TRILOGY ENERGY CORP. $27.33 - Toronto symbol TET

TRILOGY ENERGY CORP. $27.33 (Toronto symbol TET; TSINetwork Rating: Speculative) (403-290-2900; www.trilogy.com; Shares outstanding: 90.5 million; Market cap: $2.5 billion; Dividend yield: 1.5%) owns oil and gas properties in the Kaybob and Grande Prairie areas of central Alberta. About 64% of Trilogy’s production is natural gas. The remaining 36% is oil.

In the three months ended December 31, 2011, Trilogy produced 28,288 barrels of oil equivalent per day (including natural gas), up 31.3% from 21,544 barrels a year earlier. The higher production pushed up the company’s cash flow per share by 75.9%, to $0.51 from $0.29.

Trilogy drilled 68 wells in 2011, with a 98.5% success rate. That pushed up the company’s production and boosted its reserves by 13%, to 88.6 million barrels from 78.2 million. That’s enough for over 11 years of production.

Trilogy aims to continue its drilling success in 2012 by increasing its exploration spending by 5.3%, to $300 million from $285 million in 2011. That will help the company push its output above 40,000 barrels a day this year.

The company’s long-term debt is now $413.2 million. That’s a low 16.5% of its market cap. Trilogy pays a monthly dividend of $0.035 a share, for a 1.5% yield.

Trilogy is forecast to report cash flow of $3.25 a share in 2012. The shares trade at 8.4 times that estimate. Its cash flow could rise as high as $4.76 a share in 2013. The shares trade at 5.7 times that forecast.

Trilogy Energy is still a buy.

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