tiprankstipranks
Topaz Energy Corp (TSE:TPZ)
TSX:TPZ

Topaz Energy Corp (TPZ) AI Stock Analysis

Compare
207 Followers

Top Page

TS

Topaz Energy Corp

(TSX:TPZ)

62Neutral
Topaz Energy Corp's overall score of 62 reflects a mixed picture. The company shows strong potential with record achievements and positive future guidance, but faces challenges such as increased leverage and bearish technical indicators. The high P/E ratio suggests overvaluation, though this is somewhat counterbalanced by a strong dividend yield. Investors should be cautious of the current market sentiment and technical trends, while considering the company's strategic growth initiatives.
Positive Factors
Financial Strategy
TPZ closed its equity financing, which funded the majority of its royalty acquisition, showcasing its strong financial strategies.
Growth Potential
TPZ highlighted 2P reserves increasing by 23%, high activity on its lands, and signaled strong growth through its 2025 guidance.
Negative Factors
Market Volatility
Topaz stands out as a uniquely positioned company, especially amid uncertainties in the current inflationary environment.

Topaz Energy Corp (TPZ) vs. S&P 500 (SPY)

Topaz Energy Corp Business Overview & Revenue Model

Company DescriptionTopaz Energy Corp is a royalty and energy infrastructure company focused on generating free cash flow growth and paying reliable and sustainable dividends to its shareholders, through its strategic relationship with Canada's natural gas producers, and leveraging industry relationships to execute complementary acquisitions from other high-quality energy companies, while maintaining its commitment to environmental, social and governance practices. It generates revenue from the Royalty Assets, which generate the company's Royalty Production Revenue; and the Infrastructure Assets, which generate the company's Processing Revenue and Other Income.
How the Company Makes MoneyTopaz Energy Corp generates revenue primarily through its royalty and infrastructure assets. The company earns income by acquiring royalty interests in oil and gas production, which entitles it to a percentage of revenue from the production activities without bearing the operational costs. Additionally, Topaz invests in energy infrastructure assets, such as pipelines and processing facilities, which provide it with fee-based income. The company's strategic partnerships with leading energy producers and investment in high-quality assets are critical factors contributing to its earnings.

Topaz Energy Corp Financial Statement Overview

Summary
Topaz Energy Corp exhibits strengths in maintaining a consistent EBITDA margin and a strong equity position. However, challenges such as declining revenue, increased leverage, and negative free cash flow highlight areas for improvement. The company needs to focus on revenue growth and managing its capital structure to ensure long-term financial health.
Income Statement
72
Positive
Topaz Energy Corp shows a stable gross profit margin and a positive EBITDA margin. However, the net profit margin is relatively low, and there is a decrease in total revenue from the previous year, indicating a challenge in revenue growth. The company's ability to maintain profitability through EBITDA is a positive sign, but the declining trend in EBIT and net income growth rate requires attention.
Balance Sheet
68
Positive
The company's debt-to-equity ratio has increased, suggesting a rise in leverage which might pose a risk if not managed properly. The equity ratio remains strong, indicating a solid financial position. Return on equity shows potential, but the increasing debt levels and reduced cash reserves could impact financial flexibility.
Cash Flow
65
Positive
Operating cash flow remains robust, though the free cash flow has turned negative due to significant capital expenditures. The company has a healthy operating cash flow to net income ratio, but the free cash flow decline indicates a need for careful management of capital expenditures to maintain liquidity.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
299.80M306.69M356.74M198.61M89.64M
Gross Profit
103.36M89.30M147.28M43.19M4.15M
EBIT
0.0070.69M143.16M43.07M4.75M
EBITDA
292.54M315.42M351.57M193.10M88.22M
Net Income Common Stockholders
46.39M47.64M99.36M27.56M3.09M
Balance SheetCash, Cash Equivalents and Short-Term Investments
10.75M3.46M6.24M801.00K220.19M
Total Assets
1.89B1.65B1.84B1.61B1.01B
Total Debt
540.40M391.64M464.58M276.86M0.00
Net Debt
540.25M388.18M464.58M276.86M-220.19M
Total Liabilities
578.33M403.37M473.44M286.83M2.82M
Stockholders Equity
1.32B1.24B1.36B1.32B1.01B
Cash FlowFree Cash Flow
-161.63M246.03M-36.81M162.24M82.39M
Operating Cash Flow
276.27M300.58M317.88M165.02M83.64M
Investing Cash Flow
-439.99M-51.96M-354.10M-921.40M-172.63M
Financing Cash Flow
160.41M-245.16M36.22M536.20M301.04M

Topaz Energy Corp Technical Analysis

Technical Analysis Sentiment
Negative
Last Price23.55
Price Trends
50DMA
25.85
Negative
100DMA
26.50
Negative
200DMA
25.43
Negative
Market Momentum
MACD
-0.65
Positive
RSI
38.62
Neutral
STOCH
32.51
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TPZ, the sentiment is Negative. The current price of 23.55 is below the 20-day moving average (MA) of 24.63, below the 50-day MA of 25.85, and below the 200-day MA of 25.43, indicating a bearish trend. The MACD of -0.65 indicates Positive momentum. The RSI at 38.62 is Neutral, neither overbought nor oversold. The STOCH value of 32.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:TPZ.

