Canada's largest natural gas producer expects 28% more cash flow in 2023

·2 min read
While natural gas prices have rallied to multi-year highs thanks in large part to the energy crisis unfolding in Europe, many Canadian producers have not benefited nearly as much as global peers due to an unfortunate combination of pipeline restrictions and record-high production. REUTERS/Todd Korol
While natural gas prices have rallied to multi-year highs thanks in large part to the energy crisis unfolding in Europe, many Canadian producers have not benefited nearly as much as global peers due to an unfortunate combination of pipeline restrictions and record-high production. REUTERS/Todd Korol

Shares of Canada's largest natural gas producer climbed on Monday as Tourmaline Oil (TOU.TO) called for 28 per cent more cash flow next year, thanks to rising prices at several sales hubs.

The Calgary-based company boosted its 2023 cash flow guidance to $6.58 billion, up from $5.14 billion, pointing to strong prices in the Northeast Asia and western United States markets. In a news release on Monday, the company also lowered its third-quarter production estimate slightly, due to pipeline maintenance.

Toronto-listed shares climbed 2.56 per cent to $79.78 as at 12:13 p.m. ET on Monday, adding to a more than 90 per cent increase so far this year.

While natural gas prices have rallied to multi-year highs, thanks in large part to the energy crisis unfolding in Europe, many Canadian producers have not benefited nearly as much as global peers due to an unfortunate combination of pipeline restrictions and record-high production.

Scotiabank analyst Cameron Bean calls Tourmaline's natural gas marketing mix "best in class" in a note to clients on Monday, given the company's access to premium sales hubs.

Tourmaline says its 2023 average production is expected to remain unchanged at 545,000 barrels of oil equivalent per day. The company adds that will include 2.5 billion cubic feet a day of natural gas and 126,000 barrels of oil, condensate and natural gas liquids.

For the third quarter, Tourmaline expects production to hit 480,000 to 485,000 barrels a day, down 1.5 per cent from its previous guidance. The company says this is due to Alberta-British Columbia pipeline maintenance, and a related price collapse in the second half of August, which forced Tourmaline to shut in around 100 million cubic feet per day of existing production.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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