What do you think of Topaz?

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Is it better to just invest in Tourmaline?

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Asked on March 18, 2021 7:55 am
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Hey there,

I would say it really depends on your risk tolerance. Both are largely natural gas plays and its a wash in that area. Topaz was also spunout of Tourmaline and they are still intertwined. Where they differ is in terms of business models.

Tourmaline is a producer and Topaz is a royalty company. This is very similar to comparing gold streamers like FNV to producers like KL. As the producer, Tourmaline is higher risk as it has the operational and capital risk associated with production. Topaz on the other hand doesn't have that risk.

Because of this, Tourmaline is likely to be more volatile and as such provides the greater potential reward. Producers will see bigger share price gains in a bullish environment than royalty companies. The inverse is also true. Topaz is likely to see lower downside in the even the price of natural gas plummets.

In effect it is a tradeoff - which you invest in will likely be dependent on your risk tolerance.

Mat

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Posted by Mathieu Litalien
Answered on March 19, 2021 4:47 am