Post by
retiredcf on Nov 26, 2024 9:00am
CIBC
Have a $75.00 target. GLTA
EQUITY RESEARCH
November 25, 2024 Earnings Update
TOURMALINE OIL CORP.
Sale Of Topaz Shares Provides Additional Financial Flexibility
Our Conclusion
The sale of TPZ shares provides additional financial flexibility for Tourmaline.
Proceeds will be partially used to fund infrastructure developments in the
company’s NEBC Montney properties over the coming five years. We have
fine-tuned our model on the back of this update, which drives minor changes
to our estimates. We continue to see Tourmaline as the go-to natural gas
name for investors, with the majority of free cash flow being returned to
shareholders through the company’s growing base dividend and special
dividends. On our revised estimates for 2025E, TOU trades at an EV/DACF
of 6.1x versus gas-weighted peers at 4.2x.
Key Points
Proceeds from disposition to pre-fund infrastructure buildout in NEBC.
Tourmaline is selling 8.7MM shares of TPZ for gross proceeds of $242MM.
Following the sale, TOU will own ~36.4MM of TPZ shares or 23.8% of TPZ’s
shares outstanding. Management indicated net proceeds will in part be used
to fund Tourmaline’s NEBC infrastructure buildout, which is expected to add
over 150 MBoe/d of production over the next five years.