Tourmaline Oil will pay another special dividend, 2023 guidance weights on stock
Tourmaline Oil (TOU.TOAs colder weather in November and Dec means “significantly higher cash flows” in the last quarter of 2022 than was previously predicted, ) is once again spreading the wealth to shareholders. Shares fell on Friday as investors focused more on 2023’s weaker guidance.
Canada’s largest oil producer has confirmed that it will pay a $2 special dividend to shareholders with record dates of Jan. 24, which will be payable on February 1. The company also confirmed special payments will be made in the following three quarters.
Raymond James analyst Jeremy McCrea, Calgary-based, wrote that Tourmaline had become the preferred name for natural gas exposure in a note to clients Friday. “But, institutional investors are concerned about the weakness in natural gas prices.”
Tourmaline raised its quarterly dividend to $0.25, from $0.225 per shares in the last quarter of 2013. This is in addition to a steady stream of increases or special payments.
Toronto-listed Tourmaline shares dropped 2.3% to $65.59 at 11:28 AM. ET on Friday. Over the past twelve months, the stock has risen nearly 50 percent.
However, temperatures that were frigid in December last year have been replaced by a warmer start to 2023 in North America. This will bring natural gas prices down from the highs of last fall. Tourmaline announced Thursday that it expects $4.5 Billion in cash flow for this year, a decrease from its November forecast which was $5.4 billion.
Tourmaline also reported that Q4 average production was approximately 512,000 barrels per day (boepd), which is below analyst estimates. The company lowered its 2023 production guidance by three percent on Thursday and allocated more money for disruptions.
Tourmaline claims its net debt for 2023 will be lower than its long-term goal of $1 billion to 2 billion. This puts the company in a strong position to funnel excess cash flow to shareholders.
McCrea wrote that Tourmaline could still provide high-quality items for shareholders with its low-cost structure, diversified marketing portfolio and modestly growing production.
Tourmaline’s Thursday update also increased its 2023 capital expenditure guidance by approximately 11 percent to $1.78billion. Tourmaline also pointed out that 2022 capital spending saw an approximate six per cent increase due to higher inflation during the second half 2022.
Cameron Bean, Scotiabank Global Equity Research analyst called for a “mixed response” from the market to the company’s new guidance in a research note. The analyst maintains a sector outperform rating for the stock with a $117/share target price over the Toronto listing.
Jeff Lagerquist works as a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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