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Topaz Energy Corp (TSE:TPZ)
TSX:TPZ
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Topaz Energy Corp (TPZ) AI Stock Analysis

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TSE:TPZ

Topaz Energy Corp

(TSX:TPZ)

Rating:70Outperform
Price Target:
C$29.00
â–²(12.23%Upside)
Topaz Energy Corp's overall stock score is primarily driven by strong earnings call performance and positive corporate events, indicating strategic growth and solid shareholder confidence. Financial performance and technical analysis show areas for caution, particularly with revenue challenges and overbought technical indicators, while valuation suggests the stock is currently overpriced.
Positive Factors
Asset Portfolio Quality
TPZ is appreciated for its high-quality asset portfolio which offers exposure to partner growth programs and defensive infrastructure revenue in a volatile market.
Dividend Increase
Investors should have increased confidence with another dividend bump, production guidance unchanged and a record 19% market-share of WCSB rig activity.
Value Creation
For every dollar spent, management created an additional $0.26 in value, showing strong potential for value creation.
Negative Factors
Inflationary Environment
Topaz stands out as a uniquely positioned company, especially amid uncertainties in the current inflationary environment.
Macroeconomic Uncertainty
Topaz continues to be a well-positioned, defensive name amid uncertainties in the current macro environment.

Topaz Energy Corp (TPZ) vs. iShares MSCI Canada ETF (EWC)

Topaz Energy Corp Business Overview & Revenue Model

Company DescriptionTopaz Energy Corp (TPZ) is a Canadian-based oil and gas royalty and energy infrastructure company. The company primarily operates in the natural resources sector, focusing on acquiring and managing oil and gas royalty interests and infrastructure assets. Topaz Energy's core services include the development and management of energy infrastructure, as well as securing revenue streams from oil and gas production without being directly involved in exploration and production activities.
How the Company Makes MoneyTopaz Energy Corp generates revenue through a combination of royalty income and energy infrastructure services. The company's royalty income is derived from its ownership of royalty interests in various oil and gas properties, which entitles Topaz Energy to a percentage of the revenue from oil and gas production on those properties. This model allows the company to benefit from production without incurring the costs and risks associated with exploration and extraction. Additionally, Topaz Energy earns money from its energy infrastructure assets by providing services such as processing, transportation, and storage to other energy companies. These revenue streams are often supported by long-term contracts and partnerships with exploration and production companies, which contribute to the stability and predictability of Topaz Energy's earnings.

Topaz Energy Corp Earnings Call Summary

Earnings Call Date:May 05, 2025
(Q1-2025)
|
% Change Since: 12.84%|
Next Earnings Date:Jul 28, 2025
Earnings Call Sentiment Positive
The earnings call reflected a positive sentiment overall, with strong growth in royalty production, record-setting drilling activity, and a strategic dividend increase. Despite some fluctuations in heavy oil volumes and a backlog of uncompleted wells, the company demonstrated robust financial performance and a sustainable dividend strategy.
Q1-2025 Updates
Positive Updates
Record Royalty Production and Drilling Activity
Topaz achieved new records in royalty production with 22,400 BOE per day, a 10% increase from the prior quarter and 17% higher than the prior year. The company also set a new quarterly record by spudding 218 gross wells, representing 19% of Western Canadian Sedimentary Basin drilling activity, up from 12% last year.
Dividend Increase and Strong Cash Flow
The Board approved a 3% quarterly dividend increase to $0.34 per share. Topaz generated $92.2 million in total revenue, with cash flow of $81.7 million and free cash flow of $80.8 million. The free cash flow margin increased from 85% to 88%.
Processing Revenue Record
First quarter processing revenue and other income achieved a new company record of $23.5 million, which was 7% higher than the prior quarter.
Sustainable Dividend Strategy
Topaz's dividend strategy remains sustainable down to $0 AECO and $55 WTI U.S., supported by fixed revenue from infrastructure and hedging contracts.
Negative Updates
Heavy Oil Volume Fluctuations
Heavy oil volumes saw some fluctuations, with a noted decrease compared to Q4 due to compliance revenue adjustments, although core operators Tamarack and Headwater continued to grow.
Uncompleted Wells Inventory
A backlog of uncompleted wells remains, with 72% of new wells drilled during the quarter still pending completion, impacting immediate production volume growth.
Company Guidance
During Topaz Energy Corp's First Quarter 2025 Results Conference Call, several key metrics and guidance figures were discussed. The company reported first-quarter royalty production of 22,400 BOE per day, a 10% increase from the previous quarter and 17% higher than the prior year. Royalty revenue was $68.7 million, constituting 75% of total revenue, and achieved a 99% operating margin. Processing revenue and other income reached a record $23.5 million, up 7% from the previous quarter. Topaz increased its quarterly dividend by 3% to $0.34 per share, marking a 70% growth since inception. The company generated $92.2 million in total revenue, with cash flow and free cash flow at $81.7 million and $80.8 million, respectively, resulting in an 88% free cash flow margin. The Board reconfirmed 2025 guidance, projecting 21,000 to 23,000 BOE per day of average well production, processing revenue, and other income between $88 million to $92 million, and a year-end net debt to EBITDA of 1.2x. The dividend yield is anticipated to be 5.9% based on current share prices, and the payout ratio is expected to be 66%.

