Tourmaline Oil (TOU.TO) is spreading the wealth to its shareholders again as cold weather in November and December implies "significantly higher" cash flows in the final quarter of 2022 than previously forecast. But shares dipped on Friday, as investors focused on weaker guidance for 2023.
Canada's largest gas producer says it will pay a special dividend of $2 per share on Feb. 1 to shareholders of record as of Jan. 24. The company also confirmed plans for special payments in each of the next three quarters.
"Tourmaline has become the go-to name for natural gas exposure," Calgary-based Raymond James analyst Jeremy McCrea wrote in a note to clients on Friday. "That said, the recent weakness in natural gas prices has caused some concern with institutional investors."
Tourmaline boosted its quarterly dividend to $0.25 from $0.225 per share in the final quarter of last year, adding to a steady string of increases and special payments.
Toronto-listed Tourmaline shares fell 2.3 per cent to $65.59 as at 11:28 a.m. ET on Friday. The stock has climbed nearly 50 per cent over the past 12 months.
However, frigid temperatures late last year have given way to a seasonally warmer start to 2023 in North America and Europe, knocking natural gas prices down from their highs last fall. Tourmaline said on Thursday that it expects $4.5 billion in cash flow this year, down from its November forecast of $5.4 billion.
At the same time, Tourmaline says unplanned downtime resulted in Q4 average production of approximately 512,000 barrels of oil equivalent per day (boepd), falling short of analyst estimates. The company cut its 2023 production guidance by about three per cent on Thursday, while earmarking more money for disruptions.
Tourmaline says its net debt for 2023 is expected to be below its long-term target of $1 billion to $2 billion, putting the company in a solid position to channel excess cash flow to shareholders.
"Overall, with a low-cost structure and diversified marketing portfolio, Tourmaline can still deliver high shareholder friendly items, while at the same time, reducing leverage, and modestly growing production," McCrea wrote.
In Thursday's update, Tourmaline also boosted its 2023 capital spending guidance by about 11 per cent to $1.78 billion, while noting that higher inflation in the second half of 2022 caused a roughly six per cent increase in 2022 capital spending.
In a research note on Thursday, Scotiabank Global Equity Research analyst Cameron Bean called for a "mixed reaction" from the market as investors digest the company's latest guidance. He maintains a "sector outperform" rating on the stock, with a $117 per share one-year target price on the Toronto listing.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.