| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | n/a | n/a |
| Intrinsic value (DCF) | n/a | |
| Graham-Dodd Method | 3.48 | -45 |
| Graham Formula | 0.00 | -100 |
Storm Resources Ltd. (TSX: SRX) is a Calgary-based oil and natural gas exploration and development company focused on Northeast British Columbia's prolific Montney formation. Operating in the Umbach, Nig Creek, and Fireweed areas, the company held 120,000 net acres and 49.1 million barrels of oil equivalent (BOE) in proved plus probable reserves as of December 2020. Specializing in unconventional resource plays, Storm Resources leverages horizontal drilling and multi-stage fracturing to develop its natural gas-weighted asset base. The company was acquired by Canadian Natural Resources Limited (TSX: CNQ) in December 2021, integrating its operations into Canada's largest independent crude oil and natural gas producer. Prior to acquisition, Storm demonstrated operational efficiency with $155 million in annual revenue despite challenging 2020 market conditions. The company's strategic positioning in the liquids-rich Montney play offered exposure to premium-priced natural gas markets through proximity to LNG Canada's coastal export facility.
Storm Resources presented a leveraged play on Montney natural gas prior to its 2021 acquisition, with attractive reserve metrics but significant financial risk. The company's 1.44 beta reflected sensitivity to commodity price swings, evidenced by a marginal FY2020 net loss ($214K) despite $155 million revenue. Operational cash flow ($52.7 million) nearly covered capital expenditures ($59.3 million), but $136.8 million debt represented substantial leverage for a junior producer. The zero-dividend policy prioritized development spending over shareholder returns. The acquisition by Canadian Natural Resources at 0.7x EV/DACF (Q3 2021) validated Storm's asset quality but highlighted challenges for standalone juniors in capital-intensive unconventional plays. Investors gained indirect exposure through CNQ's diversified portfolio post-acquisition.
As a pure-play Montney operator, Storm Resources competed against larger intermediates and majors in British Columbia's gas-weighted basin. The company's competitive advantage stemmed from concentrated acreage position (120K net acres) in liquids-rich corridors with existing infrastructure access. However, scale disadvantages appeared in FY2020 financials - while peers hedged 2020's price collapse, Storm's $214K net loss reflected limited risk management capacity. Operational metrics showed efficiency (OCF covered 89% of capex), but the 2.2x net debt/EBITDA ratio (assuming $70M EBITDA) constrained flexibility versus better-capitalized rivals. Storm's technical expertise in multi-well pad development matched industry standards, but lacked proprietary technology differentiating top Montney operators. The strategic premium in CNQ's acquisition confirmed reserve quality (49.1MMboe 2P), but highlighted standalone challenges in marketing gas without midstream integration or LNG exposure that larger competitors possessed. Post-acquisition, Storm's assets benefit from CNQ's economies of scale in operating costs and market diversification.