Tamarack Valley Energy Ltd T.TVE

Ink Research

[retiredcf]

Morning Report: Top-ranked oil firm aims for production growth, emissions decline 

December 24, 2021

Yesterday, we featured Andean Precious Metals (APM) which took the top spot in our December Top 20 Mining & Crypto Stock Report: Beating the machines in 2022. Today, we feature the top-ranked stock in our Top Energy Stock Report: Restive season. Alberta-based Tamarack Valley Energy (TVE) is a light, medium, and heavy oil producer which produced 41,256 barrels of oil equivalent (boe/d) in Q3 with 71% weighted to oil and natural gas liquids. Just under half, 19,405 barrels/d, was light oil. Cash flow has been on the rise. According to Refinitiv and INK data, trailing 12-months cash flow per share came in at $1.27 in Q3 compared to a loss a year ago.

On December 15th, the company announced a deal to boost its heavy oil production at the Clearwater play through the acquisition of privately-held Crestwynd which has a forecast production for 2022 of 4,500 boe/d. TVE hopes to close the deal in Q1 2022 subject to customary approvals. On the same day, the company also announced that it had transitioned its existing $600 million revolving bank facility to a sustainability-linked lending facility. TVE's cost of borrowing will fall by up to 5 basis points if sustainability performance targets are achieved. On the flip side, borrowing costs rise if targets are missed. There are three key sustainability targets: Indigenous Work Force Participation, Decommissioning Management (related to well abandonment), and GHG Emissions Intensity. On the latter front, TVE has a target that includes a 40% reduction in Scope 1 and 2 emissions by 2025 using a 2020 baseline. The move earns the company an A grade in our ESG climate framework. Meanwhile, insiders have been accumulating stock which has helped the company shoot up our INK Edge rankings.