Tudor, Pickering, Holt on Thursday reiterated its buy rating on the shares of Tourmaline Oil (TOU.TO) with a C$77.00 price target following third-quarter results from the Western Canadian natural-gas producer.
"Mostly positive update on the higher cash flow and lower capex driving a FCF beat, with guidance updates to 2025 and the 5-yr plan posing no surprises, but with a bit of a drag due to the lower production / slightly higher capex outlook for Q4'24. Q3'24 cash flow per share of C$2.09 was ahead of TPHe/Street C$1.99/C$2.04, with the delta to our model driven by higher realizations and higher production (557mboepd vs TPHe/Street 555mboepd; 24% liquids weighting in-line with TPHe). On capital, C$591MM (ex-A&D) beat TPHe/Street C$621MM and contributed to the beat on FCF for the quarter of C$152MM vs TPHe/Street C$85MM/C$94MM. Outside Q3, the company is guiding to lower production of 610mboepd at the midpoint in Q4'24 (TPHe/Street 645mboepd/635mboepd) while stepping up FY'24 E&P capital by C$50MM to C$2.1B and opex by C$0.05/bbl to C$4.85/bbl for the FY. At first blush, the numbers for Q4 may appear negative but given the drivers owe to a turnaround and the shift in frac activity later into the year, we view the updated guidance as prudent given the weak AECO environment. Updated guidance for FY'25 plays as straightforward with the split to infrastructure and E&P capital the main difference in what we have modeled (but is in-line overall), with the moving pieces of interest on the call along with more detail regarding the Todd Energy transaction (~C$300MM via TOU shares and cash, to close in early December)," analyst Jeoffrey Lambujon noted.
(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)
Price: 62.80, Change: -2.32, Percent Change: -3.56
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