Raymond James Tourmaline Oil Corp. was lower following the release of mixed fourth-quarter results after the bell on Wednesday.
The Calgary-based company reported better-than-anticipated funds from operations of $4.08 per share, topping the Street’s forecast of $3.90. However, production of 511,590 barrels of oil equivalent per day fell short of estimates (516,400 boe/d).
“TOU has become the go-to name for gas exposure,” said Raymond James analyst Jeremy mcCrea. “Its size also provides a number of advantages including a better cost of capital, preferential drilling/completion contracts, and the opportunity to be a logical provider of LNG gas supply. Combined with a geologic foothold in top basins through western Canada, there are very few companies that are as profitable as Tourmaline. This low-cost structure and its diversified marketing portfolio continues to allow TOU to pay attractive special dividends each quarter, while at the same time, keep leverage low, and modestly grow production. Although the share price has come under pressure lately due to lower natural gas prices, we are noticing that some investors are taking this as an opportunity to pick up the stock in anticipation that it may possibly rebound by next winter. By then, we may also have more clarity on additional LNG projects and possibly better natural gas prices. Overall, with a good beat on 4Q FFO (given higher realized pricing), unchanged guidance, and one of the best reserve reports we’ve seen this year, we maintain our Strong Buy rating.”