Investment Q&A

TAL pays a 7.7% yield, and generates a healthy amount of free cash flows, of which ~25% is currently directed towards its dividend. Margins are strong, its balance sheet is healthy, it has a $94M cash balance, which can support dividend payments for almost a whole year. It trades at a cheap valuation, and it has been heavily reinvesting into drilling.

The overall 2024 budget announcement was positive, with plans for growth and investment. However, the success of these plans depend on various factors including market conditions and operational performance. It expects to produce 17,000 barrels of oil per day, a 20% year-over-year increase, and it is forecasting to reach free funds flow of $25M. While it is a smaller name, we would be comfortable with a position here, while being mindful of its small-cap risks, and position sizing.

Of some of its peers (including NVA, BIR, BTE), TAL is one of the better-performing names, with a relatively strong sales growth rate, lower debt levels, and strong margins.