Tourmaline Oil Corp (TOU-T)

Spooked the market a bit in terms of production spend, so stock came down. Company's trying to time production increase to coincide with the growing LNG business. Natural gas is needed for years to come -- cleaner energy, plus a bridge to the future. Largest nat gas guys in Canada. 

Prices have been depressed, but he sees very strong pricing (relatively speaking) in 2026. Meantime, you get a decent dividend while you wait. Sometimes has special dividends. Trades ~6.6x EV, in line with the group, for 9% production growth and 5% cashflow growth. Should work very well over the next 5 years. Yield is 3.17%.

He has a small position. Chart shows basing since 2023. Thinks it will do quite well for investors; as to when, he's not sure. Great balance sheet. Well run, and he's convinced it'll be taken out one day. So hold on and get rewarded someday. 

If it breaks below $50 or so, will probably end up around $40-45.

It sold off because it is being punished by short term investors for long term thinking. It is increasing its capex for the next five years which will result in accelerating cash flow in 2030 and 2031. Investors want companies to return capital to shareholders now but not much has been happening with many of them. Tourmaline has strong management so you could step in for the long term. It has been able to grow and return capital to shareholders but it will be less now with the increased capex.

Temperatures are starting to moderate, and nat gas prices are down. Overproduction in US. Ramp-up of LNG Canada slower than expected, but should be picking up. 

She's actually buying more ARX for clients, not trimming. Embedded growth via inventory through reserves. Likes that a lot of its prices are hedged to higher international gas prices (instead of Canadian). Doesn't need to acquire to fund growth, whereas TOU does.

If she were going to own 2 names, she would also own TOU. But she doesn't. ARX is first in the pecking order. If you have the patience perhaps hold onto TOU a bit longer, as we are getting into the colder months.

It pays a high dividend plus a special one. It surprised after announcing it would reduce cash flow paid to shareholders so that they can grow the business. Is undervalued.

Sideways for a while. Don't want to see it break the old support level, but that's like magic in that it always seems to bounce off. Great future for natural gas. Chart is volatile; don't buy at the top, try to buy near the bottom ~$56-57. Yield is 3.43%.

The LNG Canada facility is doubling capacity. Also, TOU offers share buybacks and special dividends. The demand for energy continues to increase.

A few of her clients own it. It follows the seasonal momentum in oil and gas which means it is subject to commodity price volatility. It is Canada's largest natural gas producer, has strong free cash flow and low debt. It is oversold and should be OK for a value play but she prefers CNQ instead.

One of his basic tenets is that if a stock isn't behaving the way you think it should based on what you think you know, then assume you might be missing something. You need discipline around selling a position. He wants to own the leading companies fundamentally and technically. 

We are in a seasonally weak period for gas; wait for that to firm up before putting $$ to work. In early spring he was 12% energy, now down to 6%. TOU trading better than only 19% of companies in the S&P, relatively weak. Breadth in energy sector has been weak. Will turn around at some point, but can't say when.

Quality name. Largest player in nat gas in Canada, with the largest reserves and the lowest cost. Top of the environmental sustainability ratings. We just built a big gas export terminal. Natural gas will power AI for at least 10 years until nuclear can get more established. Outlook for gas is strong. Lots of gas around, so pricing may not be that good but volumes will increase nicely. Yield is 3.44%.

Being affected by volatility in energy prices. Not a large company like a SU or CNQ that can weather the storm. He owns it more as a speculative play. OK as a 1-2% position maximum as long as you have a diversified portfolio. No fundamental issues, still thinks poised for growth long term. Needs to continue ramping up production.

Likes it. Especially likes stocks where the founders are major shareholders, as goals are aligned with other shareholders. Will continue to make money. Lower dividend, but they do a lot of special ones. Worth owning. Now trading at lower end of its historical range.