Journey Energy (JOY.TO and JRNGF) Valuation Update - May 10

[dan_s]

This is a very interesting Canadian Small-Cap.

Take some time to go through their updated slide deck here. If all goes according to the plan, Journey should be a much stronger company in 2026. See slide 8 in the slide deck at the link below.
https://www.journeyenergy.ca/wp-content/uploads/Reports/Presentations/May-Corporate-Presentation_2025_Final.pdf

JOY.TO closed at $1.52Cdn on May 9th. First Call's price target is $2.75Cdn

I have updated my forecast/valuation model for the Company's solid Q1 2025 financial results, that beat my forecast, and their updated guidance.
I am lowering my current valuation to $3.25Cdn per share just because I lowered my valuation multiple to 3.5 X operating CFPS. With all of the uncertainty around oil & gas prices and the results of their Duvernay Shale joint venture with Spartan Delta (SDE.TO), I think a lower multiple is appropriate.

That said, if the Duvernay JV development wells come on strong, there is significant upside for this stock. I do have a lot of confidence in the team over at Spartan Delta, the operator of the Duvernay JV. Initial well results have been impressive. Spartan Delta is expected to announce Q1 2025 results on May 12.

Based on my updated forecast, Journey should generate enough operating cash flow to keep up with their share of D&C costs in the JV.