Arc Resources Ltd (ARX.TO)

There has been a big decline in energy prices. This is a very good management team. The dividend is sustainable at current levels. They have exposure to all the right markets. A balanced portfolio. Longer term this will make some money.

He is modeling this assuming that WTI oil is at $80 and stays there, and natural gas is at $3.50 and stays there. The balance sheet is still very strong. Cash flow is 1.1X versus its peers at around 3X. Cash flow growth would still be very strong at around 16%. Dividend growth rate would still be quite good with the payout ratio of about 117%, still sustainable relative to its peers at that level of about 145%. Valuation would still be good. An excellent operator with great resources. They stand to benefit from a lot of LNG opportunities opening up, seeing that they are 40% exposed to natural gas.

He is not bullish on the energy extraction industry at all right now. There is a whole lot of oil, gas and coal in the world. These guys are price takers. There is nothing they can do to better their prospects in the market. Capping wells is a bad solution for income investors. Look in a more stable industry like a high paying REIT for income.

A core energy holding. Has been a disappointment recently because of what Nat Gas is not doing. 4% yield. It is too late to sell it.

This has done well. Dividend has been stable. Feels the natural gas price has to stay above $4 longer-term, and then they could look at increasing their dividend. The model is that they pay out a lot of the cash flow in dividends, so you can’t expect a big increase.

(Top Pick Aug 19/13, Up 28.74%) A perennial sleep at night Nat gas stocks. It always trades at a premium. The dividend is very sustainable.

Natural gas normally bottoms around the end of August, as do the stocks. Now there is a nice little base pattern forming. The trend is still not there yet and relative strength is probably slightly better than the TSE. He likes gassy stocks and they are showing signs of base building.

(A Top Pick Sept 19/13. Up 24.72%.) They continue to deliver. Have very good lands in northeast BC and Alberta, and are strong operators in that. Well-placed for LNG, should that come about at some time.

Suffered a little bit because natural gas prices have come down. He is constructive on this name. Just reported and had 110,000 production versus 107,000 that the market was looking for. Their Parkland and Tower assets are having very impressive production growth. His model suggests that this could have 40% earnings growth over the next few years. Payout ratio of 116% on 2015 estimates is pretty good. A pretty clean balance sheet.

One of the premier names in oil/gas in Canada. Great track record of creating shareholder value. Very strong management team. Strong technical focus on a risk managed basis, which she tends to like. Very committed to being a balanced income and growth player. Have had top quartile efficiencies in all of their plays. Their recycle ratios are about 2.2, comparing very well with their peers. Very low funding and development costs. Have been able to replace the reserves by more than 200%. Dividend yield of 3.76%.

Really likes this. When we get pipe to the West Coast and they start taking Montne gas out, this is going to be a beneficiary. Has a great yield.

A good looking chart. It has gone through periods of consolidation. It is probably due to pull back which would probably be $30. As a longer-term trader, he would not be worried about this.

Positive. Momentum is strong. These names are going to go higher although not as fast as over the last couple of months. There is a chance they could increase the dividend in the future.

The gas price has done well because of the cold winter. He likes gas and wants to be invested in it. They are not super low cost so he has stayed away from it. LNG works if the gas price is low because other countries want to buy it then, but if it goes up they don’t.

A core holding. Very conservative balance sheet and strong track record for management. It has been held back in price appreciation. Thinks there may be a large financing from Imperial oil coming soon.