CIBCHave a $5.50 target. GLTA
EQUITY RESEARCH
June 29, 2023 Flash Research
TAMARACK VALLEY ENERGY LTD.
Wildfire Impacts As Expected For Q2/23 And Sustainability
Report Released
Our Conclusion
Tamarack released an operational update indicating that it expects a ~1,500
Boe/d impact to Q2/23 production volumes related to wildfire-related outages
and unplanned third-party downtime. We believe the impacts of these
outages are already reflected in Street estimates, which have moved lower
by ~1,900 Boe/d since May. We therefore do not take this update as overly
negative for the stock. Tamarack trades at 3.7x 2023E EV/DACF on strip
versus the oil-weighted SMID-cap peer group at 3.5x.
Key Points
Wildfire-related downtime to impact production in Q2/23 but already
reflected in consensus estimates. Tamarack indicated that it expects a
1,500 Boe/d impact to Q2/23 volumes as a result of wildfire-related outages
and unplanned third-party infrastructure downtime. We expect production of
67.7 MBoe/d, which is slightly below the Street at 68.1 MBoe/d. Consensus
estimates for Tamarack have moved lower since May from 70 MBoe/d (down
1,900 Boe/d) therefore we expect that the impact of these outages is largely
reflected in Street estimates.
Wembley gas plant commissioned ahead of schedule. The 15 MMcf/d
facility commenced operations in mid-June and will support development in
the company’s Charlie Lake asset.
Sustainability report indicates an increase in emissions intensity
through 2022. Tamarack released its 2023 sustainability report, which
demonstrated an increase in emissions intensity over the prior year (up to
30.3 kg CO2e/boe from 28.2 kg CO2e/boe in 2021) due to acquisitions and
development in the Clearwater area. Tamarack’s methane emissions
intensity declined year-over-year, however flared gas emissions increased,
largely due to the Clearwater region continuing to expand its gas capturing
infrastructure