Opinions Josef Schachter
Baytex Energy CorpBTE.TOCOMMENTApr 07, 2017
Josef SchachterStock price when the opinion was issued
As of Sep 11, 2026. Market Open.
You might be interested:
Wants to see what the new management team can do. The Eagle Ford took their eye off the ball. They have a lot under the hood that the market doesn't appreciate, but BTE is a prove-it story. The CEO is paid only stock, not pay.
Eric NuttallIt is refocusing in Canada. He likes the new CEO who is taking his salary in stock. It has hidden potential and he sees 20 to 30% upside.
Eric NuttallGreat company. Sold Ranger asset that was disliked by the market, used proceeds to pay down debt. Sitting on $500M in cash. Now focused on Western Canada. Added light oil to its heavy oil assets. Buying back shares aggressively. Reasonable yield of 1.2-1.3%.
Jerome Hass
The US and Iran may be struck a peace deal and could be reopening the Strait of Hormuz, but there's a big backlog of oil. They have to rebuild what was destroyed to resume oil production. Strategic reserves need to be refilled. All this takes time. That's why it will keep oil around $80 a barrel. BTW can make money at $60. Beyond 6 months, oil producers will make money hand over fist. BTE's uptrend may be in question, but expects it to find support at current levels.
Suspects there will be volatility. We're seeing it in the oil price depending on which tweet comes out. The floor for oil prices is higher on the back of the conflict, perhaps around $80 -- geopolitical premium, reservoir damage, production lost, need to refill inventory.
This company has torque to that. If you want to play that game in the short-term, this is a decent vehicle for that. Company's stronger from its reorganization.
Good in terms of capital employed. Wants to see it reduce yield to shareholders and increase sustaining capital investments and new project investments. If you’re underweight energy, you need to get long. He’s very bullish on Canadian oils, but he loved them better at $60 than he does at $100.
Used to be the beta name for leverage to oil. Doesn't have that as much anymore. Cash on balance sheet will be used to buy back shares. With oil where it's at, you get paralysis on M&A (sellers want current price, buyers want to pay what it was a month ago).
Approaching fair value, though can maybe spin out another 10-20%. See his Top Picks.
Better stocks to own for the dividend. You'd own this one for its pivot back to Canada, and for its recent sale of Eagle Ford (which generated lots of cash). Intends to use much of that cash to significantly buy back stock (over next year+ intends to buy back ~20% of stock).
He took profits, as it was more of a short-term tactical play. Thinks FMV is ~$5-5.50. Comfortable with its inventory (10-12 years of stay-flat inventory), and it's proven to replace production year after year. Given current relative outperformance, he'd invest in other names.
At his firm, there are about 700 companies in Canada that they look at and rank daily. Ranking is based on earnings acceleration. This name is in the top 20%. Likes management and its capital efficiency, which falls to the bottom line and drives stock price higher. Has done really well, especially as there have been no tailwinds in energy for last 6 months.
Bruce Campbell (2)
From a value perspective, this is a cheap stock. BV is $8.48. It was a $45 stock in 2014, and the low in Q1 was $1.57. What bothers him is that the company had $1.7 billion of debt against $1.9 billion in equity. When you have a reduced price in the commodity and less cash flow is coming in, you need to focus on the debt holders first, so you can’t put money back into the ground. That means your production is not going to grow. Production volumes have come down. In Q1 in 2016 they were 41,000 and in Q4 they were 33,000, so they don’t have enough money in the till coming in from cash flow to service the debt. His view is that this company is going down. He would say there was a 10% risk the company will not survive.