Athabasca Oil Sands Corp (ATH.TO)

Risk profile has gone up so his position is smaller than it used to be. They have deal to sell their property to the Chinese and all they need is approval by the government. There has been some dispute with the natives around the lands, so approval is late arriving. He believes the approval will come and they will have the money to spend on their growing Duvernay exploration portfolio. If they don’t have it, they will have to retrench and backtrack which will change the financial picture a little bit. High risk play.

Have light oil assets in the Duvernay, which are worth probably $7 a share on their own. Also, have all the thermal oil, basically the oil sands project that they have. Have $1.3 billion still due from Petro China. Thinks it has an asset value of $20 a share. It’s like buying something for $0.30 on the dollar. Buy it here, put it away and you’ll be fine.

You could certainly buy this at the current price, using $5.70 as your base with a 15%-16% stop loss. You probably would want to have it a bit tighter, 5%-10% to prove the merits of it.

His second largest holding. Had a dramatic rise then a court injunction against them. If Alberta government delays the project, and the judge rules against them, then it will work against them. This is a high risk name. He believes they will get a positive outcome.

Very contentious name in Canadian energy. A little bit of a binary situation right now given the situation it has in the oil sands and the 1^st nations. This has been dragging on the name. They also have a very, very large Duvernay land position, an area where there is an abundant and very rich gas/oil resource. Thinks this is being undervalued by the market. He feels the 1^st nations issue will get resolved at some point. Not for the faint of heart as it is very volatile. They also have a relationship with a Chinese player and there is a large financing that is required to continue on these resources.

Oil sands company with a huge problem in terms of court challenges from 1^st nations. They got approval but now there is a leave to appeal. Thinks there is value there but you don’t know which way a court is going to decide. Feels something will be worked out. Uncertainty will kill the stock but if you are really patient and can park it for a couple of years, you’ll do okay.

This story is one of success of attracting a Chinese joint venture partner and that has been challenged. Feels the market is terribly afraid of the possible outcome with respect to the appeal by the 1^st nations group. Too many variables unfolding, which makes him very nervous.

Has never been one of his favourites. Too long to wait until the oil starts to flow. Have good properties but now a local Indian band wants a 20 km cushion between them and the operations. The decision has been appealed. The other part of the problem is that the Chinese oil company needs to pony up about $1.3 billion in the near future that will allow them to continue their operations. He thinks they are going to do it, so if you own, continue to hold.

The Duvernay light oil assets alone are probably worth $7. There is $1.3 billion hanging out with this joint venture money cash coming in from Petro China as soon as you get the approvals. Also, there are other deep oil sand assets. He can see an easy NAV of over $20 a share. You also have Warren Buffett buying into Suncor (SU-T). Oil stocks are cheap. Thinks this one is the cheapest of the cheap.

This is such a hated name that it has been pretty bombed out. Should be receiving the proceeds from their put with Petro China in the next 2 months. $1.3 billion amounts to $3.30 a share. Duvernay is going to be one of the key plays for 2014 and this company has 200,000 net acres in what they believe is the core of the play. This could ultimately be worth $5-$7. Also, have 1 billion barrels of reserves and about 7 billion barrels that you are getting for free.

Being really cheap and with a little bit of production, it has been waiting a long time for the Chinese deal to come through. The impact of that it has had a small recovery. Statistically, it looks very cheap. If you buy it here, you are taking a chance on everything coming together. He would prefer companies that he knows would grow production now.

Appeal by 1^st Nations is a continuing problem for them. It will likely delay the closing of the transaction with the Chinese oil company, where the injection of capital is crucial for this company, to continue its other drilling projects. If they are not able to consummate the transaction, this company has real financing problems. Without the support of the 1^st Nations it’s a very risky proposition for anyone.

(Market Call Minute.) Has capital raising issues.

(Market Call Minute) Probably a buy.

There was a major trading milestone on a ruling in favour of this company or the 1^st Nations. There were a lot of investors using this as a trading catalyst, including himself. The ruling went in favour of the company and the stock moved up. He sold his holdings. Once approvals have been finalized, Petro China will issue a cheque to this company for $1.3 billion, which is worth $3.30 per cash per share. If the price gets any weaker, he is going to buy back what he sold.