CIBC UpgradeEQUITY RESEARCH
September 23, 2021 Earnings Update
TOURMALINE OIL CORP.
Special Dividends Arrive In Conjunction With Free Cash Flow Allocation Strategy
Our Conclusion
We see Tourmaline’s free cash flow allocation strategy as being aligned with the recent commentary from the company, and also see the $0.75/share special dividend announcement as a sweetener for shareholders, likely arriving earlier than most had anticipated. The company is also increasing its base dividend to $0.72/share annually (up from $0.68/share) for Q4/21. These moves are consistent with the company’s stated focus of returning “the vast majority of free cash flow to shareholders on a go-forward basis,” and with gas prices at their strongest point in years, we expect more of the same for 2022. We expect the stock to continue to perform favorably relative to peers; we reiterate our Outperformer rating and increase our price target to $55.00 (from $47.50) due to the buoyancy in strip pricing since our last update and increased cash flow/share expectations.