Bonavista Energy Corp (BNP.TO)

They cut their distribution from over 10% to about 6%. This was because Nat Gas prices had not recovered. We have probably seen the lows and will slowly increase going forward. BNP is leveraged 60% to Nat gas. Dividend should be safe. Sold some assets to raise funds. They should be ok here.

Natural gas prices will drive this stock. Good management team and there is a lot of insider ownership so they will be making shareholder friendly decisions. Across the board, they have been under pressure from the revenue side but thinks the worse is over. Cut their dividend a while back. Stock seems to want to bottom in the $12-$13 range when you get some weak days in natural gas. Gas looks pretty constructive here.

(Market Call Minute.) A solid under performer. Having a very difficult time executing.

Thinks it was dirty pool for the company to issue stocks at $16 and then cut the dividend within 2 months. Really annoyed at how this has worked out. Feels that somebody is going to take a run at them and feels this could be up for grabs.

(Market Call Minute.) A bit of a falling knife kind of play, but he bought some recently. Good lands. There is some concern that they didn’t cut their dividends enough, which is reasonable.

Cut their dividend and the payout ratio is about 110%, which is much more sustainable. Doesn’t see the catalyst in this company to get people excited. Trading at about 6X cash flow. Balance sheet has been repaired from some sales. Yield of about 6%. Doesn’t see a lot of capital appreciation until we get a strong recovery in natural gas.

(Market Call Minute.) Have had excellent management over the years. Being in natural gas has punished them.

Cut their dividends. A lot of oil/gas companies, particularly those involved in heavy oil, have been under a lot of pressure. Some of the negativity has already been baked into the stock so he is not sure this is the time to bail out.

(Market Call Minute.) Just cut the distribution to about 6%. Valuation is attractive. Thinks gas prices will recover.

Price of oil in Alberta is significantly lower than it is in WTI so there has been a real squeeze. Alberta’s premier advised they were going to be short $6 billion in tax revenues and this tells you that the general oil operators in Alberta have quite a significant profit squeeze on them. Thinks that the new dividend is probably not sustainable unless there is a real bounce in oil prices.

(A Top Pick Jan 25/12. Down 30.56%.) Main product is natural gas which has deteriorated. Said they were going to maintain the dividend for 2012. With new CEO coming in, that may have precipitated the view that they didn’t have to stick with the dividend and may cut it, which they did. When outlook for natural gas improves, he would probably average down, which he has already done. Street targets are for a 24% gain. Yield of 5.9%. Still likes.

(Market Call Minute.) The Rodney Dangerfield of the royalty trusts. No reason to hold it. Has a bunch of expensive properties.

Intends to buy but just not yet. Thinks they are going to be forced to cut the dividend. Well regarded management team. Yielding almost 9%. (Just announced dividend was cut from $.12-$.07 a share. This cut should make the dividend sustainable. If it trades down 10% tomorrow it may be interesting.)

Recent decline is due to natural gas prices. As with all producers in Western Canada leveraged to gas, they are experiencing more pain due to Alberta prices being even below the US Henry hub price. Unless there is a material recovery in gas prices, you are probably looking at a situation where the dividend is in question.

Gas, but a lot of their production is liquids rich, which somewhat insulates them from commodity price volatility. Payout ratio is 140%. With this low gas price environment, he feels they will have to ultimately cut the 9.8% dividend. He is looking for a 30%-40% cut, which could potentially pressure the stock. If you own and are long-term oriented, expects the yield to come down but if it gets down to $13 it is a buying opportunity.