Tourmaline began trading today

No matter how long you’ve been in this business, it’s a feeling that never gets old: the satisfaction of identifying, analyzing, investing and then watching a private company come to fruition with an IPO and significant value creation for shareholders.

Which explains why there was an especially upbeat mood in our office this morning as Tourmaline Oil Corp. began its first day of trading today on the TSX. As we’ve referenced in earlier blog posts, (The
titan nobody knows and Mike Rose: positioned to profit from the great recession) we were participants in Tourmaline’s first capital raise in 2008, along with several follow on private placements.

And while we’ve taken some profits on the IPO, we are maintaining a large holding in the now public stock.

David Cole, our lead partner on our investment in Tourmaline provided this perspective:

“There are primarily four reasons we want to continue to own this investment. The quality and size of the properties, the management team, the current state of the natural gas market and the growth opportunities ahead.

“First, the quality of the properties Tourmaline has been able to assemble may be unmatched in North America. The company owns more than one million acres, with up to 15 different reservoirs in each well – a factor largely unique to the Alberta deep basin.

“Second, the management team, led by Mike Rose is exceptional. They are proven, focused and deeply committed, having bought additional shares on IPO bringing their total ownership to $850 million.

“We also like the, call it, contrarian nature of the play. Tourmaline’s primary product is natural gas and prices for natural gas have languished in a somewhat bear market for the past couple of years. The long term outlook is positive so we love the fact that Tourmaline has been able to build up its position in a relatively low point in the market cycle.

“Finally, with the properties and the capital it has secured, Tourmaline has significant plans to grow its production over the next five years. In fact, there is a lot of embedded growth in its current production that we expect will come onstream in the first quarter of 2011. We’ll be following closely.”