Baytex Energy Corp (BTE.TO)

6.625% bonds maturing July 19, 2022. He still likes this. Their numbers came out, and they not only had lower cost wells, but their production at the Eaglesford was much better than expected. It is a possible deleveraging story, but even with their stretched balance sheet, they can handle it. He likes the company, management and the execution of what they are doing.

Has a lot of debt, which is the knock against them. But that shouldn’t be as big a concern as it is, because the debt is turned out to 2020 and beyond, but the sentiment around oil/gas and the sector is so negative today it doesn’t matter. Have some great assets in the Eagle Ford in the US with heavy assets in Canada. Not for the faint of heart.

Sell Baytex (BTE-T) and Crescent Point (CPG-T) and move into Teck Resources (TECK.B-T)? Crescent Point and Baytex had high dividends. When oil fell, the dividend strategy collapsed. From this, he learned don’t rely on commodity stocks to pay dividends. Both are down in the dumps, but both are good names. This one probably has a little more debt than he would like, but Crescent Point is really trying to remake itself. If looking for torque in a portfolio, you will probably get more in the near term, from a base metal stock that you would from an oil stock.

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.

One of the high beta names, because it is predominantly heavy oil, and therefore very subjective to the price of the underlying commodity. Has a highly-leveraged balance sheet. A great performer when the times are right, but he is more conservative and is remaining with lower cost producers and stronger balance sheets, at least until the 4^th quarter when he has better visibility on oil recovery.

The problem with this stock is that it has been forming a base for more than a year. It has been absolutely range bound. Hope for the best if you own it and if it blips up then get out.

6.625% bonds maturing 2022. He feels they are a much safer investment. You don’t have to hope oil comes back.

It has a bit too much debt. This has been one of the victims of the oil price turn as they had too much debt at the top. She likes management. They have a lot of torque to higher oil prices. Heavy oil is a better asset in Canada.

They are marred with too much debt and can’t grow. They look too unattractive compared to peers, with the worst production forecast and one of the worst balance sheets.

This was hurting big time a year ago; really suffering under the much, much deteriorating balance sheet, caused by debt, caused by making acquisitions. They got through it and had a nice recovery into the summer of 2016, but as oil prices weakened they are now struggling.

With his expectation that fuel prices will march higher, this is going to be an interesting torquey name. The debt is termed out, so they don’t have to deal with near term maturities. With prices north of $55 a barrel, this company really starts cash flowing nice numbers.

One of the most cyclical of the cyclicals. It is cyclical in that it is in oil, as well as its returns being up and down. The biggest problem is the leverage. There is a lot of financial leverage on this. If things go well and you get this in the right time, it can pay off. On the other hand, because of the leverage, there is a lot of risk, and could end up being owned by the debt holders. Maybe only put in a small position.

The market is very concerned. The chart shows there is no bounce at all.

He exited this recently. They have fantastic assets and a pretty good stake in the Eagle Ford area, which is a prolific area with high quality assets. They also have assets in Canada in the Peace River area. A very good portfolio of assets. His concern is the balance sheet. They have a ton of debt, and the market is concerned about that. When you have a levered talent sheet, it limits your ability to grow production, which is what is happening in this case.

The only non-dividend paying stock he owns. It used to pay a dividend, went through the downturn and a lot of dividend based investors sold. The core assets are still very good. It still has a leverage issue, but are working through that. Recently did an acquisition in Alberta that looks very promising. Fundamentally thinks oil prices should be higher, and if so, this stock has a lot of potential.