Oil, steam and natural gas pipelines run through the forest at the Cenovus Foster Creek SAGD oil sands operations near Cold Lake, Alberta in this July 9, 2012 file photo.TODD KOROL/Reuters
You could argue it's because of management's track record. Or because of rapidly growing reserves. Or because of stellar operational performance.
Whatever the case, Tourmaline Oil Corp. is absolutely on fire, a glaring outlier in the depressed natural gas market.
Don't let the name deceive you. Tourmaline isn't an oil-heavy producer. Almost 90 per cent of its 2012 production came from natural gas, the rest coming from conventional oil and natural gas liquids. But that hasn't stopped the stock from rising 45 per cent in the past year and over 75 per cent since its initial public offering in late 2010. All of this while natural gas heavyweights such as Talisman Energy Inc. and Encana Corp. suffer, shedding assets and deleveraging.
Call it lucky timing, but Tourmaline is growing at just the right time. Assume you're an investor who likes the long-term fundamentals of the natural gas market, but don't want to get bogged down in heavy debt burdens or bloated companies who need to dispose of non-core assets. Tourmaline sits right in your sweet spot: debt to cash flow of just 0.9 times, and proven and probable reserves that just jumped 60 per cent, according to the company's new estimates.
As analyst Arthur Grayfer at CIBC World Markets put it, Tourmaline's got "long-term growth visibility with decades of inventory."
Then there's the management team. Mike Rose, chairman and chief executive officer, grew Duvernay Oil Corp. and then sold it to Royal Dutch Shell Plc for $5.9-billion in 2008, so he knows a thing or two about running a company (and also exiting at just the right time.)
A caveat: everyone's been piling into Tourmaline, so there's always the fear that the stock is overheated. But certainly worthwhile to keep this one on your radar screen.
(Tim Kiladze is a Globe and Mail Capital Markets Reporter.)
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