Athabasca Oil Sands Corp (ATH.TO)

(Market Call Minute) Big integrated oil companies have no pricing power so own the infrastructure companies, same as IMO-T.

He owns the debt instead of the stock because there is 4 times asset coverage. The oil sands project is under controversy. The Chinese partner could pull out. He would say it is worth $5.50 as a NAV. Depending on who the new president is, you might see an increase in the share price.

Likes this name. Involved in exploration, development and production of oil, especially out of northern Alberta in the oil sands region. Did a couple of joint ventures with the Chinese to help fund both their oil sands projects as well as some of their light oil plays. One of their light oil plays is in the Duvernay where they are the largest landholder in the Cowell (?) area in central Alberta. Currently producing 4200 barrels per day as opposed to what they should be producing of 10,000. Because of lack of infrastructure they weren’t able to get that on stream. If everything lines up properly, they can produce upwards of 100,000 barrels per day.

Thinks there is an expectation of the company “needing” the Chinese deal. As it gets delayed, the stock is weak. Although they are profitable, they are expensive because in the next couple of years there is growth. The market with their view on energy is not willing to pay in advance. Thinks this will continue until there is actually a deal.

(Top Pick Mar 19/12, Down 23.52%)

A trading stock for him. Seems to be a lot of trading around their press releases. Started to move from more of a land based JV type operation to really growing a company with a sizable amount of employees and production growth so there will be some hiccups along the way. On the right track. If you come by this below $10, it represents good value and will probably see it trade closer to $12.

A disappointment to the people who got this on the IPO. Hasn’t been doing that well. If he knew what was going to happen with the Keystone pipeline and the pipeline heading to the Pacific, he would feel a lot better about increasing his exposure to the sector.

Rebounded slightly off of its lows. Have been long on promise and short on delivery on a few things, which have largely been out of their control. Have an agreement with Petro China that was to be exercised by year end but was caught up by an aboriginal issue. Could take as long as April to clear. This will bring in $1.2-$1.3 billion. Also trying to negotiate a joint venture on some of their oil sands properties. Rumoured it is with the Kuwaiti government which has been in turmoil. Have been able to ramp up their light oil division and producing over 10,000 barrels a day. A lot of value but it is going to take a little bit of time.

Extremely rich assets. Really needs to get into the development phase of its oil sands, which are quite major. If you own, be patient. You need a higher price in oil and he doesn’t know if that is going to happen.

7.5% bond maturing November 19/19. Thinks the technology for oil sands is continuing to improve every year. The fact that this company is getting into the business now puts in at an advantage to the people that were doing traditional oil sands mining before.

Very strong company. Brilliantly financed. Unfortunately, it will take time for it to actually become a producer in its main assets in the oil sands.

100% oil. It is a land play, rather than a production play. They will spend a significant amount of capital in the next 2. There is a lot of liquidity here.

Industry is getting very expensive. Management is dragging their feet.

Thinks that oil prices are going to settle down and they are not going to be a very low cost producer. He would be wary on this.

This is one that investors have gotten a little bit frustrated with. In August, Kuwaitis were forming a deal to do a joint venture. It now looks that the deal has been reaffirmed again. At this valuation, this should do fairly well. For its barrels in the ground, it is trading at about $0.15 and should really go for $0.75-$0.80.