Tamarack Valley Energy Ltd T.TVE

Desjardins Commentary

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From Chris MacCullough and Stephen Swanson

Rating: Buy, Risk: Above-average, Target: C$1.75

TVE C$1.39, TSX

Finding more wood to chop with strategic entry into the Clearwater play by acquiring Woodcote Oil and Highwood Oil assets

The Desjardins Takeaway: Positive

Earlier this afternoon, Tamarack Valley announced a pair of strategic acquisitions to establish a significant foothold in the emerging Clearwater oil play. We view the acquisitions positively, as they provide another springboard to accelerate free cash flow generation. The transactions included a consolidated operating position in the Greater Nipisi area, along with interests in the Jarvie area, for a total net purchase price of C$74m after deducting proceeds from the sale of a 2% GORR to Topaz Energy. The deal will be partially funded through completion of a ~C$47m equity private placement at C$1.15/share, which is expected to close concurrently with the transactions on December 21, 2020.