While the broader TSX index is trading near all-time highs, several Canadian oil and gas stocks have trailed the benchmark over the past 12 months. The ongoing drawdown allows investors to gain exposure to quality energy stocks trading at a discount to their intrinsic value in 2025. In this article, I have identified two Canadian oil and gas stocks to watch out for. Let’s see why.
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Tourmaline Oil stock
Valued at a market cap of $25 billion, Tourmaline Oil (TSX:TOU) is among the largest companies in Canada. In the third quarter (Q3) of 2025, Tourmaline Oil reported strong results despite challenging natural gas prices and announced a special dividend.
In the September quarter, Tourmaline reported a cash flow of $742 million, or $2.09 per diluted share, with net earnings of $355 million, or $1.00 per diluted share.
“Deep Basin well productivity so far in 2024 is the best we’ve seen in the last five years,” Chief Executive Officer (CEO) Mike Rose told investors, noting that IP90 rates are up 20% on gas and 40% on condensate compared to the previous four-year average.
The company announced a special dividend of $0.50 per share, bringing total dividend distributions to $3.25 per share over the past year. This represents an implied 5% trailing yield.
Q3 production averaged 557,000 barrels of oil equivalent (BOE) per day, up 11% year over year, despite being impacted by unplanned third-party outages. It expects Q4 production to range between 600,000-620,000 BOE per day, with an exit rate of 630,000-640,000 BOE per day.
Tourmaline provided production guidance of 635,000-665,000 BOE, with a capital budget range of $2.6-2.85 billion in 2025. It aims to maintain flexibility to adjust its spending based on natural gas prices, which is expected to improve over the next 12 months.
“We expect steadily improving natural gas prices in 2025, but should the recovery materialize in the second half of the year, we can sequence the capital program to be back half biased,” Rose explained.
Priced at 11.7 times forward earnings, TOU stock trades at an 18% discount to consensus price targets.
Enerflex stock
An energy infrastructure company, Enerflex (TSX:EFX) stock has surged over 85% in the past year. However, the TSX stock is also down 13% from its 52-week high.
Enerflex reported strong Q3 results and announced a 50% dividend increase as it benefits from stable recurring revenue and successful debt reduction efforts.
In Q3, Enerflex posted revenue of $601 million, up from $580 million in the same quarter last year, while adjusted EBITDA rose to $120 million from $90 million. Cash flow from operations reached $98 million, including a $35 million working capital recovery.
“We have successfully reduced leverage to within our target range of 1.5x to 2.0x,” CEO Marc Rossiter told investors. “Visibility across the company’s business lines remains solid, including approximately $1.6 billion of contracted revenue supporting our energy infrastructure assets and a $1.3 billion engineered systems backlog.”
Enerflex recorded new bookings of $349 million in its engineered systems segment, maintaining the backlog at $1.3 billion. However, management noted that prolonged weakness in domestic natural gas prices has impacted North American demand.
Enerflex reduced its 2024 capital spending guidance to $80-90 million from an earlier estimate of $90-110 million. The company has repaid $268 million of debt since the beginning of 2023 and recently redeemed $62.5 million of its 9% notes due October 2027.
“The underlying macro drivers for our business are very strong, with the ongoing focus on global energy security and the growing need for low emissions natural gas,” Rossiter added, highlighting the company’s positioning for future growth.
Priced at 11 times forward earnings, the TSX stock trades at a 25% discount to consensus price targets in February 2025.
