Baytex Energy Corp (BTE.TO)

Big leverage which is very bad for oil companies right now. At $50 oil, debt to cash flow is very high at 4.8% on 2016 estimates. Unless you believe that in the next 6-12 months that oil is going to go discernibly higher and stay there, this is a name he would not be picking away at.

They made a great acquisition, but it was at the top of the market. Their Canadian heavy oil assets are getting creamed because of low heavy oil prices. The success ratio and the amount of cash they are getting from the US is good, but unfortunately putting the 2 together is not a good recipe for success in the stock.

(Market Call Minute.) You have to steer clear of this. They have falling production and have a lot of debt.

One of the most levered to oil stocks companies that you can buy. Had a pretty big debt overhang as the commodity price turned lower. They raised equity but it didn’t help. If your view is longer-term, and you think commodity prices will come back over time, this stock will do quite well. However, you could see prices drift lower.

A well-managed company, but is largely exposed to natural gas assets, and as a result has been punished along with the rest of the energy companies. Their balance sheet is okay. He wouldn’t read it as top tier, but wouldn’t put them in the bottom tier either. There are better places to look.

Stock vs. Stock. BTE-T vs. CPG-T. He would prefer CPG-T for its assets if a gun was to his head. It will still be there, but not sure if BTE-T will be around for long.

(A Top Pick Dec 1/14. Down 79.44%.) At $90’s, this is a very inexpensive stock. At $50, he believes the stock could double from today’s prices. It has a balance sheet issue at $35 oil. Have no debt maturities until 2021.

His company has this as a sector outperform with a $12 target. It looks like they are still in a pretty safe stage. When building a portfolio in the energy sector, he would recommend you have a senior, a mid tier and a smaller company. He is quite comfortable with this one, and where they are makes a pretty good entry point.

Has almost no energy exposure. The ones he would possibly look at for a rebound would not include this one. Really concerned about their prospects, especially if we see a longer protracted period where energy stays in this range without going much higher.

(Market Call Minute.) Too volatile to be Short. It has terrible value momentum and volatility characteristics. This is a levered bet on crude.

Reduced their CapX to below its cash flow, and that cash flow number is at current prices. This is where the sustainability of the company is really important. They are not going to purposely go ahead and try to grow the company, they are going to harvest it and make sure that capital expenditures are less than cash flow.

The debt to cash flow is well over the comfortable zone. They are not going to go bankrupt, however. They did acquisitions in the US at the peak of the cycle. If oil recovers then they will do well and he expects that next summer. He prefers other companies with better balance sheets.

We are seeing little spikes in energy based upon storage levels. Technically there was a strong positive period for energy stocks Feb 25^th to May 9. In that time, this company actually did okay. It then resumed its downward trend like all the other oil stocks. Right now he is not a fan of oil stocks. They can keep going down further. Although the period for seasonal strength in the energy sector starts in February, sometimes you can start to see it happening in December. The opportunity to step in might be there once there is tax loss selling.

He owned it a couple of years ago because they acquired a company he held. They are a leveraged play on the price of oil.

It is hard to argue it is a buy based on technicals. It is difficult to pick a low here. You don’t want to be in this stock at the end of the year, based on seasonals. We had a substantial snap back rally, but long term it is on a down trend. It can’t even overcome its 50 day moving average so it is much weaker than stocks that have done so.