shares look pretty cheap compared to how much cash flow you're generating. Your peers at the border seem to be turning out a lot lower free cash flow yields. Just wondering how you're thinking about share buybacks. And do you have a certain debt target that you want to reach before you initiate the share buybacks, or how are you thinking about that?
Sure. Well, the order that we listed them is probably the priority. And our priority this year is the modest sustainable dividend increases or increase. We did do one in the first quarter and the debt reduction. So I think you're on to it. Let us reduce that debt over the next two or three quarters, get it down to 0.5 times debt to cash flow or less, and then we can revisit some of the other priorities on the list.
Okay. And just to follow up, how do you see the acquisition market compared to the return you could get back from a share buyback, or how do you think about that at this point, given current market conditions for acquisitions?
Well, I mean, those are economic comparisons we would always make. What is the best use of capital? We do see the M&A market as still strong as far as the pipeline of opportunities. Costs have come up somewhat depending on what and where you're looking. So we monitor that and continue to make those economic comparisons across all the potential use of incremental capital that we have.
Okay. Great. Thank you.
Thanks. Bye.
You have no further questions at this time.
Thanks, everybody. We'll talk to you next quarter.
This concludes today's conference call. Thank you for participating, and you may now disconnect.