Tourmaline Oil to pay a special dividend. 2023 Guidance weighs on stock
Tourmaline Oil (TOU.TOThe cold weather in November/December means that cash flows will be significantly higher in the fourth quarter of 2022 than originally forecast. Shares fell on Friday as investors focused on the poorer guidance for 2023.
Canada’s largest oil producer has confirmed that it will pay a $2 special dividend to shareholders with record dates of January 24, 2012. The company also confirmed special payments will be made in the following three quarters.
Raymond James analyst Jeremy McCrea, Calgary, wrote that Tourmaline had become the preferred name for natural gas exposure in a note to clients Friday. “That being said the recent weakness of natural gas prices has raised some concerns for institutional investors.
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 plunged 2.3% to $65.59 by 11:28 a.m. ET on Friday. Over the past twelve months, the stock has risen nearly 50 percent.
However, the cold temperatures of late last year gave way to warmer winters in Europe and North America, which has lowered natural gas prices from last fall’s highs. Tourmaline stated on Thursday it expects $4.5billion cash flow in 2019, down from $5.4 billion in November’s forecast.
Tourmaline also reported that Q4 average production was approximately 512,000 barrels per day (boepd), which is below analyst estimates. On Thursday, the company cut its 2023 production guidance of about 3 percent and earmarked more money to deal with disruptions.
Tourmaline expects its net debt to fall to $1 billion to $2billion for 2023, which will allow the company to channel excess cash to shareholders.
McCrea wrote, “Overall, Tourmaline with a low cost structure and diversified market portfolio, Tourmaline is still able to deliver high shareholder-friendly items while at the same, reducing leverage and modestly increasing 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 percent 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. With a target price of $117 per share for the Toronto listing, he maintains a “sector overperform” rating for the stock.
Jeff Lagerquist, a senior reporter for Yahoo Finance Canada, is Jeff Lagerquist. Follow him on twitter @jefflagerquist.
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