Advantage Oil & Gas Ltd (AAV.TO)

This has done an incredible job of production and getting their costs down. We have a real use of natural gas for electricity air conditioning generation across North America, so gas prices are up. This is not the day that you want to buy gas stocks.

Can see a lot of merit in owning a company like this. This is one of the premier, if not the premier gas producer in Western Canada. They have a huge amount of running room. Fantastic balance sheet and great hedges in place. The company has grown into a manufacturing exercise, and manufacture returns in a very repeatable way. They own their own infrastructure and have firm capacity on the Trans Canada (TRP-T) going out to accommodate their growth. He would expect this kind of a company to grow 45% this year.

(Market Call Minute.) Just recently purchased this. It is gassy and very well-managed. Had a record quarter last week. His one-year target is $10.

Have done an excellent job ratcheting down costs. They struggled a little when they were a trust, but then spun out their oil production into Longview. This has put them into the category of a lower cost producer on the gas side. They actually make money when everybody else is not. Have hedged very well and have a huge cash flow growth profile.

It is a unique company that has performed well compared to its peers. They have the second lowest operating cost. They are growing year over year. They are generating good margins compared to their peer group. They have a great balance sheet and they did not get onto the bandwagon of buying things. They might get acquired.

A natural gas company that has performed really well. One of the better performers in the oil/natural gas space. Have really executed in terms of their growth strategy, super low cost. Have all the hallmarks of a good company, but she just doesn’t like natural gas right now. Well hedged going into this year and next.

Uncertainties have been taken away from their growth path. They found an area that is extraordinarily profitable. The right management team and the right formation.

Good operating costs. They have one of the best abilities to generate cash flow in the natural gas space. Thinks this is a company that is going to do great things. They are working on a plant expansion and the growth we are going to see from that is just phenomenal. This is going to be a cash flow machine in the next couple of years.

More of a natural gas player. The balance sheet is in good shape. They have a very well executed CapX plan. This is an excellent time to sell the have nots and buy the haves like this one.

Has recently been buying this at around $5.50 because had felt it had gone too negative. Won’t be holding it for very long. For a longer-term investor, this is doing just fine. Their production comes on in lumps, so you can wait a quarter or 2 before there is really much to talk about. They should have some exploration down to the southeast of where their properties are now. Have been increasing the productivity of their wells along with all the other Montney producers.

This is a gas weighted name. There are a lot of people that feel gas is going higher, but there are others who feel the deficit in gas may not be as great as people thought it would be. She is not ultra bullish on gas. They have a concentrated asset that will most likely get bought eventually. Prefers others.

Short and mid-term outlook for gas has improved, but now you are questioning if some of the gas names have gone up too much. This one is 90% gas, fairly unhedged and was a name people did not like because little liquids. He could see it rising a bit more, but not more than 10-15%.

They tried to surface value with a sale but it didn’t work. Their gas property does not have liquids so is hard to sell. Would advocate a switch into something like BXE-T.

Going through a strategic review so the clock is ticking. If they get sold, there could be a little bit of upside. The movement in NYMEX oil and AECO gas would be supportive for someone taking this out. If they don’t sell, then they have to operate the company for the next 5 years and, they have a little too much debt. He is more comfortable with other natural gas names but owns a little bit.

(Market Call Minute.) Prefers higher yielding, more oily names.