Topaz Energy Corp Financial Statement Overview

Summary
Topaz Energy Corp exhibits strengths in maintaining a consistent EBITDA margin and strong equity position. However, challenges such as declining revenue, increased leverage, and negative free cash flow highlight areas for improvement. The company needs to focus on revenue growth and managing its capital structure to ensure long-term financial health.
Income Statement
72
Positive
Topaz Energy Corp shows a stable gross profit margin and a positive EBITDA margin. However, the net profit margin is relatively low, and there is a decrease in total revenue from the previous year, indicating a challenge in revenue growth. The company's ability to maintain profitability through EBITDA is a positive sign, but the declining trend in EBIT and net income growth rate requires attention.
Balance Sheet
68
Positive
The company's debt-to-equity ratio has increased, suggesting a rise in leverage which might pose a risk if not managed properly. The equity ratio remains strong, indicating a solid financial position. Return on equity shows potential, but the increasing debt levels and reduced cash reserves could impact financial flexibility.
Cash Flow
65
Positive
Operating cash flow remains robust, though the free cash flow has turned negative due to significant capital expenditures. The company has a healthy operating cash flow to net income ratio, but the free cash flow decline indicates a need for careful management of capital expenditures to maintain liquidity.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue299.80M306.69M356.74M198.61M89.64M
Gross Profit103.36M89.30M147.28M43.19M4.15M
EBITDA293.16M315.42M351.57M193.10M88.22M
Net Income46.39M47.64M99.36M27.56M3.09M
Balance Sheet
Total Assets1.89B1.65B1.84B1.61B1.01B
Cash, Cash Equivalents and Short-Term Investments10.75M3.46M6.24M801.00K220.19M
Total Debt540.40M391.64M464.58M276.86M0.00
Total Liabilities578.33M403.37M473.44M286.83M2.82M
Stockholders Equity1.32B1.24B1.36B1.32B1.01B
Cash Flow
Free Cash Flow-161.63M246.03M-36.81M-757.08M82.39M
Operating Cash Flow276.27M300.58M317.88M165.02M83.64M
Investing Cash Flow-439.99M-51.96M-354.10M-921.40M-172.63M
Financing Cash Flow160.41M-245.16M36.22M536.20M301.04M

Topaz Energy Corp Technical Analysis

Technical Analysis Sentiment
Positive
Last Price25.84
Price Trends
50DMA
25.45
Positive
100DMA
24.34
Positive
200DMA
25.17
Positive
Market Momentum
MACD
0.05
Positive
RSI
57.13
Neutral
STOCH
57.14
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TPZ, the sentiment is Positive. The current price of 25.84 is above the 20-day moving average (MA) of 25.53, above the 50-day MA of 25.45, and above the 200-day MA of 25.17, indicating a bullish trend. The MACD of 0.05 indicates Positive momentum. The RSI at 57.13 is Neutral, neither overbought nor oversold. The STOCH value of 57.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:TPZ.

Topaz Energy Corp Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
C$9.77B17.9919.55%4.83%8.00%52.89%
72
Outperform
C$4.04B24.8517.23%6.79%-5.85%-8.05%
70
Outperform
C$3.97B71.994.22%5.19%2.02%12.06%
70
Outperform
C$3.90B12.6911.17%6.82%2.80%-7.94%
69
Neutral
$2.22B13.5215.22%7.98%-1.62%12.60%
67
Neutral
$15.27B9.946.24%5.21%4.47%-70.67%
65
Neutral
C$5.67B25.778.08%4.26%1.73%3.68%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:TPZ
Topaz Energy Corp
25.62
2.29
9.82%
TSE:PSK
PrairieSky Royalty
23.94
-2.62
-9.87%
TSE:FRU
Freehold Royalties
13.45
0.41
3.17%
TSE:GEI
Gibson Energy
24.73
3.54
16.68%
TSE:KEY
Keyera Corp.
43.06
6.32
17.20%
TSE:PEY
Peyto Exploration & Dev
19.35
5.91
43.97%

Topaz Energy Corp Corporate Events

Executive/Board ChangesShareholder Meetings
Topaz Energy Corp. Secures Shareholder Approval for Key Resolutions
Positive
May 7, 2025

Topaz Energy Corp. announced that all resolutions were approved at its annual shareholders’ meeting, including the appointment of eight directors and KPMG LLP as auditors. The company’s approach to executive compensation also received strong support. This outcome reflects shareholder confidence in Topaz’s strategic direction and governance, potentially strengthening its market position and stakeholder relations.

DividendsBusiness Operations and StrategyFinancial Disclosures
Topaz Energy Corp. Reports Record Q1 2025 Results and Increases Dividend
Positive
May 5, 2025

Topaz Energy Corp. reported a strong first quarter in 2025, with record royalty production and a notable increase in cash flow and free cash flow, both up by 13% per share compared to the previous year. The company achieved record processing revenue and announced a dividend increase, reflecting its strategy to align dividend growth with sustainable revenue increases. Topaz also extended its credit facility maturity date, maintaining a robust credit capacity, and continued to advance the construction of a new natural gas processing facility. These developments highlight Topaz’s strategic focus on enhancing shareholder value and expanding its operational capabilities.

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: Jun 14, 2025