Tourmaline Oil (TOU) AI Stock Analysis

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Tourmaline Oil

(TSX:TOU)

Rating:73Outperform

Price Target:―

Tourmaline Oil's stock is bolstered by robust financial health and positive corporate events, such as record production and increased dividends, showcasing strong operational and strategic positioning. However, technical indicators suggest caution due to a bearish trend, which slightly detracts from the overall score. Valuation is reasonable, adding to the stock's appeal as a solid investment option.

Positive Factors

Financial Performance

Tourmaline's deep resource base and extensive gas processing infrastructure provides a long-term advantage, preserving more than $350 million per year in cash flow.

Market Diversification

The company is well-suited to navigate lower natural gas prices given its extensive market diversification.

Shareholder Returns

Tourmaline targets returns of over 10% through a combination of growth and dividend yields, with plans to conduct share buybacks to maintain per share returns.

Negative Factors

Financial Results

Tourmaline announced weaker-than-expected CFPS results despite production coming in higher than expected.

Pricing Challenges

Tourmaline plans to defer some planned frac activity from Q2/25 into Q3/25 due to the weakness in Station 2 pricing.

Tourmaline Oil (TOU) vs. iShares MSCI Canada ETF (EWC)

Market Cap

C$23.97B

Dividend Yield4.92%

Average Volume (3M)1.76M

Price to Earnings (P/E)18.1

Beta (1Y)0.72

Revenue Growth-8.29%

EPS Growth-30.52%

CountryCA

Employees458

SectorEnergy

Sector Strength45

IndustryOil & Gas Exploration & Production

Share Statistics

EPS (TTM)0.56

Shares Outstanding386,829,830

10 Day Avg. Volume1,349,669

30 Day Avg. Volume1,756,161

Financial Highlights & Ratios

PEG Ratio-5.15

Price to Book (P/B)1.49

Price to Sales (P/S)0.00

P/FCF Ratio36.40

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$77.83

Price Target Upside25.59% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering6

Tourmaline Oil Business Overview & Revenue Model

Company DescriptionTourmaline Oil Corp. acquires, explores for, develops, and produces oil and natural gas properties in the Western Canadian Sedimentary Basin. It holds interests in properties located in the Alberta Deep Basin, Northeast British Columbia Montney, and the Peace River High Triassic oil complex. The company was incorporated in 2008 and is headquartered in Calgary, Canada.

How the Company Makes MoneyTourmaline Oil Corp. generates revenue primarily through the exploration, production, and sale of natural gas and crude oil. The company's key revenue streams include the extraction and sale of these resources to domestic and international markets. Tourmaline benefits from long-term contracts and spot market sales, which provide flexibility and pricing advantages. Additionally, the company invests in infrastructure such as gas processing facilities and pipelines, enhancing operational efficiency and reducing costs. Strategic acquisitions and partnerships also play a significant role in expanding its asset base and increasing production capacity, contributing to its overall earnings.

Tourmaline Oil Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q3-2024)

% Change Since: -1.42%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Positive

The earnings call reflected a strong financial performance and successful operational milestones, including increased production and strategic acquisitions. However, challenges were noted with low gas prices affecting production and the need for flexibility in future capital planning due to market volatility.

Q3-2024 Updates

Positive Updates

Strong Financial Performance

Q3 cash flow was $742 million or $2.09 per diluted share. Net earnings were $355 million or $1 per diluted share. Free cash flow for the quarter was $152.5 million.

Dividend and Special Dividend Announcement

Declared a special dividend of $0.50 per common share. Total dividends distributed this year amount to $3.25 per share, implying a 5% trailing yield.

Production Increase

Q3 '24 average production was a little over 557,000 BOEs a day, marking an 11% increase over Q3 '23. Fourth quarter production is anticipated between 600,000 and 620,000 BOEs per day.

Successful Transactions and Acquisitions

Closed the transaction with Topaz Energy Corp. and received $278 million of proceeds. Completed the acquisition of Crew Energy.

Deep Basin Well Productivity

Deep Basin well productivity in 2024 has been the best in the last 5 years, with a 20% increase in gas and 40% increase in condensate on IP-90s compared to the previous 4 years.

Environmental Initiatives

Opened new CNG fueling stations in Calgary and Grand Prairie as part of the joint venture with clean energy fuels, aiming for 7 stations operational by the end of 2025.

Negative Updates

Impact of Low Gas Prices

Q3 production was reduced by unplanned third-party outages and low gas price-related frac and production start-up deferrals.

Net Debt and Adjusted Target

Exit Q3 '24 net debt was $1.7 billion. Adjusted long-term net debt target to $1.5 billion due to business growth.

Volatile Commodity Price Environment

Board approved a flexible '25 EP capital budget range between $2.6 billion and $2.85 billion due to uncertainty in commodity prices.

Company Guidance

During the Tourmaline Q3 2024 earnings call, the company provided detailed guidance on its financial and operational performance. The third quarter saw cash flow of $742 million, translating to $2.09 per diluted share, and net earnings of $355 million or $1 per diluted share. A special dividend of $0.50 per share was declared, contributing to a total dividend distribution of $3.25 per share for the year. Tourmaline reported a Q3 average production of 557,000 BOEs per day, marking an 11% increase from Q3 2023, and set a Q4 production target of 600,000-620,000 BOEs per day. The company anticipates a 2025 average production range of 635,000-665,000 BOEs per day, with a midpoint of 650,000 BOEs per day. Capital expenditure for 2025 is projected between $2.6 billion and $2.85 billion, with plans to drill approximately 365 wells. Tourmaline's net debt stood at $1.7 billion by the end of Q3, with a revised long-term target of $1.5 billion. The company highlighted strong well productivity in the Deep Basin and plans to capitalize on potential improvements in natural gas prices, supported by its hedging strategy and market diversification efforts.

