06:16 AM EST, 02/07/2025 (MT Newswires) -- Tenaz Energy ( ATUUF ) received an Outperform stock rating and $23 target price as National Bank of Canada initiated coverage of the company.

The oil and gas sector has evolved into a sustainable capital allocation model amid lower leverage and focus on returning free cash flow to shareholders, the bank noted.

Tenaz stands out strategically as it focuses on acquiring high-quality international assets that often were underfunded by "supermajors" such as Exxon Mobil or Shell, the bank said. Tenaz often manages to unlock free cash flow generation in the early stages by optimizing operations with marginal capital investment, National Bank said.

In Canada, Tenaz operates out of the Leduc Woodbend area of Central Alberta. Internationally, Tenaz holds offshore natural gas and midstream assets in the Dutch North Sea, which offers expansion opportunities.

Texas's strategy of targeting undercapitalized, non-core assets is a unique opportunity given the wide range of global operating regions it can evaluate, the bank said.

The company aims to expand its portfolio by focusing on strategic regions such as Europe, South America, the Middle East and North Africa.

National Bank said it would prefer that Tenaz continue consolidation out of its core European region, leveraging experience and relationships.

Tenaz closed trading on Thursday at $13.75.