Baytex Energy Corp (BTE.TO)

It is up 4% today. It is putting a base in here. He does not favour this sector. It is not showing enough strength. If it went above $3 he would take another look.

Predominantly a light oil producer. They have changed their portfolio to only 21% heavy oil exposure – holding 40% in Eagleford light barrels. Debt to cash flow is only 1.7 times. He wants 10% of his portfolio to be this holding.

The company has changed dramatically with the merger with Raging River adding exposure to Eagle Ford and light oil in Canada. In three years, Line 3 and Keystone will be sorted out, even Trans Mountain, makes him like being paid to wait for better times. He still owns their corporate bonds.

Energy stocks are so beaten up that other companies will do M&A; companies see value out there. Generating cash now. Eventually this sector will see a lift. Tremendous upside. There's little risk in this. (no dividend, Price target $6.32)

This company has been through some tough times that will probably persist in terms in differentials in oil pricing. They are a bargain basement valuation, although he would not step into this sector. A lot of good things have to happen in order to realize their analysts' target price. They are more diversified; but there is still a lot of leverage. Cash flows from Eagleford are from Aurora. The valuation is still very levered to the price of oil and their ability to execute in the Duvernay. Try going for lower risk names,

Raging River had good light oil assets but issues with decline rates. Baytex shareholders were comfortable with the debt, given the torque to heavy oil differentials. Mashed together, it has allowed the concerns over BTE-T debt levels to be abated and is opening doors for new opportunities.

The merged Raging River/Baytex company, at $80 oil and a five times multiple over cash flow is a $10 stock. The Eagleford and Viking assets create cash flow as they delineate a prolific heavy oil play in Peace River and massive exposure into the East Duverney play. Yield 0%. (Analysts’ price target is $6.31)

She thinks the price differentials for Canadian oil will continue to widen, so even if the balance sheet of this company has improved, she is not buying Canadian energy at this time. In addition, the market is coming to a seasonally weaker period, with refineries closing for maintenance (for example). So this is not a good time for new investment. Even if an investor expects prices to improve, this is seasonally the wrong time for the improvement to happen.

When this stock was $6 he was not a fan and still is not. The company will soon rise to 60% debt on the balance sheet. Baytex taking over Raging River does not seem to make sense to shareholders, in his opinion. He thinks they may be over paying and shareholders will not be in a controlling position. He also thinks operating costs are still too high.

He recently bought this. This was an undervalued company and heavily levered. They recently merged with Raging River, making it worth investing in now. It was beaten up along with other oil stocks, but he likes the story of this stock
now.

Is flatlining. Hold it. It needs a serious energy run to rise. It's a short-term trade at best.

He owned this company when they had a real good balance sheet. Debt load has gone up. He sold this when oil went bearish. It has continued to struggle and has not really looked at it since. Probably could go to a lower leveraged oil play and take on less risk.

A slowly slipping balance sheet, because its forecast earnings are only 6 cents per share. He doesn't expect a turn in the earnings to lift the stock.

The recent merger with Raging River has not been well accepted by the shareholders. It is trading at 3.3 times EBITDA at $70 oil. He sees almost 100% upside if reasonable metrics return on the valuation. It plays well into the view of tighter heavy oil differentials and WTI trading over $80 next year. Yield 0%. (Analysts’ price target is $6.12)