Shares of Tourmaline Oil Corp. were down on Thursday after reporting it earned $700.2-million in the last quarter of 2023, up from a loss of $30.4-million a year earlier, and a further increase to its quarterly dividend
The Calgary-based company says revenues were $1.7-billion, down from $2.2-billion in the fourth quarter of 2022.
Diluted earnings per share were $2.00, up from a loss of nine cents per share a year earlier.
Tourmaline says its average production in the fourth quarter was 556,957 barrels of oil equivalent per day, up nine per cent from the fourth quarter of 2022.
Due to continuing weak natural gas prices, the company says it has decided to reduce its forecast 2024 capital expenditures to $2.13-billion, down from $2.35-billion.
It says the budget reductions include a reduction in its rig count and a deferral of select exploration drilling and facility projects.
Tourmaline also increased its quarterly base dividend by 7 per cent to 30 cents a share. It’s company’s 13th raise since the first quarter of 2018 and represents 20-per-cent year-over-year growth and a 25-per-cent compound annual growth rate since inception.
“TOU delivered solid Q4/23 results, with Adjusted Funds Flow (AFF) ahead of expectations on lower cash costs and Free Cash Flow (FCF) in line with consensus,” said Scotia analyst. “The company put up solid PDP reserves metrics, with 20-per-cent growth (we estimate 6-per-cent organic) and a 2.2 times corporate recycle ratio. TOU’s Q1/24 special dividend of $0.50/share met our expectations, while the 7-pre-cent base dividend increase to $0.30 per share/quarter was bigger (and sooner) than we expected. The company held to its plan to maximize FCF and reduced its 2024 all-in capital budget by 9 per cent, with a 2.5-per-cent decrease to production guidance. As a result, we estimate FCF will increase by more than 10 per cent versus the original budget on both our price deck and current strip. Importantly, TOU expects liquids production to decrease slightly under its updated guidance, while natural gas production will decrease 100 mmcf/d (all priced at AECO). Overall, we see TOU’s release as a positive for the stock, with capex and gas production down slightly and FCF and the base dividend up. We believe these moves demonstrate the company’s commitment to generate value for shareholders. We continue to see TOU as best in class in the North American natural gas space.”