Bonavista Energy Corp (BNP.TO)

Management has done a good job. 71% natural gas. They pay a dividend. Book value is $6.63. (Analysts’ target: $3.00).

They are 71% natural gas and will keep production flat. Excess cash flow will pay down debt. He thinks they will raise the dividend in 2019. There is so much potential when we have a recovery in Natural Gas. (Analysts’ target: $3.45).

(Market Call Minute.) A good, solid energy company, but has a bit of a hangover because of its natural gas exposure.

BNP-T is a much bigger company. CQE-T is a smaller company and has a different risk profile. He prefers BNP-T.

Management has done a very good job of concentrating assets in their 2 key areas. Had some nervousness over the balance sheet, but that is improving. He is a little more bullish on oil, than natural gas, but he would buy this today. (See Top Picks.)

71% natural gas. Obviously, there are concerns about energy. They’ve increased their asset concentration, lowered their costs. Q1 was good and their growth rate is pretty good. Very cheap relative to its peers. The only reason he wouldn’t buy this, if he were interested in an energy name, is that the balance sheet, although better than its peers, it is not ironclad or best of breed. Their 2018 production he models as still lower than that which they printed in 2014.

If you are a trader, this is one you could probably trade. Not a bad entry. They continue to improve in asset concentration. About 70% is hedged for 2017. The very small dividend is safe. Even though its balance sheet is a lot better than its peers, it still has a cash flow of 2.6%, which is high for where oil/gas is. There are safer names, but probably not a bad little bet for a trade.

They have a dividend that looks safe for now because they are 70% hedged for 2017. They are into a narrow play, they cut costs and are cheap. Debt levels aren’t bad. But to him in this environment it is really still too much debt.

There has been a bit of a pull back and then a bump up. This is a position you can let run. Feb 25^th until May 9^th is the period of seasonal strength.

(Market Call Minute.) Probably a value trap. People have given up on the name. It is probably going to stay cheap for the foreseeable future.

This has gone through a period of significant adjustment to the current commodity prices. They’ve had to right size the dividend, reduce leverage levels, sell assets, etc., and he thinks they are through the worst of it. This is something that he thinks he should be looking closer at.

(A Top Pick Sept 8/16. Down 1.73%.) Energy has been pretty good, and this one could have been a little bit better. He has no reason to change his hypothesis, as nothing has changed with the company.

He would sell this and either buy another name or a top performing energy fund. They still have too much debt. This is trading at about 3X debt to cash flow. He doesn’t see them regaining their lost multiples.

This had a peak in early September, but has come back down. The whole space has a seasonality to it. It tends to get strong in the summer and then weakens into November and then picks up again. If you want to own an energy name, you could start to nibble away next month until you get the full position you are looking at. Perhaps in 3 portions.

They are at -3% return, but he thinks they are close to the bottom so it won’t take much for them to be worth more.