Tamarack Valley Energy (TVE.TO)

Deeply out of favour. Active doing M&A, created an overhang. Timing and quality of assets purchased was very good.

Can't find any negative comments on its assets. May have overpaid slightly for its most recent purchase, but very high quality. Hit numbers for 2 quarters in a row, so his confidence in execution is increasing. 20% free cashflow yield. Needs to pay down debt, and then 75% of free cashflow can return to shareholders. He trimmed recently, from a 10% position to 6.5%. Implied price target is almost $7. Share price is getting increasingly attractive.

EPS of ($0.06) missed estimates of $0.0763 and revenues were $393.34M. Adjusted Funds Flow was $181.6M, a 15% year-over-year increase, which was directed to dividends, and reinforcing its balance sheet. TVE purchased 7.6M in shares during the quarter, 1.4% of outstanding shares for $25.6M. Production volume was in line with guidance, and management called for an average annual production of 61,000 to 63,000 boe/d in 2024 with a capital budget of $390M to $440M. A big piece of its loss per share in the quarter is due to an unrealized loss in its commodity related hedging contract. The stock closed the day in the green, and we are not overly concerned by this quarter. It continues to offer a high dividend yield, and repurchase shares. 
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They've been aggressive acquiring inventory, perhaps overpaying for a few, but that's now in the past, and they won't be buying more in the near future. They have more than enough drilling inventory, so now they must prove to markets the merits of what they bought and that they've taken care of all their overhangs. He projects 19% forward free cash flow yield--compelling. It's been a frustrating stock, though. Past laggards should perform well this year.

A large disappointment due to their acquisitions, which haven't paid off yet. There are no more overhangs, though, so this could rerate higher. He target $6.80 or 73% upside. Are a prime target to merge to gain scale and attract large investors.

Oil should stay in the $80 range or higher. TVE had issued shares for its acquisitions but is now buying back shares and paying down debt. He owns and is buying. Headwater is the number one position in the Clearwater area.

Half its production comes from the Clearwater Formation, the hottest play in Canada. Very high margin, excellent leverage to differentials (WCS and WTI) pulling back to historic averages at the Transmountain comes online soon. However, they bought several companies and the market didn't like that. But they will reach their debt level in the second half of 2024 that will lead to 25% of free cash flow to return to investors and eventually reach 75%. He expects more debt reduction.

He bought a lot of oil in 2020 when it bottomed, and oil did well through 2022. Shares have come down since, but oil and gas prices remain good, and the stocks offer good free cash flows. But sentiment is not there. The Saudis don't want oil below $70/barrel, and they run OPEC. If you believe that the Saudis will cut production to maintain that price, then oil stocks are undervalued. The large-caps have the best balance sheets and are the most stable. Mid-caps are slightly more volatile and the small-caps are very but are really cheap though don't pay dividends. TVE is the best mid-cap with great assets in the Clearwater. The knock is that they made some acquisitions which raised their debt, but this is short term. He expects a rebound this year.

Higher cost, higher leveraged assets. Weak compared to others in the sector. But if we see strength in the energy sector, a name like this could perform better because the marginal increase can affect them more to the upside. Not one to own if you're only middling on energy.

Likes it and the energy space, but the malaise is down to weak oil and natural gas prices as well as the federal government being hostile to this space. TVE has grown very well in recent years. 

Awful. Finally hit numbers for the first time in modern history. Management's motivated to make sure execution continues. Trading at 3x $80 oil, 21% free cashflow yield, paying down debt. 68-114% potential upside at $80 oil.

Suffering a hangover from an acquisition binge. Reducing debt, so less return of capital to shareholders. 2024 will be an inflection point on debt, which should allow higher ROC to shareholders, increase dividend, or buy back shares.

Avoid the small oil producers. This has been underperforming the market a little. Chart tops were in 2022, bottom this year. If the stock hits that top, then take a look at this. Not in seasonality now.

Recent M&A not being rewarded. Too many shares have been sold after recent acquisitions. Not worried about share overhang. Recent quarterly numbers have beaten expectations. 88% exposure to Clearwater and Charlie Lake oil plays. Debt targets being met. Currently trading at 3x cash flow given $80 oil. 5x multiple appropriate for $8 share price target. Will continue to hold. 

The $123M sale of Cardium assets is not huge on TVE's $4B+ asset base, but it will reduce debt and, importantly, supports an acceleration of capital returns to shareholders (i.e. dividends and buybacks). TVE notes the sold assets were undercapitalized and it wants to focus on its Charlie Lake and Clearwater projects. The price of Delta can be debated, but it has only been a year and TVE has long term plans for the assets. 
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Terrible performance in stock.
Largest shareholder of company.
Will continue to buy shares.
High quality assets.
Recent acquisition negative on share priced (issued lots of shares).
Non-core Cardium assets on the market.
Trading at 28% free cash flow yield.