Natural gas is having a moment. In fact, investors and producers alike are eagerly awaiting a big surge in natural gas demand – the likes not seen since the commissioning of the Alliance Pipeline back in 2000. And if demand grows as expected over the next few years, 2026 will be the start of many big growth years for certain Canadian energy stocks. Tourmaline Oil Corp. (TSX:TOU) is one of those energy stocks. It’s heavily weighted toward natural gas, which means that if and when natural gas prices rise, so will Tourmaline’s stock price. The company’s competitive edge lies in its efficient and low-cost operations and strong presence in the growing Canadian liquefied natural gas (LNG) industry.
Let’s take a closer look at why I believe that Tourmaline Oil Corp. (TSX:TOU) will have a very good year in 2026 and beyond.
Source: Getty Images
Rising natural gas prices
In the last year, natural gas prices have continued to be volatile and unpredictable. The US Nymex natural gas price has fallen 6% to the current $3.22. And the Canadian AECO natural gas price has increased 23% to the current $1.64.
But this is the past, and I just included it to show where we’re at today. Looking ahead, fundamentals are suggesting stronger pricing in the medium to long-term. In fact, 2026 could very likely be the start of a decisive upward trend. Current estimates are at $4.50 for NYMEX natural gas, which is 40% higher than current levels. As for AECO natural gas, current estimates are just shy of $3.00. This is almost 80% higher than current prices.
These bullish expectations are being driven by a few factors. The first is the expected ramp-up of LNG Canada, which will significantly boost natural gas demand. Also, data centres are expected to provide another boost to natural gas demand. And finally, utilities are expecting increased demand from a variety of industrial customers. This, too, will increase natural gas demand.
Tourmaline’s competitive advantage
Naturally, in this commodity price environment, natural gas energy stocks like Tourmaline will do well. But what is Tourmaline and why would you want to own it?
Tourmaline is a senior oil and gas company with a production profile that’s almost 80% weighted toward natural gas. The company’s operations are focused on three lucrative plays in the Western Canadian Sedimentary Basin – the Alberta Deep Basin, North East British Columbia Montney, and the Peace River Triassic Oil resource.
These plays and Tourmaline’s efficiently run operations have resulted in the company growing to be one of the largest and lowest-cost natural gas producers. In the five years ended December 31, 2024 Tourmaline grew its revenue by 150% to $5.4 billion. The company also grew its operating cash flow by 143% to $2.7 billion.
Tourmaline’s shareholders have also benefited along with the company. In the last year, this Canadian energy stock paid out $2 in regular dividends. It also paid out an additional $1.30 in special dividends. All told, this equates to $3.30 in dividends in 2025, for a total dividend yield of 5.5% at today’s stock price.
Looking ahead
Tourmaline has been busy positioning itself to benefit from the booming LNG business in the United States and now the growing Canadian LNG business. We can expect Tourmaline to continue to diversify its natural gas markets and, therefore, continue to be able to direct its gas to the most profitable markets.
In the company’s latest quarter, its operating cash flow declined 3% to $719.6 million. This was due to weak natural gas prices in Canada, which were at their lowest levels in over 30 years. Yet, cash flows were nevertheless strong. This speaks to the strength of Tourmaline’s network as well as its resiliency.
