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Tamarack Valley Energy: Strong Results Allow The Company To Pursue M&A


  • Tamarack's low cost and low-decline asset base ensured it got through 2020 pretty much unharmed.
  • Including hedging benefits, the company was actually free cash flow positive.
  • Two smart acquisitions will be very beneficial to the shareholders.
  • The share price has run up thanks to the strong oil price and I missed out on buying in January. I'm now waiting for a pullback.
  • Looking for a portfolio of ideas like this one? Members of European Small-Cap Ideas get exclusive access to our model portfolio. Learn More »


Tamarack Valley Energy (OTC:TNEYF) is a Canadian oil producer with a market capitalization of just under C$700M after taking the impact of the current capital raise into consideration. The company’s low-cost asset base and focus on the Clearwater area in Canada makes the company very interesting, even after its share price has doubled in just two months.

Tamarack has its main listing in Canada where it’s trading on the Toronto Stock Exchange with TVE as its ticker symbol. With an average daily volume of around 2.7M shares per day, the TSX offers superior liquidity compared to any other secondary exchange. I always will refer to the TSX listing in this article and the Canadian Dollar will be my base currency as Tamarack reports its financials in CAD and trades in CAD.

A quick look back at the 2020 results paints a very satisfying picture

It’s kicking at an open door when stating 2020 was a difficult year for oil and gas producers, and the only thing the vast majority could do was hanging in there and trying not to go under. Tamarack Valley Energy actually did a good job. Its total revenue decreased by approximately 40% on the back of a 10% lower oil-equivalent output (a drop from just over 24,000 boe/day to 22,000 boe/day) but the much lower realized oil and gas prices were obviously the main contributor to a rather weak year.

Source: Management Discussion & Analysis

The net loss on a pre-tax basis was entirely caused by a C$399M impairment charge and excluding the impairment, Tamarack would have reported a break-even situation (also thanks to a C$27M net gain on its hedge position).

Source: Financial statements

Looking at the cash flow statement however we see Tamarack was actually able to put in a

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This article was written by

The Investment Doctor profile picture

The Investment Doctor is a financial writer, highlighting European small-caps with a 5-7 year investment horizon. He strongly believes a portfolio should consist of a mixture of dividend and growth stocks.

He is the leader of the investment group European Small Cap Ideas which offers exclusive access to actionable research on appealing Europe-focused investment opportunities not found elsewhere. The a focus is on high-quality ideas in the small-cap space, with emphasis on capital gains and dividend income for continuous cash flow. Features include: two model portfolios - the European Small Cap Ideas portfolio and the European REIT Portfolio, weekly updates, educational content to learn more about the European investing opportunities, and an active chat room to discuss the latest developments of the portfolio holdings. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (14)

Nice mention and buy recommendation at the end of this interview with Eric Nuttal.

@The Investment Doctor Any idea how hedged they are moving forward this year?
Joseph investing profile picture
I have it in my buylist as well, together with ATH, NVA, and MEG.
I like the chart of ARX, KEL, and BIR(this is more gas), Im holding the 3 of them.
CJ and BTE have jumped quite a lot lately, holding both also fortunatly.
River18 profile picture
Great Article on TVE.
I'm long TNEYF in two accounts.
Up 61%, and up 70% in the other.
Follow PetroGirl on TWTR. She really pumps up the stock. NONSTOP.
Josh Young profile picture
Good timing! I was just quoted talking about my investment in Tamarack - www.bloomberg.com/... I think there's more to the investment than is in this writeup but its a great start.
The Investment Doctor profile picture
@Josh Young Oh yes, this was just a very brief overview. Once the dust surrounding the acquisition settles, I'll circle back.

Any other favorite Canadian oil picks?
Josh Young profile picture
@The Investment Doctor I like Cardinal here. There are other really interesting ones but I'm still buying them...
The Investment Doctor profile picture
@Josh Young Ha, I bought the Cardinal bonds at 35 cents on the dollar last year, and they were fully repaid on December 31st. Probably one of my best fixed income returns ever.

I'll send you a PM about one you may not have heard about yet.
Chancer profile picture
@The Investment Doctor:

Thanks for article. This is my last producer from the 2015 energy collapse. I did sell off my older higher priced TNEYF shares at a loss to reduce my exposure. Holding smaller position that may recover to my cost.
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