Birchcliff Energy Ltd. (BIR.TO)

He holds no natural gas stocks in his portfolio as he remains bearish on natural gas. It is trading 5 times cash flow – near trough levels – but it is difficult to excite investors and the variability of weather is too uncertain.

(A Top Pick December 18, 2017. Up 24%). This will be a significant beneficiary of LNG Canada for 2023, along with Painted Pony, Bonavista Energy and Tourmaline. He sees this rising to $9 in 12 months and $15 in the next 3 to 5 years. Production is 80% natural gas. They will raise their liquids percentage with the new wells in Gordondale. Book value is $6.42 so the company is still trading at a discount to book.

He likes this a hold for a positive FID announcement on a west coast LNG project. They are a drier gas play than others with a solid balance sheet. (Analysts’ price target is $6.90)

Seeing strong improvement now. Since 2017, it's been in a strong downtrend, but has recently improved. He likes it. Been a good rally in the past month, and he sees further upside for this stock and natural gas in general.

He likes the company. He has a $9.00 1 year target and book value is $6.42. He has a $15.00 target for 3-5 years.

Birchcliff vs. Trican Well (TCW-T) Go with this instead of Trican Well. (Analysts’ price target is $6.44.)

The seasonal strength for energy names is from the end of January to the start of May. The demand for energy product has been stellar. There is a trend of lower lows but that has been broken now. Everything looks good for this except for the fact that the seasonal strength is over, and the easy money has been made already. There is another period of strength in July. You might want to pause.

They have a large exposure to AECO gas pricing, which today was trading at negative $0.15/GJ. Without the cold winter weather, AECO could be much worse. Longer term, the LNG decision by Shell to potentially go ahead could propel the stock up in the next 2-3 months.

They struck a good long term relationship with AltaGas. They were sold off due to its primary exposure to AECO. He thinks it is fully discounted, the selloff was overdone and if you hold it you will make money. But there are better bargains available.

Steady decline. Was above $10 in 2017, fell, found support at $3, so it's good to buy now. Keep in mind there will be lots of resistance at $5 with people selling. Start reducing at $3.50 and get out at $3. It's a good company like most oil companies now, but be cautious.

(A Top Pick June 12, 2017. Down 33.70%). This has been a nasty market. The TSX energy index is down 10% year to date and the big international investors are hiding in the CNQ’s and the Suncors. The natural gas stocks have been devastated. Birchcliff is very cheap. It’s book value at the end of 2017 was $6.30. It trades today at $3.87. They are 79% natural gas, 21% liquids. In 2014, this stock traded at 2.2x book value, so it should trade at $13 to $14 in a bull market. His target for a year from now is $9. It also pays a 10 cent dividend, for about a 3% yield. The negativity around this stock is about takeaway capacity, which has been very tight, but capacity has been rising significantly, especially for liquids. As companies shift focus, their total production doesn’t increase but their proportion of liquids increases as the payoff and prospects for these has improved.

Hey says production came in higher than his expectations in Q4. It is trading just above 2 times cash flow and it has a good dividend. Book value is estimated at $6.30 and it has traded close to 3 times book value historically. He and his family own this one and he sees a price of $15 over the next 3-5 years. Yield 3.1%. (Analysts’ price target is $5.79 )