Opinions

Mason Granger Anderson Energy Ltd. AND-T HOLD Feb 24, 2012

Likes to think of this as a capital destroyer. If you invested 5 years ago, you’ve lost 95% of your money. Has very distressed shallow gas assets in the Edmonton Sands play but they do have some fairly decent Cardium acreage and are slowly trying to migrate the portfolio development over to the oil side. Expect there will be a positive sale over the next few months.

Mason Granger

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$0.630

Stock price when the opinion was issued

oil gas

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COMMENT

Have been able to develop an oil play prospect on top of the gas prospect. A lot of prospective drilling over the next couple of years and really increase production and improve their cash flow profile. Prospective takeover target but the price will have to go up a bit more before they would be willing to sell.

DON'T BUY

Used to be a dry gas company and are now transforming. Stock is cheap but no major catalyst. There are better stocks where they are at lower valuations. People are tired of the story.

WAIT

Long reserve life, but balance sheet is in trouble. You want to see the stock make a bottom.

BUY

Descent name. Production has been in line. He encourages you to pick it up.

DON'T BUY

Going through a painful transformation from a dry natural gas company to oil. Drilling in the Cardium. Debt is a bit of a concern. Value trap.

DON'T BUY

Small cap, successful in transitioning in to an oily name, but he doesn’t like it. They have a fairly substantial debt load – 2.7 times. There are other names below 1. Not an expensive multiple, but there are better names he would buy.

DON'T BUY

(Market Call Minute) Debt to Cash is about 3.4x. Trying to find a buyer, so risk/reward is not in your favour.

COMMENT

Had a bit of a debt problem so they’ve been selling off assets, which has brought their overall gross cash flow down, but it has cleaned up their balance sheet. Thinks they have a bit of a shot here. Doesn’t own the stock, but owns convertible debentures that are trading $.85 on the dollar. This gives you equity like returns with a bond here if it matures at par in a couple of years. Play this one through convertible debentures.

COMMENT

They are undergoing a turnaround. Last fall they were looking at strategic alternatives, which led them to sell about $150 million of assets and to pay off their bank loan. Unfortunately, they still have over $90 million of convertible debentures, paying about 7.5% that they have to deal with. Has huge potential upside, but it is a very dangerous situation. Has the same old management that got them into troubles in the first place

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Mason Granger Anderson Energy Ltd. AND-T HOLD Feb 24, 2012

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