Athabasca Oil Sands Corp (ATH.TO)

Started out as an acquirer of oil sands leases. They have migrated into light oil, but this has not wowed anyone. They are looking for conclusion to these oil sands plays. Doesn’t plan to buy.

It is cheap in terms of market price vs net asset value. $12 vs $8.08. There is a general concern however about over promising and under delivering. They just sold an asset to China and will put capital into Duvernay property. Prefers others.

Prefers smaller players for his oil exposure. Likes the ones that have more exposure to discovery, a pickup in oil production to the bottom line and just changing to a dividend model. Has an $11 target on this.

Approval has just been given on order in Council. They just need the environmental approval which should be a “go” on the Dover project. This means they can now exercise their Put option and Petro China will have to pay them over $1 billion on their joint venture. That cash should be in their hands probably 90-120 days from now. The upside from here may be $10. Now that the company has the cash, a clean balance sheet, now needs to show operational excellence. He’ll have to see 3 or 4 quarters. They are also looking to joint venture there Duvernay as well.

Easy money has been made. Stock probably goes sideways for a while. NAV is high. Trading at a nice discount but the catalysts won’t come for a year to 18 months.

There are a few dynamics in the story that might challenge the stock price from reaching $10.62 a year from now. Shareholder base largely consists of New York hedge funds as opposed to fundamental buyers. That community needs to sell eventually to realize again on a trading catalyst. This is a stock that you need to be really on top of. Risk/reward is not worth the gray hair.

Been disappointing, even though it is settled with the first nations. What really gets it going is the development. The Canadian oil and gas space has suffered, but is starting to come back.

Have a big overhang with a Chinese deal that is hanging in the balance. Chinese have a Put/Call option and they would like to put this project back to Petro China. Natives do not want development on their lands. This is all tied up in the court. Most analysts think fundamentally this is a great name and that it will eventually get resolved. But given all those issues, this is a stock he would avoid.

Thinks oil is going to do well over the next little while and this company will do well.

He has difficulty with it. It plateaued quite low. Looks like a buy technically and they have good assets. It does not thrill him however.

One of the more volatile names in Canada. Has been caught up in a few issues such as ongoing joint venture discussions. Feels the Duvernay is going to be a standout play this year. They really need either to secure a Duvernay joint venture or to have an ongoing issue with one of the oil sands developments. A judge ruled that there may have been constitutional grounds which were not evaluated by the governing oil/gas body in Alberta. He is hopeful that they settle with the 1^st nations, but the most likely scenario is that they will sign a joint venture given the stupendous economics that have been achieving in the Duvernay play. High data/high volatile name.

In a difficult risk/reward ratio at this $7 price level. Concerned that they are waiting for an order in Council from the Alberta Cabinet to go ahead. Too much headwind and uncertainty.

Had a low in 2013 of around $5.70 so it has a little ways to go before testing the support. Chart looks like we are getting a bit of a basing pattern. If you don’t own, he would be much more inclined to Buy on this breakout at around $8.50 with a little bit of volume. A downtrend was established part way through 2013, followed by a couple of little peaks where it tried to run up. You don’t have to rush out to buy energy right now as seasonal strength comes in at around mid/early -February.

Would probably never be a buyer of this company. They have ambitious plans to become an oil Sands producer. He doesn’t buy optimism; he buys pessimism, which means getting companies that are making money now at a cheap valuation. Doesn’t know if this company will ever be worth something. His favourites are Canadian Natural Resources (CNQ-t) and Suncor (SU-T), which he thinks are extraordinarily cheap.

Thinks we are range bound in the oil industry. There is potential for a long term bottom developing. If we see it breaking resistance, that would be quite bullish. If it breaks support you don’t want to be there. Nibbling away here with a stop would be one way to play it.