Tourmaline Oil Corp (TOU.TO) Buy, Sell or Hold

Tourmaline Oil Corp (TOU.TO)

62.91

-0.08 (0.13%)

as of Oct 6, 2026, 8:00:00 pm Market Open.

832 watching

COMMENT

Would prefer TOU over VET. The challenge is the stressed balance sheet for these energy providers. VET has some of the worst price momentum, value, volatility and earnings profile in terms of current return on equity. They can move quickly if they look like they will survive. If you are looking for a huge amount of leverage and upside for a recovery, you could own VET but TOU is the more stable choice.

TOP PICK

He likes it not just in energy but in comparison to all TSX stocks. Price momentum is good and valuation is not bad. The largest natural gas producer in Canada. Has one of the best management teams in the business. Will be one of the survivors and has acquired 2 companies recently. 3.8x enterprise value, 15% free cashflow yield. (Analysts’ price target is $27.16)

TOP PICK

Bullish on gas for the first time in years. Outlook for gas is very strong. An easy way to play growing demand. You have scale, good balance sheet, dividend payments. Valuation is good. 15% free cashflow at $50 oil. 90% upside is possible. (Analysts’ price target is $22.52)

PAST TOP PICK

(A Top Pick Jun 20/19, Down 26%) It's generating free cash flow and paying down debt. Buy this under $10 for the long term. This is the premier large gas company in Canada with a strong management team who will maximize shareholder value. Managers also own a lot of shares.

WAIT

They are the largest natural gas producer in North America. He is bearish on short term natural gas prices, so he would not be recommending it right now. He would rather own mid-cap oil companies right now.

TOP PICK

He likes it for the natural gas exposure. Payout ratio of 12%. Natural gas inventories are expected to be well below normal going into this winter, he expects. Yield 3.56% (Analysts’ price target is $19.45)

HOLD

Natural gas? He has 24% exposure to natural gas in his portfolio and this partially through TOU. Normally it is a weather call, but the associated gas production from rising oil drilling has been a negative impact of growing importance. If we see declines in drilling in oil, we should see natural gas associated production declining. He sees 2021 AECO prices over $2, and this is okay for producers.

COMMENT

Natrual gas prices? The 2021 strip price for AECO is over $2. That will work for strong balance sheet producers like TOU, NVA (60% natural gas), and ARX.

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TOP PICK

The trophy name in Canada, the largest nat. gas producer. Their production of liquids is rising. They pay a 7.1% dividend yield. It's trading at its lowest valuation level ever. Great managers over the decades. They're generating free cash flow from their contracted gas, and with US revenues higher given the weaker Canadian dollar. He's been buying more shares recently.

SHORT

Capex has been cut across the board because of the Saudi oil shock. TOU has excellent assets run by fine operators, but because of this oil environment TOU is a small short for him. This is a relative call vs. companies with a strong balance sheet or better valuation. Price momentum and volatility are negatives. But this is getting really cheap at 3x EBITDA.

DON'T BUY

They just acquired a large land position. The company has great assets and is well run. However, he needs a higher dividend yield and he needs to see how the new management team works out. Yield 4.4%

BUY

How will their spin-out be a catalyst? They created the spinout, but haven't IPOd yet (https://www.newswire.ca/news-releases/tourmaline-announces-formation-of-topaz-energy-unlocking-value-in-tourmaline-s-significant-asset-base-867903254.html) They took the bull by the horns in a poor sentiment environment of low natural gas prices, worse then oil. So, they created Topaz, a royalty infrastructure company. These companies trade at a big premium which attracts better investor sentiment. Topaz just bought land from Painted Pony and bought a private as well as public company. They consolidated land and infrastructure in northeast BC. They can use Topaz to sell some of that infrastructure to reduce the cost. It's a great way to reduce their cost of capital. They can download assets to Topaz. He sees a lot of upside for TOU to do acquisitions.

COMMENT

TOU is too high of a natural gas exposure for him. BIR is overspending their cash flow to fill a plant they invested in for the promise of free cash flow next year. If you believe the strip pricing next year, they will generate a 26% free cash flow yield. However, it is also natural gas related. He just thinks there are better buying opportunities from the over selling in the oil markets from the Corona virus.

DON'T BUY

He doesn't like the oil sector. Don't buy weakness in a strong market. Hard to make money in an unloved sector, oil. No uptick here. ESG and coronavirus are headwinds. CNQ or Suncor are the very top stocks in this sector and are the only serious considerations.

SELL

Canada is awash in Natural Gas. There is not enough pipeline capacity to get it to market. These companies are neglected by investors.

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Tourmaline Oil Corp (TOU.TO)