Opinions
Paul Tepsich
Athabasca Oil Sands Corp
ATH-T
TOP PICK
Apr 25, 2016
$1.180
Stock price when the opinion was issued
oil
gas
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PAST TOP PICK
(A Top Pick Mar 22/24, Down 6%)Note the short timeframe.
Correction over the past 2 months in price of oil and stocks. Price of oil has bounced back, but not the stocks. Now in a holding pattern, with support around $5.25 and resistance $5.75. He sold as he saw the correction unfold. In his universe, other energy stocks are more highly ranked right now.
oil
gas
TOP PICK
Buy any dip. They will modestly grow production over 5 years and buy 68% of shares at the current oil price; at $80 they could almost privatize. At $70 oil in 5 years, they will free cash flow at the current share price. Has 50 years of stay-flat inventory. At flat oil, will go from 3.9x cash flow this year, 3.2x in 2026 and 0.3x in 2029.
(Analysts’ price target is $6.42)
oil
gas
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7.5% bond maturing Nov 19/17. Probably one of the only exploration/production companies on the continent that is in a net cash position. It will have about $900 million in cash when they do the Murphy Oil joint venture, and have about $800 million of debt. The bond is worth $550 million. More senior to it is a bank debt of about $250 million. The $250 million debt matures after the bond in 2019, which is not a position that bankers usually like. The loan has a “springing” maturity, which means if any of the bonds are outstanding 6 months before they are due, the bank debt becomes due immediately. The company likes the bank debt which has a very attractive terms. Thinks the company is going to do a combination of paying down all this bond and maybe refinance with the new bond for $150 million.