As the world shifts to renewables, investors will increasingly look to get on the right side of this trade. One of the main energy stocks on the Toronto Stock Exchange that I think could be part of this transition is Tourmaline Oil (TSX: TOU). Indeed, this is a stock that I have loved for quite some time, for good reason.
As the energy sector continues to shift towards renewables, cleaner forms of fuels will be increasingly in demand. As a key player in natural gas, I appreciate Tourmaline’s positioning on the market at the moment.
Let’s discuss it further.
The economic model makes Tourmaline a leading energy value
When evaluating energy players, the first thing I look at are the respective business models of the companies. For Tourmaline, there is a lot to like when looking under the covers.
Tourmaline has extremely efficient operations. The Company’s oil and natural gas production is centered in the Montney, Deep Basin and Charlie Lake areas in British Columbia and Alberta. In addition, although it mainly deals with natural gas, tourmaline is increasingly present in liquids.
Indeed, the company has what many analysts consider to be a profile of unparalleled producer and explorer in British Columbia. In addition, Tourmaline is in an excellent position to take advantage of a growing Canadian market for natural gas. After all, natural gas and LNG are seen as the transitional fuels to lead us towards a renewable energy future.
This model, combined with a strong balance sheet and one of the best management teams in the industry, makes Tourmaline a top choice for energy investors today.
Do the right things
One of the things I love about Tourmaline is that this company doesn’t stand still. Tourmaline’s management team is always on the lookout for creating shareholder value. It is not something investors should ignore.
The company’s acquisition of Black Swan provides the company with heating and fuel operations for power plants on the west coast of Canada. In addition to providing operating leverage, the merger will provide Tourmaline with contiguous Montney land. It also offers the infrastructure that should generate synergies.
In addition, Tourmaline was quite aggressive in its acquisitions last year. This helped Tourmaline expand its scale, efficiency, and production reserves. Tourmaline produced around 410,340 barrels of oil equivalent, a massive 35% year-over-year jump. Management expects that number to reach 500,000 by the second half of 2022. By the third quarter, the company expects to produce 450,000 boe.
At the end of the line
Tourmaline is an energy player with the right mix of short, medium and long term prospects for investors. By giving investors exposure to the energy transition underway, Tourmaline is a safer bet than other pure-play energy stocks currently on the market.
Tourmaline’s $ 1.86 billion in operating cash flow and 2% dividend yield is just the icing on the cake. This is high quality stock long term investors should consider today.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .
Foolish contributor Chris MacDonald has no position in the stocks mentioned in this article.