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 Nov 08, 2024 8:42am

234 Views

Post# 36302773

RBC 2

Their upside scenario target is $100.00. GLTA

November 7, 2024

Outperform

TSX: TOU; CAD 65.12

Price Target CAD 78.00

Tourmaline Oil Corp.
Q3/24 - Positioning for a Gas Upswing

Our view: TOU delivered solid Q3/24 results (+$0.50/share special), underscoring the strength of the diversified gas pricing model amid a quarter of very low gas pricing. 2024 volume guidance was trimmed slightly as select gas activity was deferred while the company unveiled its updated five-year plan now pointing to volumes towards 750 mboe/d by 2029. 2025 guidance sits right in line with RBC/street expectations. TOU remains one of our top picks and continues to be featured on the RBC Global Energy Best Ideas List.

Key points:

• Q3/24 results - in line. TOU reported Q3/24 production of 557,365 boe/ d (24% liquids) (RBC: 554,334 boe/d; Street: 561,787 boe/d) driving AFFO (f.d) of $2.09 which compared to RBC estimates of $2.06/sh (Street: $2.04/sh). The mix was slightly gassier vs our/street expectations which was picked up by better margins. Production was also affected by ~5,200 boe/d due to injected storage volumes (2.5 mboe/d), third party outages, drilling and select frac deferrals.

Special dividend - $0.50/sh. E&P capital investment of $575 million was in line with street expectations (Street: $568 million); $152 million ($0.43/share) in FCF was generated in the quarter. Natural gas realizations of ~$3/mcf were well above benchmark ($0.70/mcf) on the company's marketing initiatives. The company declared a special dividend of $0.50/sh to shareholders on record on November 15, 2024 while also maintaining its base dividend of $1.32/sh. Subsequent to the quarter, TOU also noted that it will acquire Todd Energy Canada for roughly $300 million (closing in December).
2024 outlook - trimmed on gas prices. 2024 volume guidance was trimmed to 580 mboe/d at the midpoint (previously 587.5 mboe/d) reflective of low gas prices with EP capital shifted to $2.1bn (from $2.05bn). Q4 production guidance is now 610 mboe/d (midpoint) including a scheduled turnaround for both phases of its Gundy plant (c-60-A) in October and deferred frac activity to the latter half of the quarter.
2025 guidance - in line. TOU unveiled its 2025 guidance comprised of 635-665 mboe/d (25% liquids) driven by $2.6-2.85bn E&P capital ($2.85-$3.1bn inclusive of capitalized G&A, EPI and A&D). The company noted that the broad range allows for E&P activity deferrals and/or shut- ins in the event of a higher/lower pricing environment. The company anticipates drilling 365 net wells in 2025 across its three core areas (and noted that DUC inventory may increase in H1/25).
Updates to estimates. We update our estimates to reflect adjusted 2024 guidance, the unveiled 2025 budget and updated 5 year plan. Our 2024 production estimate is trimmed to 580 mboe/ d (from 587.5 mboe/d), while our 25/26 estimates point towards ~655/689 mboe/ d. Our 24/25/26 CFPS estimates decrease by 3%/6%/4% due to lower realizations and adjusted margins.