Q: The buyback program was started on January 2024. Do you see the dividend raising too. Does it have a strong natural gas play to enhance their revenue once the natural gas price increase. Will Transmountain pipeline and LNG pipeline comes on line will increase their revenue. All the points I mention above, will the stock have a re-rating.
5i Research Answer:
TVE produced 67,000 b/d last year, but oil production was 85% so it does not have huge exposure to gas currently. New pipelines generally have the impact of raising prices a bit, but have more impact on the spread between various types of oil (heavy oil discount). We would expect TVE to see some incremental benefit but nothing material. It is ahead of plan on its capital budget, and has accelerated enhanced returns through more share buybacks, which should continue this year. It has struggled a bit but remains very cheap, and is finally getting some good traction, with shares up 21% YTD. Payout ratio is very low at less than 25% and this does leave room for an increase.