Mike Kruger of MPK Partners presented his thesis on Tenaz Energy (Canada: TNZ) at Best Ideas 2026.
Thesis summary:
Tenaz Energy is a shareholder-friendly E&P moving from an M&A-driven recapitalization story to an organic growth platform. CEO Anthony Marino previously ran Baytex and Vermilion, multi-billion dollar Canadian E&Ps, and in 2021 recapitalized the nanocap Altura with former Vermilion colleagues; insiders own 16%. Mike sees a conservative, non-promotional dealmaker with a record of disciplined capital allocation. Canada is now just over 10% of production, and the rest comes from the Dutch North Sea.
Tenaz avoids crowded North American auctions, targets unlevered after-tax IRRs of at least 20% before asset improvements, and sees 90-95% of its bids rejected. Its big deal came from non-economic sellers: Shell and Exxon wanted out after Groningen earthquakes brought bad press, and the mature basin no longer moved the needle. The lockbox cut NOBV’s C$246m headline price to about C$10m of net cash plus an earnout. Before GEMS, Tenaz had spent C$120m for about C$800m of after-tax 1P reserves.
The portfolio is now about 93% natural gas. NOBV came with well-maintained infrastructure, an operated stake in the Den Helder gas plant, and ocean-bottom-node 3D seismic revealing dozens more locations than the 5.3 net wells in 2P reserves; one decent well a year holds production flat. GEMS holds the highest-producing well in the Netherlands, and three exploration prospects carry C$310m of risked value outside its C$590m of 2P reserves. Management sees a 2026 exit rate of up to 27,000 boe/d.
Mike argues the cost of shipping U.S. LNG to Europe puts a floor near €27-28/MWh under Dutch TTF prices. Piped domestic gas is cleaner than LNG and aids energy security as EU Russian imports end by late 2027, and Tenaz is now the largest Dutch gas producer outside state-owned EBN. Funds flow should jump in 2026 with eight large wells planned, both senior notes become callable in mid-2027, and about C$185m of liquidity leaves Tenaz ready for more deals in Europe, MENA or Latin America.
Tenaz recently traded at C$31, a C$1.0bn market cap and C$1.4bn EV, or 115% of after-tax 1P and 75% of after-tax 2P reserve value. No longer “stupid cheap,” the shares still price the acquisition program and exploration upside at zero, and Mike believes reserves are understated. Net debt is just 1.1x 2026E FFO, and about half of next-year production is typically hedged. Capital returns could start at 50,000 boe/d. Risks include a global recession and a less gas-friendly future Dutch government.
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