CIBC (TPZ Upgrade)EQUITY RESEARCH
October 5, 2021 Earnings Update
TOPAZ ENERGY CORPORATION
14% Dividend Bump Accompanies Multiple Liquids-focused Deals
Our Conclusion
We see the Weyburn transaction adding a high-quality, low-decline, oil-weighted asset into the Topaz portfolio, which should provide a stable cash flow wedge for multiple years into the future. We also see this asset offering environmentally friendly barrels from the largest anthropogenic CCUS project in the world, and being attached to a well-capitalized operator in Whitecap. Combined with the complementary royalty assets ($50MM), acquisition metrics compute to ~7.7x EBITDA on recent pricing, which offers nice accretion to our pre-deal trading metrics on strip at 11.2x 2022E EV/DACF. We maintain our Outperformer rating on the shares and increase our price target to C$21 from C$20 with the accretion to our cash flow estimates.