While hydrocarbon extraction remains a cyclical, capital-intensive and perilous business, Tourmaline, which has just announced its annual earnings reports, is in a class of its own, with an outstanding operational and financial performance.

There are three main reasons for its first-class performance: Exceptional quality deposits in the heart of the Cardium, Deep Basin and Montney; an integrated, proprietary midstream infrastructure connected to major North American pipeline systems; and elite management led by Mike Rose, who personally owns 4.8% of the capital and has been steadily increasing his stake, including at current prices.

These first two assets allow Tourmaline to win hands down the prize of the lowest cost producer - a sine qua non condition for survival in the raw materials industry - alongside Peyto, its most direct comparable, still presided over by another star of the Canadian oil patch, Don Gray.

We should also note the significant share of liquids - oil, natural gas condensates, etc. - in the production mix, which ensures that the company will be able - The company's significant share of liquids - oil, natural gas condensates, etc. - in the production mix is also noteworthy, providing better margins and relative independence from structurally volatile gas prices.

With two billion barrels and equivalents in proven reserves, plus another two billion in probable reserves, or between 12 and 18 years of production at a constant rate, excluding midstream infrastructure, Tourmaline's fixed assets alone are worth between $15 and $25 billion - in Canadian dollars, with a very conservative discount rate of between 15% and 20%.

The current enterprise value reflects this estimate very accurately. The $1 billion working capital and midstream assets were counted as zero, and the cost of abandoning the wells was assumed to be covered by the unusually high discount rate. In the private market, the traditional 10% discount rate prevails: it would value Tourmaline's reserves at $25 to $35 billion.

Operationally, the company has doubled its production in five years, from 250,000 to 500,000 barrel equivalents per day between 2017 and 2022. Management, known for its reliable projections, expects to reach 700,000 barrels per day by 2028.

This will be achieved without increasing the company's debt, which is already almost zero. On the contrary: by that date, Tourmaline intends to achieve a surplus after basic dividend of $7 billion. This surplus will be divided between special dividends - a specialty of the producer, which maintains a fairly low base dividend as a precaution - and external growth operations, where its profitability history is also excellent.

At $60 a share, the producer is valued at the sum of the profits it expects to generate over the next eight to ten years. Without losing sight of the imponderables, first and foremost the fluctuations in the price of hydrocarbons in North America, it should be remembered that in terms of projections, management's track record has always been remarkably reliable, and that Tourmaline has one of the best balance sheets in its sector.

Gas prices are often depressed at the end of the winter season. This year is no exception: the situation deserves to be watched closely, especially if Tourmaline's valuation were to suffer - if, for example, it were to fall back to its low of $40 per share, a level reached for the first time in 2013 with a production five times lower than today's.