TORC Oil & Gas Ltd.


TSX : C$8.54

Target: C$13.75

TORC is a dividend paying junior oil & gas company with assets in Alberta and Saskatchewan. TOG is listed on the
TSX under the symbol “TOG”

All amounts in C$ unless otherwise noted.

Our target price of C$13.75 is NAV based and implies a 2014E EV/DACF of 9.2 x

Energy — Oil and Gas, Exploration and Production
Investment recommendation
We are reiterating our BUY thesis on TOG, as we believe the stock is
well positioned for a strong run through Q4. In addition to a compelling
valuation, solid balance sheet, and motivated and proven management
team, TOG has several potential catalysts on the horizon that could
boost the stock as we head into year end. As a result, we believe the
current share price represents an excellent entry point into the stock,
and we are adding TORC to our CG Focus List.
Catalysts on the Horizon
 Catalysts Expected: Time to Get In. TOG has several potential catalysts on the horizon over the next three months, which we believe makes now an excellent entry point into the stock. These include:
 Guidance Increase with Q3? Our current model incorporates TOG’s 2013 exit rate guidance of 9,500 boe/d, with a 5% increase in production through 2014.
Given the company’s Q2 production level of ~4,300 boe/d and the asset acquisition of 5,700 boe/d, we believe TOG may be in position to raise its guidance, particularly given an active drilling program through the back half of the year. By our estimates, TOG may be in position to increase exit rate guidance by +5%.
 Upward revision in oil price decks. With the continued strength in the oil price, we believe many investment dealers will be revising their 2014 oil price decks higher in Q4. Given TOG is 85% weighted to oil, its valuation and payout ratios should look even more attractive in industry comp tables in the coming weeks



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