The TSX oil & gas stocks on our list are well below the median debt to equity level of junior oil & gas producers
SmallCapPower | December 19, 2016: One of the more favoured metrics of determining a company’s financial position is evaluating the cash flow per share as opposed to net income per share, since cash flow generated is harder to manipulate. For example, net income takes into account depreciation and other non-cash transactions, which can be recorded on a straight line or accelerated depreciation, which would alter your bottom line. If a company has low levels of debt, relative to its equity, and positive cash flow generation, then it would be in a good position to raise more debt (as it is cheaper than equity) to help the growth of the company, while not taking on too much risk. The TSX oil & gas stocks on our list today all have debt to equity ratios of less than 0.42, which was the median of junior oil and gas producers in Canada, but have also generated positive cash flow per share for the past four fiscal years.
Freehold Royalties Ltd. (TSE:FRU) – $14.27
Oil & Gas Exploration and Production
Freehold Royalties Ltd. is a Canada-based company engaged in the development and production of oil and natural gas, predominantly in western Canada. Its primary focus is acquiring and managing oil and natural gas royalties. The Company’s total land holdings encompass approximately 3.7 million gross acres, over 90% of which are royalties. Of this, its mineral title lands (including royalty assumption lands), which it owns in perpetuity, cover approximately 750,000 acres. It also has interests in over 36,000 wells (of which over 34,000 are royalty wells, including over 18,000 unitized wells).
- Market Cap: $1,681.72(mm)
- Cash Flow Per Share – Actual (FY0, CAD): $1.22
- Cash Flow Per Share – Actual (FY-1, CAD): $1.89
- Debt/Equity: 0.21
Granite Oil Corp. (TSE:GXO) – $5.74
Oil & Gas Exploration and Production
Granite Oil Corp., formerly DeeThree Exploration Ltd., is a Canada-based oil producer based in Calgary, Alberta with lands and operations located in southern Alberta. The Company is engaged in the exploration for and exploitation, development and production of oil and natural gas. Its Alberta Bakken Properties are located in southern Alberta, approximately 70 kilometers south of Lethbridge. This property consists of an average working interest of approximately 100% in over 393,453 gross (391,633 net) undeveloped acres and approximately 54,434 gross (52,140) net developed acres. The Alberta Bakken Properties include approximately 60 gross (61.4 net) oil wells and over 140 gross (138.16 net) gas wells.
- Market Cap: $193.74(mm)
- Cash Flow Per Share – Actual (FY0, CAD): $2.01
- Cash Flow Per Share – Actual (FY-1, CAD): $6.24
- Debt/Equity: 0.18
NuVista Energy Ltd. (TSE:NVA) – $6.78
Oil & Gas Exploration and Production
NuVista Energy Ltd. (NuVista) is an exploration and production company, which is engaged in exploration, development and production of oil and natural gas reserves in the Western Canadian Sedimentary Basin. The Company’s primary focus is on Montney formation in the Alberta Deep Basin (Wapiti Montney). The Company’s products include natural gas, and condensate and oil.
- Market Cap: $1,169.47(mm)
- Cash Flow Per Share – Actual (FY0, CAD): $0.75
- Cash Flow Per Share – Actual (FY-1, CAD): $0.63
- Debt/Equity: 0.31
TORC Oil & Gas Ltd. (TSE:TOG) – $8.30
Oil & Gas Exploration and Production
TORC Oil & Gas Ltd. is a Canada-based company. Its principal business activity is the exploration for, and production of, petroleum and natural gas in the Western Canadian sedimentary basin. The Company’s principal properties include West Central Alberta Cardium, Monarch, and Southeast Saskatchewan and Manitoba. The West Central Alberta Cardium properties include approximately 140 gross producing light oil wells and over 30 gross producing gas wells. In the West Central Alberta Cardium property, the Company operates approximately two oil production facilities in the Kaybob and Pembina fields. The Monarch property includes approximately 20 gross producing light oil wells. The southeast Saskatchewan and Manitoba assets include approximately 1,565 gross producing light oil wells.
- Market Cap: $1,515.31(mm)
- Cash Flow Per Share – Actual (FY0, CAD): $1.01
- Cash Flow Per Share – Actual (FY-1, CAD): $2.08
- Debt/Equity: 0.18
