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Tourmaline Oil shares rise after it spins off hybrid royalty corporation

Tourmaline Oil shares rise after it spins off hybrid royalty corporation
Business
CALGARY - Shares in Tourmaline Oil Corp. are up by as much as 15 per cent after it announced it will spin off a private company to hold a royalty on its oil and gas lands as well as interests in two of its 19 natural gas processing plants and other third-party revenues.

Stock in the Calgary-based company jumped as high as $12.32, up $1.60 from the Thursday close of $10.72, in early trading Friday on the Toronto Stock Exchange.

Tourmaline says its creation of Topaz Energy Corp. is designed to “monetize” assets which are not currently being given their full value by the public market.

It says Topaz will pay $775 million in shares and cash for the assets, with Tourmaline owning between 75 and 81 per cent of the shares and receiving $135 million to $185 million in cash proceeds.

Topaz is to raise $150 million to $200 million via a private placement of shares with investors and is expected to undergo a “public liquidity event” in 2020.

Tourmaline says it expects Topaz to generate $90 million of revenue in 2020, of which 75 per cent will be paid out in dividends at 80 cents per share.
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