Topaz Energy Corp Peers Comparison

Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSTOU
70
Outperform
C$24.32B18.228.55%2.04%-8.29%-30.52%
TSTPZ
62
Neutral
C$3.62B74.383.62%5.52%-2.25%-3.28%
57
Neutral
$8.36B5.47-5.51%7.41%0.15%-68.69%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:TPZ
Topaz Energy Corp
23.90
3.19
15.40%
CNQ
Canadian Natural
29.25
-6.04
-17.12%
VET
Vermilion Energy
8.15
-2.87
-26.04%
FRHLF
Freehold Royalties
8.67
-1.12
-11.44%
PREKF
PrairieSky Royalty
18.28
-0.08
-0.44%
TSE:TOU
Tourmaline Oil
66.43
8.94
15.55%

Topaz Energy Corp Earnings Call Summary

Earnings Call Date: Feb 24, 2025 | % Change Since: -7.65% | Next Earnings Date: May 5, 2025
Earnings Call Sentiment Positive
The earnings call indicated strong growth and record achievements in 2024, with positive financial and production metrics. Despite uncertainty in the macro environment and M&A activities, the company remains optimistic about future opportunities and has provided a positive outlook for 2025.
Highlights
Transformational Growth
2024 marked another year of transformational growth for Topaz with $430.6 million in royalty and infrastructure acquisitions, contributing to a 38% increase in annualized processing revenue, an 11% increase in year-end royalty production, and a 52% increase in year-end royalty acreage.
Strong Royalty and Processing Revenue
Fourth quarter royalty revenue was $60.2 million, representing 73% of total revenue with a 99% operating margin. Processing revenue and other income achieved a new company record of $21.9 million, 19% higher than Q4 2023.
Record Production and Reserve Growth
Topaz's year-end 2024 total proved plus probable reserves increased 23% from the previous year. The company achieved a record production replacement of 1.5x at no cost.
Significant Cash Flow and Dividend Growth
Topaz generated Q4 total revenue and other income of $82 million, with cash flow of $73.9 million and an 87% free cash flow margin. The company distributed $50.6 million in quarterly dividends, representing a 4.8% trailing annualized dividend yield, and announced two dividend increases in 2024.
Positive 2025 Outlook
Topaz announced 2025 guidance ranges of 21,000 to 23,000 Boe/d average royalty production and $88 million to $92 million of processing revenue and other income. The company expects to maintain a sustainable 63% payout ratio.
Lowlights
Uncertainty in M&A and Macro Environment
There is a tremendous amount of uncertainty in the industry, affecting M&A opportunities. The company noted a slight pause in the market as everyone waits to react to changes in the macro environment.
Potential Lower Operator Spending
Guidance for operator spending in 2025 ranges from $2.2 billion to $2.8 billion, with the lower end reflecting macro uncertainty. This could potentially impact production guidance if spending is at the lower end.
Company Guidance
In the Topaz Energy Corp Fourth Quarter 2024 Results Conference Call, the company highlighted significant growth metrics and provided guidance for 2025. In 2024, Topaz completed $430.6 million in royalty and infrastructure acquisitions, resulting in a 38% increase in annualized processing revenue and an 11% increase in year-end royalty production. Fourth quarter royalty production averaged 20,300 Boe/d, an 8% increase from Q3, with year-end production up 14% compared to 2023 due to higher liquids and natural gas production. Royalty revenue for Q4 was $60.2 million, representing 73% of total revenue with a 99% operating margin. The company achieved a record processing revenue of $21.9 million, a 19% increase over Q4 2023, and maintained 100% utilization of its infrastructure portfolio with a 93% operating margin. Topaz's year-end reserves increased 23% to 59.5 million Boe, driven by operator drilling activity, with 630 gross wells spud in 2024. The company expects 2025 royalty production to average between 21,000 and 23,000 Boe/d and processing revenue to range from $88 million to $92 million. Topaz plans to maintain a 63% payout ratio with a net debt to EBITDA of 1.2 times, supported by its infrastructure portfolio and hedging contracts.

Topaz Energy Corp Corporate Events

DividendsBusiness Operations and StrategyFinancial Disclosures
Topaz Energy Corp Reports Record 2024 Results and Provides 2025 Guidance
Positive
Feb 24, 2025

Topaz Energy Corp reported record financial results for 2024, driven by strategic acquisitions and increased production. The company achieved a 23% increase in reserves and a 14% rise in year-end royalty production compared to 2023. With a strong cash flow and a sustainable dividend strategy, Topaz is well-positioned for continued growth in 2025, supported by increased drilling activity and operator-funded capital investments.

M&A TransactionsBusiness Operations and Strategy
Topaz Energy Expands with Strategic Montney Acquisition
Positive
Feb 3, 2025

Topaz Energy Corp announced the acquisition of a gross overriding royalty interest and a 35% working interest in a natural gas processing facility in the Alberta Montney for $43 million. This acquisition is expected to generate approximately $5 million in annualized revenue, with potential for growth from future acreage development. The acquisition is backed by contractual commitments for development capital and take-or-pay agreements, ensuring minimal financial risk to Topaz. This strategic move is anticipated to strengthen Topaz’s market position and enhance its revenue streams, providing significant implications for stakeholders.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.