Alberta Oil - - JUNIORS -

If you had $100 mil­lion and had to give it to one oil and gas man to try and turn it into some­thing big­ger, Mike Rose may be your best bet. Prior to found­ing Tour­ma­line Oil in 2008, Rose suc­cess­fully built and sold Berke­ley Pe­tro­leum to Anadarko Pe­tro­leum for $1.6 bil­lion, and sold Duver­nay Oil to Shell for $5.9 bil­lion, mak­ing share­hold­ers scads of money along the way.

Those two com­pa­nies were huge suc­cesses. What he has done this time around at Tour­ma­line is a bit harder to wrap one’s head around. From a stand­ing start in 2008, he will have turned Tour­ma­line into the sec­ond-largest nat­u­ral gas pro­ducer in the en­tire Western Cana­dian Sed­i­men­tary Basin by 2016.

With Tour­ma­line, Rose and his team (the same group from Duver­nay Oil) have fo­cused on the Deep Basin in Alberta. In just seven years, Tour­ma­line has as­sem­bled the largest land po­si­tion (1.69 mil­lion acres), de­lin­eated the largest drilling in­ven­tory (8,833 lo­ca­tions) and be­come the sin­gle largest pro­ducer in the re­gion.

The wells that Tour­ma­line is drilling into the Deep Basin are ab­so­lute mon­sters. In any list of the 10 best Alberta nat­u­ral gas wells drilled each month, you can ex­pect to find Tour­ma­line hold­ing the ma­jor­ity of the spots.

Like all the great en­trepreneurs who re­peat­edly cre­ate value for share­hold­ers, Rose has done it by fo­cus­ing on low-cost as­sets and keep­ing a pristine bal­ance sheet. It doesn’t hurt that his rep­u­ta­tion keeps Tour­ma­line’s share price at a pre­mium val­u­a­tion, of­fer­ing all kinds of op­por­tu­ni­ties to use those shares to make lu­cra­tive ac­qui­si­tions.

The big­gest chal­lenge for Rose—other than stub­bornly low gas prices—is that Tour­ma­line got so big, so fast, that very few com­pa­nies have the fire­power to ac­quire it. That com­pli­cates the usual Mike Rose exit strat­egy. The best hope on that front for Tour­ma­line would be a West Coast LNG player need­ing to lock down sig­nif­i­cant feed­stock. That might mean share­hold­ers will be forced to en­joy this ride for quite a while longer.


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