Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

A no-show at an energy conference this week could spell a rare and positive development in an industry that’s been starved of capital since well before the coronavirus pandemic hit.

On Monday, a private outfit called Topaz Energy Corp. had been scheduled to give a presentation to a virtual edition of the annual Peters & Co. conference. The Street had been waiting with interest, given that an initial public offering for the hybrid energy royalty and midstream company has been under consideration.

But Topaz, majority owned by Calgary-based Tourmaline Oil Corp., cancelled its spiel, leading analysts and investors to wager it had entered the required quiet period before filing a prospectus for an offering that could raise hundreds of millions of dollars.

Story continues below advertisement

If Tourmaline parts with some of its interest alongside an IPO, or sells down its stake later, the proceeds could help chief executive officer Mike Rose build up his own war chest for natural gas acquisitions in Alberta and British Columbia, reducing the need to take on debt for what he’s described as “a generational opportunity.”

More broadly, Canada’s energy industry has been starved of new public equity for years – the last IPO of note in the sector was for AltaGas Canada (now TriSummit Utilities) in the fall of 2018 – so a successful deal would be a tonic for the oil patch and the banks that fund it at a time when so much of the industry is down on its luck.

Officials with Calgary-based Tourmaline did not respond to a request for comment.

Recall it was just six months ago that Alberta was wracked by fear that a large portion of its biggest industry was headed for bankruptcy proceedings as cash dried up and debt burdens loomed large owing to the collapse in demand for oil and gas. It looked darkest in April, when the price of U.S. benchmark crude oil sank below zero.

The market has staged some recovery as economies have gingerly opened back up after the initial coronavirus-induced lockdowns, but it has been a slog. Oil prices have clung to a range around US$40 a barrel, which leaves many companies operating with little money to fund drilling. As a result, the Toronto Stock Exchange’s energy group has also been largely range-bound since mid-June.

Natural gas markets, though, are surprisingly strong. Tourmaline has been by far the most active gas driller in the industry, focusing on areas such as the B.C. Montney and Alberta Deep Basin, and has garnered a reputation as one of the most savvy acquisitors. Companies with high debt loads will be pushed to sell assets, and Tourmaline could take advantage of such strains at rival companies by snapping up properties in its main areas, Stifel FirstEnergy analyst Robert Fitzmartyn said.

In a recent research report, Mr. Fitzmartyn tallied the opportunity that Topaz presents. The company, which Tourmaline spun off last year, has two main businesses – it collects royalties on Tourmaline lands and has stakes in infrastructure such as gas plants. It recently increased its holdings by paying $100-million for a minority stake in a gas plant owned by Advantage Oil & Gas.

Story continues below advertisement

Tourmaline has a 64-per-cent interest in the growing business, and after a $145-million private placement in June, the stake was valued at about $650-million.

Based on comparable multiples for the country’s other energy royalty companies, Mr. Fitzmartyn says Topaz shares could trade at about $12.75, suggesting a market capitalization of nearly $1.2-billion.

What’s still not known is how much stock might hit the market, and whether Tourmaline might look to raise some cash in the process. There’s a large portion of a hard-hit industry on pins and needles waiting to see what the appetite will be, and betting whether it signals the start of a turnaround.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies