TD Acquisition adds FCF boost and slight deleveraging. We now expect Q4/20EQ4/21E production growth of 18%, with capex equating to only 66% of cash flow (futures pricing), This translates into an enhanced FCF yield of 12% (from 9%), while our 2021E D/CF improves to 1.2x (from 1.3x).
TD Investment Conclusion We view the acquisition positively, given the underlying asset economics, and believe that the potential inventory enhances Tamarack Valley's ability to drive FCF growth. Our target price increases to $2.00 (from $1.40); we remain BUY-rated.