Tourmaline Oil Financial Statement Overview

Summary

Tourmaline Oil demonstrates a commendable financial performance with strengths in profitability and financial stability. The company has effectively managed its operating margins and maintained a solid balance sheet with low leverage. However, variability in revenue growth and free cash flow generation indicates areas for potential improvement.

Income Statement

Positive

Tourmaline Oil's income statement shows a strong gross profit margin and net profit margin, indicative of effective cost management and profitability. Despite a decline in revenue from 2022 to 2023, the company maintained stable EBIT and EBITDA margins, demonstrating operational efficiency. However, the revenue growth rate has been inconsistent, with significant fluctuations over recent years, posing potential risks to future profitability.

Balance Sheet

Positive

The company's balance sheet reflects a healthy financial position with a low debt-to-equity ratio, underscoring prudent financial leverage. A strong equity ratio indicates a robust balance sheet foundation. Return on equity remains solid, suggesting effective use of shareholder funds to generate profits. Overall, Tourmaline Oil exhibits a stable financial structure, with limited risk from high leverage.

Cash Flow

Positive

Cash flow analysis shows Tourmaline Oil has positive free cash flow, albeit with a declining growth rate, which may impact its ability to fund expansions or pay dividends. The operating cash flow to net income ratio is favorable, indicating efficient cash generation from operations. However, the free cash flow to net income ratio suggests room for improvement in converting earnings to free cash flow.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.65B	6.24B	8.68B	4.77B	2.14B
Gross Profit	3.52B	4.27B	6.33B	3.43B	892.18M
EBITDA	3.29B	3.52B	7.12B	3.41B	1.80B
Net Income	1.26B	1.74B	4.49B	2.03B	618.31M
Balance Sheet
Total Assets	22.31B	20.10B	18.89B	15.29B	12.79B
Cash, Cash Equivalents and Short-Term Investments	0.00	719.54M	-10.15M	-11.17M	220.17M
Total Debt	1.30B	1.13B	629.26M	880.74M	1.95B
Total Liabilities	6.77B	6.08B	5.21B	3.69B	3.51B
Stockholders Equity	15.54B	14.02B	13.69B	11.61B	8.81B
Cash Flow
Free Cash Flow	470.63M	1.67B	2.74B	864.19M	47.91M
Operating Cash Flow	2.73B	4.41B	4.69B	2.85B	1.13B
Investing Cash Flow	-1.64B	-2.60B	-1.97B	-1.38B	-1.16B
Financing Cash Flow	-1.09B	-1.80B	-2.72B	-1.69B	257.30M

Tourmaline Oil Technical Analysis

Technical Analysis Sentiment

Negative

Last Price61.97

Price Trends

50DMA

63.68

Negative

100DMA

63.34

Negative

200DMA

63.47

Negative

Market Momentum

MACD

-0.82

Positive

RSI

44.50

Neutral

STOCH

40.12

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TOU, the sentiment is Negative. The current price of 61.97 is below the 20-day moving average (MA) of 62.85, below the 50-day MA of 63.68, and below the 200-day MA of 63.47, indicating a bearish trend. The MACD of -0.82 indicates Positive momentum. The RSI at 44.50 is Neutral, neither overbought nor oversold. The STOCH value of 40.12 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:TOU.

Tourmaline Oil Peers Comparison

Overall Rating

UnderperformOutperform

Sector (52)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TOU	73 Outperform	C$23.97B	18.05	8.35%	4.92%	-8.29%	-30.52%
Sector *	52 Neutral	C$2.96B	-1.55	-3.48%	6.54%	3.13%	-49.39%
WCPRF	―	$9.74B	7.12	11.56%	6.62%	―	―
PRMRF	―	$2.25B	2.09	48.97%	6.19%	―	―
NUVSF	―	$2.06B	7.79	16.78%	―	―	―
AETUF	―	$11.50B	12.11	17.25%	0.13%	―	―
SCR	77 Outperform	C$7.29B	10.19	12.43%	3.12%	796.07%	-35.52%

* Energy Sector Average

Performance Comparison

TSE:TOU

Tourmaline Oil

61.97

5.25

9.26%

WCPRF

Whitecap Resources

7.89

0.87

12.39%

PRMRF

Paramount Resources

15.73

4.96

46.05%

NUVSF

NuVista Energy

10.41

0.80

8.32%

AETUF

ARC Resources

19.95

3.55

21.65%

TSE:SCR

Strathcona Resources

34.02

3.89

12.91%

Tourmaline Oil Corporate Events

DividendsBusiness Operations and StrategyFinancial Disclosures

Tourmaline Oil Reports Record Production and Dividend Increase

Positive

Mar 5, 2025

Tourmaline Oil Corp. announced record production levels and an increase in 2P reserves to 5.5 billion BOE for 2024. The company reported a substantial increase in cash flow and net earnings, with a forecasted free cash flow of $1.4 billion for 2025. Tourmaline also declared a 43% increase in its base dividend and a special dividend, highlighting its strong financial performance and commitment to enhancing shareholder value. The anticipated production for the first quarter of 2025 is set between 630,000-635,000 boepd, positioning the company for continued growth and stability in the market.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Apr 22, 2025