Tourmaline Oil Corp (Alberta) T.TOU

Alternate Symbol(s): TRMLF

Energy Oil & Gas E&P

Tourmaline Oil Corp. is a natural gas producer, which is focused on producing natural gas in North America. The Company is focused on long-term growth through an aggressive exploration, development, production and acquisition program in the Western Canadian Sedimentary Basin. It operates in three basins, which include the Alberta Deep Basin, NEBC Montney Gas/Condensate and Peace River Triassic Oil. It has ownership interests in 22 natural gas plants in the Alberta Deep Basin. It owns and operates seven natural gas processing facilities with an aggregate capacity of approximately 1.0 Bcf/d with related gas gathering systems and NGL handling infrastructure in the NEBC complex. The Company owns and operates two oil batteries in the Peace River Triassic Oil basin. The Company’s operations are focused on northeast British Columbia and include a large contiguous land base with a Montney resource. Its Montney area assets include Septimus / West Septimus, Groundbirch, Monias and Tower.

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Tourmaline Oil Corp (Alberta)

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Post by retiredcfon Jan 18, 2022 8:16am

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Post# 34327523

TD

Tourmaline Oil Corp.

(TOU-T) C$46.05

More Cash Dividends (Regular & Special); Much More to Come... Event

Bumps Base Dividend, Declares Second Special Dividend, and Provides Operations Update

Impact: POSITIVE

Base Dividend Increased: Tourmaline announced that it has increased its base quarterly dividend to $0.20/share (from $0.18), which equates to an annualized yield of 1.7%. This base dividend level consumes ~7% of 2022E FCF. Additionally, Tourmaline declared its second special dividend at $1.25/share or 2.7% of yesterday's closing price (payable to shareholders of record on January 25). This follows the Q3/21 special dividend of $0.75/share.

Our View

We had anticipated (here), but not formally forecast, a second special dividend in Q1/22. Based on investor feedback, we believe the market was expecting a special dividend of ~$1.00/share. Therefore, this is likely higher than what most expected.
Tourmaline's latest presentation includes an FCF outlook for 2022+, which we can use to extrapolate the amount of cash flow the company could return. Specifically, net of the current dividend and the announced special dividend, shareholders could expect an incremental $2.25/share dividends/buybacks (~5% of current share price) in 2022E for Tourmaline to meet its commitment to return the majority of FCF to equity holders. This is based on TOU's price deck of US$68/bbl WTI and US$3.61/mcf HH, which is below both TD and futures pricing.
In aggregate, investors purchasing shares today could anticipate >9% of the current share price returned via cash dividends through 2022E (assuming no NCIB participation). This is incremental to our forecast of 8% y/y production growth per share.

Q4/21 Affected by Weather, but within Guidance; 2022 Outlook Unchanged:

Q4/21 production was indicated to be ~485 mBOE/d, which is at the lower end of guidance, partly due to extremely cold weather (impact: ~6 mBOE/d). Q1/22 production is guided to be 500-510 mBOE/d. FY-2022 guidance is unchanged.

TD Investment Conclusion

Tourmaline offers top-tier assets, best-in-class management, profitable production growth, scale to execute diverse market egress strategies, significant cash returns to shareholders, and negligible debt.