How much cash does Tourmaline really make, and what is a share of it worth?

The words on this page

Real cash (true cash)

What was left in the bank each year after every bill, every tax payment and every well drilled. Not profit, and not "cash flow" as the company defines it, which leaves the drilling out. The strictest number there is.

Required return

The yearly return you insist on for taking the risk. A dollar promised in ten years is worth less than a dollar today; this rate says how much less. 9% is what professionals use for a large Canadian gas producer; the reserve engineers use 10%.

The gas price (AECO)

AECO is the Alberta price for natural gas, in Canadian dollars per thousand cubic feet (mcf). Tourmaline's cash moves with it: management says each C$1 on the gas price is worth about C$0.5B of free cash a year. The futures market today sells 2028 gas for about C$2.65; management plans on C$4.00; the dial starts at C$3.75, because AECO trades near C$3.75 today, winter is coming, and data-centre buildout in Alberta is adding demand.

Reserve life

How long the wells keep producing. The engineers' proved plus probable reserves would last 26 years at today's production; the proved reserves alone about 14. After that, nothing is counted.

What a share is worth

Every future year's cash, shrunk back to today's dollars at your required return, added up, less the debt and the cost of cleaning up the wells, plus the Topaz stake, divided by the number of shares. Pay less than this and you earn more than your required return; pay more and you earn less.

Floor, base, plan

The floor is what the futures market will pay for today; the audited history lands in the same place. The base is our own judgement of the gas price, C$3.75: AECO trades near C$3.75 today, winter is coming, and data-centre buildout in Alberta is adding demand. The plan is management's C$4.00. Today's price sits at the plan, and every gap between the three is a gas price, not a growth rate.

The arithmetic, step by step

1. Count the real cash each past year: cash generated by operations as audited (after tax paid, well clean-up spending and working capital), plus interest paid put back, minus rent on leases, minus every dollar spent on wells and plants. Buying and selling assets, and the Topaz unit sales, are shown separately.
2. Project it. On the standard setting, years 1 to 7 (2026 to 2032) are management's own July 2026 plan, re-priced to the gas price you set with the company's sensitivity slide (July 2026 presentation, p.37). 2026 and 2027 stay on today's futures prices in every case. The free cash flow the company published for 2028 and 2032 at a low deck (C$2.50 AECO, US$55 WTI, US$8 JKM), the base deck (C$4.00, US$65, US$12) and the high deck (C$5.00, US$75, US$14) is read off in a straight line to your dial, and the shape of the published base path (a dip in 2029, then catch-up) fills in 2029 to 2031. At C$4.00 the dial reproduces the published plan to the dollar. After 2032 the cash grows at the long-run rate for as long as the reserve life allows. The audited-history starts grow at your growth dial for ten years, then at the long-run rate. "Forever" adds a never-ending stream after year 10, growing at the long-run rate, which is held below your required return.
3. Bring it back to today. Each year's cash is shrunk by your required return, counted at mid-year because cash arrives through the year rather than on 31 December.
4. Turn it into a share value. Add up the shrunk cash; take off net debt of C$1,508M (30 June 2026, the company's definition, which already nets working capital); take off the C$884M cost of cleaning up the wells if that switch is on; add the Topaz stake (about C$700M) if that switch is on; divide by 388.6M shares. No separate value for the tax pools: the company's after-tax plan already uses them, so adding them again would count them twice.
5. Work it backwards. "The gas price today's price assumes" is the flat AECO from 2028 at which this plan is worth exactly C$62.25. On a history start the same search finds the ten-year growth rate instead.

Where the numbers come from

• No FY2012 year-end package exists in the archive; 2012 uses the audited comparative columns of the FY2013 statements.
• Interest paid for the first half of 2026 is not disclosed in the interim report; C$33M is an estimate from the 2025 run rate.
• The Topaz stake value is approximate, taken from the company's "net debt of C$0.8B net of Topaz" in the July 2026 presentation against C$1.5B reported net debt.
• The share price and market value are from a data aggregator (stockanalysis.com), not a filing. C$62.25 is the close of 27 August 2026; the next day closed at C$62.50. The page keeps C$62.25 so every number ties to one date.
• The share count is held constant in the projection. Tourmaline has issued shares for acquisitions in most years; that dilution is not modelled.
• The analyst consensus of about C$70 was verified on stockanalysis.com on 28 August 2026 (average target C$70.36 across 21 analysts). Morningstar's C$51 is a search excerpt: morningstar.com blocks automated access, so it could not be read on the source page and should be re-checked before it is quoted anywhere.
• The C$4.00 management deck is the July 2026 presentation's sensitivity slide (p.37). The company's July 2026 results release does not restate a long-term C$4.00 figure; the flat US$4.00 NYMEX plan language last appeared in the July 2025 release.
• The cash is a gas-price bet first: management says each C$1/mcf of AECO is worth about C$0.5B of free cash a year. The growth dial cannot see the gas price; the gas price dial and the three starting points bracket it.
• Hedging and the "premium on risk management" are inside the historical cash (they were real cash). Whether they persist is part of the growth assumption.
• The gas price dial moves oil and LNG prices together with AECO, exactly as the company's slide does; it cannot separate them. Between the company's published points the interpolation is straight-line, and beyond C$5.00 or below C$2.50 it extends the nearest segment.

For the technically minded

The method is the one used to evaluate capital projects, from Ted Lawrence, The Business Guide to Economic Evaluations: Projects, Leases, Tariffs and Acquisitions (2017). "Real cash" is the book's project cash flow (chapter 3) with depreciation, debt servicing and debt-like leases restructured out (chapters 4, 5 and 19); Tourmaline's leases are immaterial and short, so they stay in as a cost of producing, a chapter 19 judgment. The value per share follows the share-purchase evaluation of chapter 20 (Fig. 20.12): present value of the company's cash flows at the cost of capital (chapter 10), mid-year discounting (chapter 12, Fig. 12.15), plus non-required assets (the Topaz stake), less net debt and the decommissioning liability, which the book notes terminal values ignore. "What you gain or lose" is the bid-curve NPV of Fig. 20.6; "when you get your money back" is the discounted payout of chapter 13; the bars follow the project profile of chapter 6. "Forever" is the chapter 22 terminal value, placed at the end of year 10 with growth held below the discount rate. The reverse solve on the gas price is a reverse DCF run through management's own sensitivity.

Discount-rate anchors: 9% is Morningstar's average cost of equity and the practitioner figure for a large Canadian gas producer (Simply Wall St 8.7 to 8.8% for TOU); 10% is the reserve-report convention (PV10); 7% is what the textbook CAPM gives on the 3.66% Government of Canada 10-year yield (Damodaran: E&P cost of equity 7.17%, implied equity risk premium 4.23%, January 2026; Kroll US ERP 5.0%). The long-run rate defaults to 0%: Damodaran's rule is never above the risk-free rate, and this is a depleting resource. The 4% growth default is the production growth rate in the company's 2026 to 2032 plan. The 26-year life is 2P reserves of 6,092 MMboe over 2025 production of 233 MMboe; 14 years on 1P.