Rob Lauzon Tamarack Valley Energy TVE-T BUY Mar 25, 2024

It trades around 3x cash flow and a double-digit free cash flow yield, and pays over a 4% dividend yield. He see 50-80% upside. They operate in the Clearwater oil play and another high-return oil project. They just started buying back shares which should increase as they lower debt. You get paid to wait.

Suffered from poor performance due to being aggressive acquirer, a lot of stock was issued and had to be absorbed. 

He continues to hold with a 7-7.5% weight. Quality assets, though may have overpaid, but that's in the past. Deleveraging so that more free cash can be returned to shareholders; investors get half of it right now, goal is 75%. Well over 10 years of inventory. 10% free cashflow yield is reasonable. Ticks all the boxes.

Has its ups and downs, can be more volatile, so the dividend can help. These small caps are quite dependent on the energy price. Nice run earlier this year; now just bouncing between $3.50 and $4.25, looking for direction.

He's stuck with it through some real pain. Hit its numbers for 2 quarters in a row, exceeding expectations. Beat on higher production and lower capex. At least 20 years of high-quality, stay-flat inventory. 60% of free cashflow to shareholders, meaningful buybacks. 18% free cashflow yield, 1/2 in buybacks and 1/2 as dividend. Yield is 3.74%.

Sees $8.32 one year out, 71-104% potential upside 2 years out.

Company has hit guidance targets 3 quarters in a row - out of the penalty box as a result. Pure play on Clearwater/Charlie Lake oil plays. Wells are paying our multiple times in ~2 years. Very economic oil metrics. Trading at a steep discount to NAV and cash flow multiples. Would recommend buying at this price. Management buying stock aggressively. 

Hit or exceeded numbers for 3 quarters in a row. People have come back to the story. 20 years of stay-flat inventory in the Clearwater, a massively economic play. Benefit of incremental FCF lowering the decline rate. Shareholders likely to get 60% of FCF for the next several years as it pays down debt. 

Mid-cap, but doing very well. Deep value. Still believes in $80 oil one day, which would translate to 17% FCF yield, and that's where the juice of the mid-cap shines. Yield is 3.4%.

Energy stocks have been sideways this year, but TVE is pushing higher. It pays a 3.5% dividend yield. For the past 2 years, natural gas has gone sideways, but in recent weeks, it has broken to the upside. This is exciting, showing a change in trend.

Cheap PE. Likes it. Nothing wrong with TVE, but these stocks are tied to the oil price. Is well run. They hold long-life reserves. The oil prices has more upside than down.

If you assume oil prices go up, and assume they all execute well, which is the buy right now? He likes the upfront dividend. VRN is cheapest on price and financial metrics. Production outlook posted a few days ago is quite positive.

Not sure if the easiest thesis is to buy energy right now with Trump trying to attack the price of oil. But within the group, VRN is a name that works pretty well.

He's been adding; he remains a top shareholder in this. He likes that most of their production is exposed to the Clearwater. Super economical: their payback period on a well is 10-11 months. All companies benefit from a weak loonie, because they sell in USD and bring back that money to Canada. They trade at 3.3x cash flow this year, 2.8x next. Their cash flow yield now is 18% and 20% forward. Pays under a 4% dividend, plus buybacks. He targets $7 in a year at $70 oil.