-- Tudor, Pickering, Holt on Wednesday maintained its buy rating on the shares of Topaz Energy (TPZ.TO) with a C$32.00 price target after the oil and gas processing and royalty company reported first-quarter results.
"On Q1'26 financials, C$0.52 CFPS headlined results, better vs. TPHe/Street C$0.48/C$0.51. Compared to our model, better-than-expected liquids production drove higher royalty revenue, and cash taxes were lower than forecasted, partially offset by a wider hedging loss, while infrastructure revenue remained relatively in-line (C$23.4MM vs. TPHe C$23.9MM). Capex of C$1.5MM (ex-acquisitions vs. TPHe/Street C$1.5MM/C$1.3MM) and the production/revenue beat solidified stronger-than-expected FCF vs. consensus (C$78.7MM vs. TPHe/Street C$73.0MM/C$75.3MM). On volumes, Q1'26 royalty production of 24.6mboepd was ahead of TPHe/Street 24.1/23.8 and exceeded the high end of the FY'26 guidance range, with liquids of 7.0mbopd in-line with Street but ahead of TPHe 6.7. Drilling was diversified across 138 gross wells (48 Clearwater, 31 NEBC & AB Montney, 23 Deep Basin, 8 Peace River, 11 SE Sask, 13 Central AB incl. 9 Belly River oil-focused), with 55% directed into oil-focused plays, 131 wells brought on production, and 86 DUCs at quarter-end. On 2026 guidance, the range on royalty production was reaffirmed at 23.5-23.9mboepd, though with production now expected at the high end, driven by oil-focused activity and Clearwater waterflood implementations by key operators," analyst Jeoffrey Lambujon wrote.
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