Canadian energy stocks have been volatile. This is no surprise given the volatility of oil prices and the uncertainty that the Iran war has brought into the equation. But through all of this, Canada’s natural gas has become increasingly valuable.
With this in mind, I’d like to review Tourmaline Oil Corp. (TSX: TOU), which despite its name, is predominantly a natural gas producer. In fact, it’s Canada’s largest natural gas producer, and the company is looking forward to a bright future.
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Natural gas: Ready for a comeback?
While natural gas prices remain subdued, longer-term structural changes are expected to alter the supply/demand fundamentals. Canadian natural gas prices are currently trading at $1.00, down significantly in the last month, but up 20% versus one year ago. This has been due to rising production and higher-than-expected storage injections.
But if we turn our attention to the longer-term outlook for natural gas, this is where things get interesting. New and growing demand sources such as liquified natural gas (LNG), utilities, and data centres are shifting the natural gas fundamental supply/demand balance. Higher demand will almost certainly result in higher natural gas prices as this long-term shift continues to accelerate.
Tourmaline: Canada’s largest natural gas producer
Canadian energy stock Tourmaline Oil is well-positioned as this shift starts to take hold. At this time, Tourmaline’s stock price is sitting below $60, as the company has faced low natural gas prices. Yet, despite negative earnings per share (EPS) in Q4 2025 due to non-cash charges, the company’s operational results and cash flow were quite strong.
In fact, Tourmaline’s realized natural gas price in the fourth quarter was $3.77 per million cubic feet (MCF). This is almost 70% higher than Canadian market prices. Furthermore, Tourmaline’s operating cash flow came in at $890 million, 5% higher than the prior year. A good showing considering the weak Canadian natural gas pricing environment.
This is a testament to Tourmaline’s quality business model, which exposes the company to strong natural gas markets.
Momentum builds
In Tourmaline’s first-quarter results, we witnessed the company building momentum. Production hit a record high, and earnings were strong, at $1.67 per share, far above expectations and 200% higher than the prior year.
But just as important was Tourmaline’s bullish description of the accelerating demand profile that exists in the global natural gas liquids (NGL) market. Essentially, Canadian NGLs were already in high demand globally. The Iran war accelerated and accentuated this trend. Canadian access to global markets is strong, as Pacific LNG terminals have favourable global access.
Due to strong global liquids prices and favourable access to the Pacific LNG terminal, Tourmaline’s 2026 natural gas liquids price realizations are rising and expected to increase by over 30%.
The bottom line
Canadian energy stocks like Tourmaline are in for a strong 2026. Rapidly rising global liquids prices and strong long-term trends pointing to a favourable shift in the supply/demand balance are driving this performance. They are likely to lead to sustainably higher natural gas prices.
