Tenaz Energy (TNZ.TO)

Pure European natural gas exposure, when we've lost 20% of LNG flows through the Strait of Hormuz. His view is the Strait will remain shut much longer than consensus believes. Trades inexpensively. Let it ride.

(Note the shortish timeframe.)  Continued growth from existing assets, plus new acquisitions.

Really likes its international focus for orphaned projects. Enhanced recovery expected from its current project. CEO constantly looking for more deals. Stock tends to jump on big news. Management owns 20%. Amazing job with the capital structure. No dividend.

TNZ released a corporate update on Jan 10.  It outlined its potential production growth and investment attributes. The presentation was received very well by investors.
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Buys orphaned assets from big producers. Issued convertible debentures to fund latest purchase, and will use funds to enhance assets. CEO has street credentials to execute his plans. Stock tends to move sideways for a while and then jump up.

18 months ago, acquired undeveloped oil & gas assets in the North Sea; uniquely financed it with cashflow from the asset to be acquired. Just did another one. Can now go looking to make deals with bigger companies for more of their orphaned or neglected assets. In no time, is going to show up on the radar of a lot of investors. Coming up to $1B market cap. No dividend.

Its small size, and the sector, add risks, but the valuation is quite attractive and the stock is showing good momentum (even before the broadcast). Insiders own 12% and have been net buyers this year. The balance sheet is strong and good cash flow/production growth is expected. Production rose 176% in the last quarter with a corresponding giant increase in cash flow. TNZ has also been buying back its own shares (though not at a huge level). All-in, for a small cap stock in the sector we agree that it looks good.
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It just closed a deal with a consortium that ran assets in the Dutch North Sea. These were neglected assets so with new technology and capitalization there is enhanced recovery. The assets in this acquisition are phenomenal. The CEO used to be with Vermilion and has a lot of credibility. He has set up a $140 million debenture to work on anther venture.       Buy 5  Hold 0  Sell 0

TNZ reported Q3 EPS at $0.71 which beat analysts’ estimates of $0.007. Revenue came in below forecasts of $16.6M at $15.05M, nearly doubling year-over-year. Fund flow from operations (FFO) was $4.8M or $0.16 per diluted share versus the same period a year prior at $2.3M and $0.08 respectively. TNZ closed the acquisition of XTO Netherlands in Q3 to increase position in the Dutch North Sea (DNS). Net income was $21M up from $0.2M in the prior year due to the estimated gain from the XTO acquisition. TNZ expects Q4 production to increase significantly, mainly driven by contributions from new wells at Leduc-Woodbend, whereas annual production guidance post XTO acquisition is unchanged. Share prices for TNZ have increased sharply since June, up +110.23% year-to-date. Q3 was solid for TNZ with strong revenue growth and recent acquisitions being positive indicators. Conversely, cash from operations is just slightly positive and has declined in recent quarters, while also continuing to face small cap risks and being tied to the performance of oil.
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