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Introduction & Market Context
Tenaz Energy Corp (TSX:TNZ) presented its Q1 2025 results on May 8, highlighting a transformative acquisition that positions the company for significant growth. The Canadian-based energy producer has executed on its international expansion strategy with the completion of its NAM Offshore B.V. (NOBV) acquisition, which dramatically shifts its production profile toward European natural gas.
The company’s stock has continued its impressive performance, trading at $14.82 as of May 16, representing a 6.07% daily gain and reflecting investor confidence in the company’s growth strategy. Since its recapitalization in August 2021, Tenaz has delivered a total shareholder return of 696%.
Q1 2025 Performance Highlights
Tenaz reported modest production growth in Q1 2025, with corporate production averaging 2,814 barrels of oil equivalent per day (boe/d), representing a 3% increase from Q4 2024. Canadian production averaged 1,924 boe/d, with current rates approximately 2,450 boe/d following recent drilling activity.
The company highlighted several new wells in Canada with promising initial production rates:
- Glauconite A Pool (NASDAQ:POOL) well: 610 boe/d (43% oil, 87.5% working interest)
- Glauconite D Pool well: 90 boe/d (70% oil, 52.3% working interest)
- Ellerslie A well: 300 boe/d (60% oil, 100% working interest)
Funds flow from operations (FFO) for Q1 2025 was $1.0 million, a significant decrease from $8.3 million in Q4 2024. The company ended the quarter with a $0.5 million net debt position, while maintaining a substantial unrestricted cash position of $135.7 million, providing ample liquidity for its growth initiatives.
Tenaz has continued its share repurchase program, retiring 62,000 shares during Q1 2025 at an average cost of $13.42 per share. Since Q3 2022, the company has retired 2.1 million common shares, representing 7.5% of basic common shares, at an average cost of $3.11 per share.
NOBV Acquisition Details
The most significant development for Tenaz was the completion of its acquisition of NAM Offshore B.V. on May 1, 2025. The acquired entity has been renamed Tenaz Energy Netherlands B.V. and represents a transformative addition to the company’s portfolio.
As a result of free cash flow and other purchase price adjustments, Tenaz received approximately €15 million at completion, effectively reducing the net acquisition cost. The net working capital of the acquired subsidiary is approximately neutral, excluding any future contingent earn-out payments.
The NOBV reserves as of December 31, 2024, include 2P (proved plus probable) reserves of 55.7 million barrels of oil equivalent (mmboe), with 99% being TTF (Title Transfer Facility) gas. The 2P after-tax NPV10 (net present value using a 10% discount rate) is valued at €618 million or approximately $967 million, highlighting the significant scale of this acquisition relative to Tenaz’s previous operations.
2025 Guidance & Strategic Outlook
Following the NOBV acquisition, Tenaz has updated its 2025 guidance, projecting average production of 9,000 to 9,500 boe/d, more than tripling its Q1 2025 production rate. The company’s production mix is expected to shift dramatically toward European gas, with 77% of 2025 production coming from TTF gas, 11% from Canadian oil, 10% from AECO gas, and 2% from Canadian NGLs.
The company’s 2025 drilling and development capital expenditure is projected at $85 to $95 million, with key activities including:
- Three gross (2.4 net) well Ellerslie and Glauconite drilling programs in Canada
- A non-operated L10 Malachite development well in the Dutch North Sea (21.4% working interest)
- NOBV drilling and development capex of $55-61 million (75% allocated to drilling and workovers, 25% to facilities projects)
Tenaz is also evaluating carbon capture and storage (CCS) opportunities in the Netherlands, allocating $1.7 million for front-end engineering and design (FEED) capital. The company plans to begin barge and drilling programs in Q4 2025 and continues to pursue disciplined M&A efforts in its regions of focus.
Share Performance & Capital Allocation
Tenaz’s share price has demonstrated remarkable performance since its recapitalization in August 2021, rising from $1.80 to $14.33 as of May 7, 2025 (and further to $14.82 as of May 16). This represents a total shareholder return of 696% over this period.
The company’s funds flow from operations has grown substantially, from negligible levels at recapitalization to an expected rate of nearly $80 million in 2025 (including the NOBV acquisition). Meanwhile, the company has reduced its share count by 3% through its share repurchase program.
Tenaz’s management team emphasizes its alignment with shareholders, noting that the team invested in the recapitalization transaction. The company’s value proposition centers on three key elements:
1. Deep value opportunities in international markets, with a focus on Europe and Latin America
2. Experienced management with a clear acquire-and-develop strategy and over $8 billion in closed transaction experience
3. Shareholder-aligned team focused on delivering returns
With the transformative NOBV acquisition now complete, Tenaz is positioned for significant production and cash flow growth in 2025, with a strong balance sheet and a clear strategic direction focused on creating shareholder value through disciplined acquisitions and operational excellence.
Full presentation:
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