Tourmaline Oil reported record production as geopolitical tensions in the Middle East disrupt global LNG supply and push benchmark prices higher.
BNN Bloomberg spoke with Ernest Wong, head of research at Baskin Wealth Management, about how supply disruptions linked to the Strait of Hormuz and rising global demand could influence the outlook for natural gas markets.
Key Takeaways
- Disruptions around the Strait of Hormuz — a key route for roughly 20 per cent of global LNG exports — have pushed spot LNG prices sharply higher.
- Limited LNG export capacity in North America means producers have little ability to quickly redirect supply to global markets despite higher prices.
- Growing LNG export demand and energy needs from data centres and AI infrastructure are expected to support natural gas demand longer term.
- Tourmaline reported record quarterly production, reflecting continued development in Western Canada’s natural gas basins.
- The company is prioritizing capital discipline and infrastructure buildout as it positions for stronger natural gas pricing in the future.
Read the full transcript below:
ANDREW: To talk now to a manager who spends a lot of time crunching numbers from Tourmaline, Ernest Wong joins us, head of research at Baskin Wealth Management. Ernest, thanks very much indeed for joining us.
ERNEST: Happy to be here.
ANDREW: Is Tourmaline a stock to buy, do you think?
ERNEST: Well, we certainly own it, and we continue to be buying today. I think the big picture for Tourmaline, geopolitical issues aside, is that they are the largest natural gas player in Canada, one of the largest in North America, and they are very well positioned for a higher natural gas pricing environment because of things like LNG, data centres, and especially as U.S. natural gas basins start to mature and look to Canada for additional supply.
ANDREW: I mean, we should remember that even if global natural gas prices are in turmoil, Tourmaline has some international exposure, but they’re still tied very much to the North American market.
ERNEST: That’s right. So I think because of what is happening in Iran and the Strait of Hormuz, certainly LNG benchmarks have been rising, but not really contributing to higher natural gas pricing in North America, because most of the LNG export capacity in North America is already full and fully contracted. So there’s not really a way for anybody, including Tourmaline, to be able to replace that 20 per cent of natural gas that has been displaced. Now, I think to your point, Tourmaline does have some contracts that are tied to global LNG benchmarks. I think it’s going to be about eight per cent of their production for 2026 and 2027, so it’s a nice boost to their bottom line, but not hugely material overall.
ANDREW: I mean, I wonder, when will they ever change the name, take oil out of it when they’re a natural gas company? But anyway, that’s the way they like to do it.
ERNEST: Right.
ANDREW: So Tourmaline Oil — is this one that you would just hold, irrespective of your view on natural gas prices, in that they are big returners of capital, et cetera?
ERNEST: Right. So this is really a capital allocation thesis, more so than a bet on a specific commodity. I think the reason the stock is down today is because the natural gas pricing environment is fairly weak. They have said that there’s not going to be a special dividend for Q1. Now, I think that is kind of the point of a special dividend, which is that Tourmaline uses special dividends so that in periods when natural gas pricing is high, such as in 2022, they can pay additional return, additional capital, to shareholders without committing to it in the future. And I think as shareholders of Tourmaline, we’re really pleased that they’re deciding to retain capital to really focus on completing their infrastructure buildout to position the business for the decades beyond.
ANDREW: Just — sorry, you touched on this, Ernest — but just remind us, what is their LNG exposure? I mean, ultimately, how much of their production could start going to LNG exports, or do you have any kind of number on that?
ERNEST: So for 2026, about eight per cent of their production is tied to LNG benchmarks. They are not a direct participant in LNG Canada, but they are a participant in Rockies LNG, which is still deciding whether they want to go forward with that project. But I think the bigger picture for LNG is that as 11 per cent of natural gas in the Canadian energy basin goes to LNG, that is going to be a tide that lifts all boats, including local benchmark pricing. And we have yet to see that, but I think we’re still moderately bullish on that in the medium term.
ANDREW: And of course, Qatar has really got a black eye, hasn’t it, in this latest violence in the Middle East. It has been hit by Iranian attacks, and in the past it said, well, we’re a rock of stability.
ERNEST: Sorry, can you repeat that?
ANDREW: Oh, just talking about Qatar in the Middle East, the huge LNG exporter.
ERNEST: Oh, Qatar, yes. Sorry. Qatar is the largest exporter of LNG. They’re responsible for about 20 per cent of global LNG exports. They have curtailed that because of the issues in the Strait of Hormuz, mostly exporting to Asia, places like China. And again, there’s no real way for the world to be able to find alternative sources of LNG to replace that. And that’s why you’re seeing spot LNG prices rise quite significantly over the last few weeks.
Now, I think what you will see is that in places like Asia or even in North America, because of higher LNG prices and the lack of supply, they may end up switching back to coal. So that is something we’ve seen — coal prices rise by 20 per cent over the last week as well. And so I think there’s a lot of dynamics in terms of how that ends up influencing natural gas pricing in the near term.
ANDREW: Thank you very much indeed for joining us. Always great hearing from you, Ernest. Ernest Wong is head of research at Baskin Wealth Management.
---
This BNN Bloomberg summary and transcript of the March 5, 2026 interview with Ernest Wong are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
