Energy is one of the heavyweight sectors on the Toronto Stock Exchange, and many constituents are highly profitable. Oil and gas stocks dominated the TSX30 List in 2023 and 2024, the flagship program for Canada's top growth stocks.

However, if you're investing in the sector, Valeura Energy (TSX:VLE) is the ultimate energy stock to buy right now. At only $6.50 per share, current investors enjoy a 128.9% year-to-date gain. A $1,000 position on December 29, 2023, is worth $2,288.33 today. This small-cap stock is a winner, given its 1,344.4% overall return in three years. I won't be surprised if VLE makes it to the 2025 TSX30 List.

Business overview

Valeura Energy is an oil and natural gas producer with headquarters in Singapore. Its material-operated oil-producing assets are in the offshore Gulf of Thailand. The $695.5 million Canadian company also operates in the Thrace basin, onshore in north-west Turkey.

According to management, Valeura started as a small Turkish gas explorer and producer and is now Thailand's second-largest oil producer. Its successful exploration and appraisal activities assure longer production life. The company also commits to pursuing organic and inorganic growth to enhance shareholder value.

Milestone and business decision

In Q3 2024, net loss reached US$3.9 million compared to the US$11.3 million in net earnings in Q3 2023. The loss was due to lower oil sales and the payment of US$30 million in petroleum taxes following the consolidation of the Thai assets into a single subsidiary. It was a milestone and necessary business decision.

Dr. Sean Guest, Valeura's President and CEO, said, "All steps are now completed for us to pool our forward costs and apply our substantial tax loss carry-forwards to the combined income generated from the Nong Yao, Manora, and Wassana fields from November 1, 2024 on. We have achieved record production rates in both September and October."

Besides immediately increasing the company's cash flow generation, Dr. Guest added that it would further enhance the ability to extend the fields' producing life. Management expects strong Q4 2024 financial performance because of higher production and unusually high crude oil in inventory at the end of Q3.

Valeura had no active operations in Turkey during Q3 2024 as it searches for a farm-in partner to help move to the next phase of work. The company has between a 63% to 100% interest in the deep gas play. It will apply for an extension of the exploration license expiring on June 27, 2025.

Strong buy

Valeura Energy has zero debt after fully repaying all outstanding loan obligations in Q3 2023. As of September 30, 2024, the available cash is US$156 million. Dr. Guest further said the company is well-positioned to continue pursuing value through portfolio growth and accretive acquisitions.

More importantly, the Gulf of Thailand is a competitive advantage. Valeura Energy can maintain and considerably improve the reserve life index because the continued development of existing fields continues to replace production historically. This energy stock is a "strong buy" for its strong balance sheet and expected cash flows in the near term.