Baytex Energy Corp (BTE.TO)

A heavy oil producer. They have been leaders in oil by rail. Management has shown themselves to be heads up in terms of marketing in the US and he thinks they will continue to do that. Yield of 7.88%.

This is being hit along with all the other energy stocks and he would recommend continuing to Hold.

There is going to be an economic cold war with Russia involving sanctions. Once LNG gets going that will stable is the world oil supply. He does not feel Russia would flood the world with oil.

Jan to May is seasonal strength period. This year it was strong, but now it is in a downward trend, underperforming market and is below its 20 day moving average. Wait until January.

It was bearish for some time (2012-2014) then broke out, but now it is breaking down again. However, there are two previous lows that are lower than we are now and you want to see that. So long as it holds, that would be healthy.

Market indicators are somewhat neutral. He thinks the market is in a buy right here. He does not know where oil is going to go. They have good property here in Canada. We have some resistance at about the point we are here. It could now be support. You have good yield. He is a believer in this one.

This has been a very strong story over the last 10 years. More of a heavy oil story, which is looking pretty good. The differential between Western Canadian Select and WTI has narrowed and is likely to stay now because the infrastructure bottlenecks that were creating the spread have really narrowed. Very well managed and will continue to grow.

They just increased the dividend 9%. The stock has not done as well as the fundamentals suggest it should have done.

Very well-run company. They will want to keep growing by buying more assets. Pretty high dividend of around 6%, which is enough to hold investors’ interest. A great story to own. Not cheap, but these stocks are never cheap.

Both Brent and West Texas crude have come back and are testing very important technical support. What matters more to a lot of Canadian companies generally is the spread between what we get for our oil, especially heavy crude and West Texas. It is always attractive to buy when the spread is wide and think about selling when the spread is narrow. They made a great acquisition in the Eagleford in Texas. It gives them great exposure to a great US play in light oil. Production profile looks really interesting. Pays an attractive yield that they can back up with production growth.

Thinks they raised money at $39.50 to buy Aurora in Texas. In retrospect it was a pretty good transaction. It took a little while for the street to appreciate how much free cash flow that asset will contribute over time. They have to spend a certain amount to maintain production and grow it a little, and all of the excess cash flow from Baytex can either be used to repay debt, which they don’t have a lot of, or they can use it to increase their dividend, or buy other acreage. Sold his holdings because it had regained the multiple it had. There is a new team, so there is a little bit of proving they have to do to the street. Trading at a multiple where people are already baking in extremely good operational success. On a relative valuation basis, he would prefer other names. If you own, it is a steady Eddie name, and you are looking at roughly 10%-12% total return.

A core holding for him. The acquisition they made makes sense. Thinks it is relatively early days.

Made an acquisition in the Eagleford, so she sold her holdings. Felt it was going outside their core competency, so she is going to wait on the sidelines. Wants to see a few quarters of operational success in the new play, just to make sure that everything is working properly.

We should get a seasonal boost now. He took profits, however. Prefers HSE-T, SU-T, and CNQ-T.

Scratched his head a little bit on their last acquisition in the Eagleford. They tend to pay out a fair bit, which he feels could pose some problems when they borrow or issue new shares. Feels there could be better companies out there. (See Top Picks.)