Canadian Natural, Tourmaline inject more capital in booming natural gas as oil outlook dims
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Canadian Natural is in a position to grow its natural gas production by 10 per cent this year to 1.6 billion cubic feet per day as the company is “capturing strengthening gas prices,” National Bank Financial analyst Travis Wood wrote in a research note Wednesday.
Other analysts expected more modest investments in gas output from other producers.
“Strengthening gas prices likely won’t move the needle on free cash flow considerably, though it does provide the ability of the company to deploy some modest capital at very attractive returns and should put a bit more focus on the company’s considerable portfolio of gas-weighted assets in (Western Canada),” Raymond James analyst Chris Cox wrote in a research note.
Similarly, Canada’s largest natural gas producer, Tourmaline Oil Corp., announced a $35 million increase to its capital budget as it reported earnings Thursday, which brings its total expected spending this year to $835 million.
More crucially, Tourmaline also announced two acquisitions of private-equity own natural gas producers this week for a total of $770 million, including debt. The Calgary-based company bought Apollo Global Management-backed Jupiter Resources Inc. for $626 million, a figure which includes $200 million of net debt, and ARC Financial-backed Modern Resources Inc. for $144 million.
Those two deals will add roughly 76,000 barrels of oil equivalent production to Tourmaline’s daily output, which will now reach 400,000 boed.
