Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tamarack Valley Energy Ltd (TNEYF, Financial) achieved record oil production from its North Clearwater assets, with a 26% year-over-year increase.
- The company successfully mitigated downtime impacts from the third-party Nipisi outage, showcasing operational resilience.
- Strong production growth was reported in the Charlie Lake area, with the highest quarterly production to date.
- Tamarack Valley Energy Ltd (TNEYF) improved operating costs, reducing them by 9% year-over-year on a per barrel basis.
- The company repurchased 2.1 million common shares in Q2, contributing to a total shareholder return of $75 million in the first half of the year.
Negative Points
- Despite operational successes, Tamarack Valley Energy Ltd (TNEYF) still carries a significant net debt of $883 million.
- The company faces potential risks related to the timing and reliability of the CSV Albright sour gas plant expansion.
- There is uncertainty regarding the allocation of incremental drilling capital for volumes associated with the CSV project.
- The company has no plans for special cash dividends, focusing instead on share buybacks, which may not satisfy all shareholders.
- Operational improvements are projected at only 4% to 5% in the second half of the year, which may be seen as modest.
Q & A Highlights
Q: Now that you have reached 60% return of free cash flow to stockholders, can we expect to see share buybacks accelerate?
A: Yes, with the next phase triggered, we anticipate $50 million to $65 million available for buybacks in the second half of the year, potentially doubling the number of buybacks compared to the first half. - Steve Buytels, CFO
Q: Can you discuss the cadence of free cash flow and the perspective on buybacks through the remainder of the year?
A: We forecast $140 million to $150 million of free funds flow, with $40 million allocated to base dividends and around $50 million for buybacks. We will balance buybacks and debt repayment based on monthly free funds flow. - Steve Buytels, CFO
Q: Production from Q2 was higher than Q1 and outside of the guidance range. How are the new Charlie Lake wells performing, and what are the plans for the asset in the second half of the year?
A: Q2 production exceeded expectations due to shorter-than-anticipated downtime and high-performing Charlie Lake wells. We plan to follow up with additional drilling in areas showing high-quality crude and better-than-expected rates. - Brian Schmidt, CEO
Q: Does Tamarack plan to supplement the share buyback program with any special cash dividends to shareholders?
A: No, our strategy focuses on long-term buybacks to drive per-share growth, with no plans for special dividends in the short term. - Steve Buytels, CFO
Q: With water injection ramping up this year, when will Tamarack be able to speak to the response to this activity?
A: We expect to see responses within four to six months, with gas compression suppression and oil response flattening in that timeframe, followed by a pickup. - Brian Schmidt, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
