Baytex Energy Corp (BTE.TO)

Heavy oil and a high yielder. This one gets hit when there is a worry about heavy oil/light oil differentials. His problem is that if you put together the dividend and the CapX, it comes out to 140%. He prefers this to be not over 100%. They need to grow into what they are paying. 140% is not a number you can sustain forever. (See Top Picks.)

Very well run company. Pays a good dividend, which is secure. You can buy at these levels. Volatile and are susceptible to oil prices. Thinks the heavy oil differentials they have been struggling with will continue to be a problem for some time. He wouldn’t have more than 5% in a portfolio.

(A Top Pick April 27/12. Down 13.74%.) Sold some of this to move some money offshore. Still likes it. His company has a $53 target on it and classes it as an outperform. 6% yield.

The low shown mid-2012 on the chart is very important. You want to avoid energy stocks that have taken out there 2012 low. This one has not so he would favour it. 6% yield.

Very good yield at a little over 6%. The big thing is heavy oil. Seaway reversal is underway, Keystone will likely get approved, BP’s Whiting refinery will be coming on and light/heavy oil differential will close. If the differential does close, this is huge. Has decent production growth.

One of the first companies to hire CN to transport oil. Likes it, likes the yield and the balance sheet. But he questions buying oil except for the dividend. Dividend is solid as a rock.

Considerable visibility in depth of inventory to offer 8%-10% oil growth going out 5 years. Balance sheet has essentially an undrawn line of credit. Offers exposure to heavy oil which he thinks will be the place to be. 6.1% dividend yield.

Produces heavy oil that is drillable and pumpable. Have a very solid land base were they can drill section after section. Right now they are suffering because of the price for heavy oil. Shipping a fair amount by rail, this seems to be the answer. Word is out that there is some pressure on their margins right now but he is holding his position because the yield is reasonable. He wants to see the next quarterly earnings.

Heavy oil producer. Good solid company. Solid balance sheet and solid assets. Problem is the big discount to what they produce. If Keystone XL gets approved and people start to price in the differential coming down, it will be very beneficial for them. Have taken proactive steps to mitigate some of the discount. One of the leaders and pioneers in shipping by rail and have used hedges very aggressively. 6% yield is safe.

(A Top Pick Feb 10/12. Down 17.58%.) The only Canadian oil company that he is holding. Thinks they can continue to grow production in a very accretive way. Has concerns because of all the oil being found in North America, Canadian oils might be in trouble because they can’t ship it. Continuing to increase production. His company has a target of $53.

It’s been touch for so many Canadian energy companies over the last few months because of the price differential. They are into heavier crudes. There are a number of refineries in the US that have shut down for retrofits. Pays a good dividend so it pays you to be patient. His target is $50 and then he would take a hard look at it as to whether to scale out of it.

Very strong balance sheet. Predictable growth and production, close to 8% a year over the next 5 years in the heavy oil end. Differentials should improve gradually over the summer through the 1^st half of 2014. Looking for low double-digit returns over the next 5 years. Yield of 5.72%.

Differentials right now are at extremes for heavy oil. This company is adding to their refinery, which should help to alleviate some of the differentials in heavy oil spreads. Have upped their guidance this year unlike many other companies. Good balance sheet with debt to cash flow of about 1.4%.

One of the great themes for 2013 will be the reduction in the heavy/light differential from its current levels. Historically low. This is going to improve over the year. Stock is down over 25% for the year. Dividend yield of 5.96%. On a total return basis you are looking at over 30%. P/E ratio 18.8%. EPS $2.62.

(Market Call Minute.) Been adding to his position but there is potentially a better buying opportunity in the coming months as the differential continues to widen. 6% yield.