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 May 03, 2024 9:32am

361 Views

Post# 36021343

RBC 2

Their upside scenario target is $100.00. GLTA

May 2, 2024

Tourmaline Oil Corp. Q1/24 - Delivering the Goods

Outperform

TSX: TOU; CAD 65.29

Price Target CAD 80.00

Our view: Q1/24 results were slightly ahead of Street expectations with 2024 guidance reiterated; the print was also punctuated by a 7% base dividend increase and $0.50/share special. Of note liquids volumes were above our estimate on continued NE BC Montney successes, and gas realizations were well above benchmark on the company's marketing portfolio. TOU delivered a solid quarter in our view, and the stock remains on RBC's Energy Best Ideas List.

Key points:

• Q1 Results - Solid. Q1/24 production of 592,077 boe/d (24% liquids) compared to RBCe at 591,214 (Street: 591,824 boe/d) and drove AFFO of $2.45 which compared to street estimates of $2.39/sh (RBC: $2.33/ sh). Liquids volumes came in ahead of our expectations. E&P capital investment of $556 million was below Street expectations at $623 million; $310 million ($0.87/share) in FCF was generated in the quarter. Margins were better than expected, largely on a higher liquids weighting than forecast as detailed within Exhibit 1.

Dividend +7%, $0.50/share special. The company increased its base dividend by 7% to $1.28/sh (annualized, from $1.20/sh) and announced a $0.50/sh special dividend to shareholders of record on May 9, 2024. $310 million ($0.87/share) in FCF was generated in the quarter, exceeding dividends paid.
Duvernay Sale Process - Closed. TOU completed the sale of its Duvernay assets for $53.1mm (1.6-1.8 mboe/d). The company also added 35.6 net sections of Deep Basin acreage in the quarter (49.1 tier 1 drilling locations).
Guidance - Reiterated. 2024 guidance was reiterated at 580-590 mboe/d on $2bn of EP capital, resulting in +5% YoY growth and $1.4 billion in FCF. Q2 production guidance aimed toward 560-670 mboe/d including the impacts of planned maintenance and 7 mboe/d of planned gas injections. The 5-year plan was also reiterated with the company positioned to reach 715,000 boe/d by 2028.
Adjusting estimates. Our 2024/25 production estimates remain largely unchanged, while our CFPS estimates increase +3%/+2% in 2024/25, largely related to higher realizations and increased liquids mix margin assumptions. Our updated estimates call for $1.2bn in FCF this year, with special dividends of $0.50/share declared in each of the 4 quarters.
Operations in Good Shape - NE BC Montney a Highlight. Recent operational highlights include: (1) The company expects to drill ~271 net wells in 2024 with 59 wells drilled in Q1; (2) During Q1, TOU operated between 13-15 rigs while heading into breakup where 6 rigs are in operation; (3) TOU drilled an 8 well pad in North Montney in 44.5 days (12 days ahead of schedule) with the total pad cost of $13.4mm; (4) Entering Q2, TOU has an inventory of 27 DUCs.