Tourmaline Oil Corp (Alberta) T.TOU

Ink Research

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Morning Report: Tourmaline Oil reaches for the top

Overview: Sentiment and Stocks

On Sunday, Fareed Zakaria on CNN interviewed Conservation International CEO M. Sanjayan who proposed that the way to get climate change laggards to up their game was to instill a reach-for-the-top attitude as the world seeks to reduce carbon emissions. The idea is to make it in everyone's interest to want to be seen as succeeding in achieving significant reductions in greenhouse gases. We have a sense that is exactly what is unfolding as active investors begin to reward companies that achieve ambitious emission reduction targets.

Nowhere will this reach-for-the-top mindset be more important than in the oil patch which is continually in the climate change spotlight. Natural-gas-focused Tourmaline Oil (TOU) looks set to benefit from this new mindset. Tourmaline produces 405,000 to 410,000 barrels of oil equivalent per day (about 79% natural gas), making it Canada's biggest natural gas producer. However, that is not the only area where Tourmaline comes near, or at, the top. Based on its 2019 sustainability report, it is setting the pace in the race to reduce carbon emissions. It has already achieved a 46% reduction in emissions intensity since 2013. Importantly, Tourmaline has meaningful benchmark objectives including a 25% reduction in ultra-harmful methane emissions by 2023, using a 2018 base. Tourmaline also incorporates risk assessments into its sustainability report. It adds up to an A+ grade based on INK's ESG Climate framework. Meanwhile, both insider commitment and valuations are in the top decile.