TOU: LNG Exports Will Drive Long Term Gas Volume Upside

Analysts have nudged their fair value estimate for Tourmaline Oil slightly higher to about C$73 from roughly C$72.71, citing a combination of modestly stronger long term revenue growth and margin assumptions that offsets recent mixed target revisions across the Street.

Analyst Commentary

Street research on Tourmaline Oil has turned more nuanced, with recent target trims balancing out fresh positive initiations and leaving a mixed but generally constructive outlook on the shares.

Bullish Takeaways

• Bullish analysts highlight Tourmaline Oil's leverage to strengthening North American natural gas fundamentals, viewing the ramp up of Canadian LNG export capacity over the next several months as a key structural tailwind for volumes and pricing.
• New coverage initiations with Buy and Overweight ratings, including one from a major global bank, emphasize confidence in the company’s ability to deliver mid single digit production growth through 2031 while sustaining attractive returns on capital.
• The depth of Tourmaline Oil's drilling inventory and ongoing facility expansion projects are seen as underpinning long term growth visibility, supporting the view that current valuation does not fully reflect the company’s multi year production trajectory.
• Outperform level recommendations suggest that, despite recent volatility in commodity expectations, the shares still offer upside relative to peers on a risk adjusted basis given the combination of scale, balance sheet strength, and growth optionality.

Bearish Takeaways

• Bearish analysts have trimmed price targets and, in at least one case, downgraded the stock to a more neutral stance, reflecting concerns that the prior valuation embedded overly optimistic assumptions for gas prices and execution.
• Recent target reductions from multiple firms signal caution that the risk reward is now more balanced, with some seeing limited near term upside to target prices amid updated 2025 guidance and early 2026 commentary.
• There is increasing focus on execution risk around ramping production toward the 2031 targets, with skeptics flagging potential bottlenecks in facility expansions and the need for disciplined capital deployment to avoid value destructive growth.
• Some cautious views point to the possibility that macro headwinds in energy markets or delays in LNG export capacity could push out the timing of expected cash flow inflection, which would challenge the current fair value framework for the shares.

What's in the News

• Tourmaline Oil reported strong third quarter 2025 operating results, with natural gas production up 15%, liquids output up 12%, and total production rising 14% year over year. This reinforced its growth trajectory despite commodity volatility (company results release).
• The company reiterated its production guidance, targeting average fourth quarter 2025 volumes of 655,000 to 665,000 boepd, a 2025 exit rate of 680,000 to 700,000 boepd, and unchanged 2026 guidance of 690,000 to 710,000 boepd, along with a multi year plan to reach 850,000 boepd by 2031 (corporate guidance update).
• Tourmaline's Board declared a special dividend of $0.25 per share, payable November 25, 2025 to shareholders of record on November 14, 2025, highlighting continued shareholder return alongside growth spending (company dividend announcement).
• Recent buyback tranche updates for programs announced in July 2024 and August 2025 showed no shares repurchased and no capital deployed to date. This suggested a preference for other capital allocation priorities in the current environment (normal course issuer bid disclosures).

Valuation Changes

• The fair value estimate has risen slightly to about CA$73.00 from roughly CA$72.71, reflecting a modest uplift in the intrinsic valuation outlook.
• The discount rate is essentially unchanged at approximately 6.12%, indicating no meaningful shift in the assumed risk profile.
• Revenue growth has been nudged higher, with the long-term annual growth assumption increasing modestly from about 30.26% to roughly 30.32%.
• The net profit margin has risen slightly, with the long-run margin assumption moving from about 26.41% to roughly 26.47%, signaling a small improvement in expected profitability.
• The future P/E has edged up marginally to approximately 14.52x from about 14.51x, suggesting a very small increase in the multiple applied to forward earnings.