Morningstar | Lowering Our FVE for Tourmaline; Stock Still Looks Fairly Valued
We are lowering our fair value estimate on no-moat Tourmaline Oil to CAD 16 per share from CAD 17 to reflect our lower near-term commodity forecasts coupled with lower price realization forecasts due to pipeline constraints. Tourmaline’s stock has tumbled over 20% over the past six months to CAD 16.50 per share and is converging toward our fair value estimate. Accordingly, it is now trading in 3-star territory.Although the recent acquisition from Shell Canada provides additional high-quality resources for Tourmaline, full-cycle break-even prices approximate $4 per thousand cubic feet Henry Hub. In comparison, our midcycle Henry Hub forecast is $3/mcf.
We are maintaining our no-moat rating.
Tourmaline Oil is engaged in the acquisition, exploration, development and production of petroleum and natural gas properties in the Western Canadian Sedimentary Basin.
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