Stockchase Opinions

Josef Schachter Bellatrix Exploration Ltd. BXE-T PAST TOP PICK May 01, 2018

(A Top Pick July 28, 2017. Down 40%). He recommended buying on weakness, the stock dropped and he recommended it most strongly last December. It is up 50% since then. He thinks the stock can go up to $7. He pointed out on the 10 year chart that the stock has massive upside when the price of oil moves. For example, it went from less than $15 in 2012 to nearly $60 in 2015. Similarly in 2009-2010, the stock went from $2 to $17. They go from being hated to being loved, and right now, the natural gas story is getting strong. Storage is low, last week there was even a draw. The US industry is so focused on drilling oil and liquids that the focus on natural gas is just not there. The LNG takeaway capacity in the US is going from 2 bcf to 9 by the end of 2019. Canada does have the pipelines into the midwest, and they are expanding. These can carry a lot of Canadian production into this growth of demand of 7 bcf. He also expects LNG to BC to be approved, which will result in a further increase of demand for Canadian natural gas, at better prices.

$2.000

Stock price when the opinion was issued

oil gas
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DON'T BUY
He thinks their financial flexibility is so constrained that he sees better choices out there. Why would he take on that added risk?
PAST TOP PICK
(A Top Pick Feb 12/18, Down 57%) Under one times cash flow. People are worried about their debt, but he does not see a problem. He likes the company. It is a gift. He bought more.
DON'T BUY
Their debt is too high and lack the financial flexibility that others have. He sees other opportunities that do not have this balance sheet issue.
WATCH
Unbelievable numbers. Maturities of debt in 2021. 2018 cash flow was a $1.05 due to hedges. They have always done well with debtors. The stock is ridiculously cheap. He is comfortable with it and at this price it is a bargain. The market is nervous regarding the extension of the debt.
PAST TOP PICK
(A Top Pick Apr 03/18, Down 80%) Problem is trying to renegotiate the debt due in the next year or two. So it had to do a restructuring and massive dilution of shares. Still generating cash flow. Sees upside. Could be a $1 stock a year from now. He's going to be adding. Likes management.
COMMENT
BNP and BXE Both are carrying high levels of debt. BNP-T has been paying down debt and will try to keep production flat. He intends to buy more of both. BXE-T will be doing a 12:1 reverse split on the shares sometime in June.
PAST TOP PICK
(A Top Pick Jun 18/18, Down 94%) The whole thing about low energy prices and the debt restructuring meant the stock got beat up. He will be adding to this position. People need to see that they can service the debt and then see the price of nat. gas firm up.
RISKY
Stock is very cheap, but people are nervous about the debt. Production is robust, and Q2 should also be decent. It's now a small cap, and has been disowned by the market. Could be a $10 stock again with consistent $3 gas prices.
DON'T BUY

They are more levered towards natural gas. It all comes down to being able to live with the volatility. Anything related to Montney natural gas is betting on LNG, which may not come quickly enough. He would stay away.

COMMENT

Debt concerns? BXE took bankruptcy protection when debt became too much. There is no equity value in it any longer. Companies that have debt that matures in 2020 or 2021 will have issues. He sees no issues with BIR or TVE on this topic. The new Federal relief program for large companies may be difficult for companies to accept as it has provisions for up to 15% of ownership being made available in warrants to the government.