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 Aug 01, 2024 10:54am

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Post# 36158239

More RBC

Their upside scenario target is $100.00. GLTA

August 1, 2024

Tourmaline Oil Corp. Q2/24 Results - The Beat Goes On

Outperform

TSX: TOU; CAD 60.75

Price Target CAD 80.00

Scenario Analysis*

Our view: TOU delivered solid Q2 results (featuring +3% base dividend and $0.50/share special), underscoring the strength of the diversified gas pricing model. 2024 volume guidance was trimmed slightly as select gas activity was deferred into 2025. Operationally, NE BC Montney remains a focus with condensate hub and Aitken compressor station being built out and positioned to add 10-15 mboe/d in 2025. TOU remains on RBC's Energy Best Ideas List.

Key points:

• Q2/24 Results - In line. Q2/24 production of 561,787 boe/d (25% liquids)
compared to RBCe at 564,065 (Street: 564,625 boe/d) and drove AFFO
of $2.12 which compared to street estimates of $2.09/sh (RBC: $2.18/
sh). The mix was slightly gassier vs our expectations; an additional ~4,800
boe/d of natural gas was also produced and injected into storage. E&P
capital investment of $307 million was below Street expectations at $366
million; $434 million ($1.22/share) in FCF was generated in the quarter.
Natural gas realizations of ~$3/mcf were well above benchmark ($1.20/mcf) on the company's marketing initiatives. See Exhibit 1 for margins and variances.

$0.50/share special declared; +3% base dividend. The company increased its base dividend by 3% to $1.32/sh (annualized, from $1.28/ sh) and announced a $0.50/sh special dividend to shareholders of record on August 21, 2024. $434 million ($1.22/share) in FCF was generated in the quarter, exceeding dividends paid. Our updated estimates call for ~ $1bn in FCF this year, with special dividends of $0.50/share declared in each of the 4 quarters.
Guidance - Trimmed on gas prices. 2024 volume guidance was trimmed to 575-585 mboe/d (previously 580-590 mboe/d) reflective of low gas prices with $2bn (unchanged) of EP capital. Q3 production guidance is now 550-560 mboe/d including the impacts of planned maintenance and frac deferrals. The 5-year plan was reiterated with the company positioned to reach 620,000 in 2025 and 715,000 boe/d by 2028 (both figures unchanged). The company expects to add an additional (15th) rig into Q4 to capitalize on better prices and faster drilling times.
Operations - NE BC Montney remains a Highlight. Recent operational highlights include: (1) TOU drilled 47 wells and completed 38 during the quarter ; (2) In NE BC at Conroy, the liquids/condensate hub and Aitken compression site remain expected to be completed in 2024; (3) TOU continues to hedge volumes and now holds only about 9% exposure to AECO and Station 2 in H2/24. Please see key operational highlights within Exhibit 1 of this report, and for more details on the Montney please see our recent reports here, here and here.
Adjusting estimates. Our 2024/25 production change slightly reflective of 2024 deferrals; our CFPS estimates decrease -1%/-3% in 2024/25. Year end net debt maps to $1.5bn based on our updated figures, which compares to the company target of $1.2-1.4 billion.
Conference call. August 1, 2024 9:00AM MT (11AM ET). 1-888-664-6383.