Canadian energy company Tourmaline Oil (TSE:TOU) announced on Monday that it had reached an agreement to acquire Bonavista Energy in a deal worth C$1.45 billion (US$1.06B). The deal is expected to further strengthen Tourmaline’s position as Canada’s largest Deep Basin producer.
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Per details of the agreement, half of the deal will be paid for in cash and the rest in common shares. The deal is expected to close in November and improve Tourmaline’s free cash flow. In addition, it is also expected to boost the company’s operating income to about C$450 million per year from 2024-26, while increasing its daily output to more than 600,000 barrels of oil equivalent.
Furthermore, the company approved a 7.7% increase to its quarterly base dividend for Q4 2023, citing a continued strong financial forecast for H2 2023. In addition, on November 1, a special dividend of $1.00 per share will be paid for the fourth quarter.
Is Tourmaline Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Tourmaline stock based on nine Buys assigned in the past three months, as indicated by the graphic above. Furthermore, the average Tourmaline price target of C$78.56 per share implies 10.06% upside potential.
