Bellatrix Exploration Ltd. (BXE.TO)

This is a company that attracted a lot of joint venture capital to the plays that they have. They are a Cardium oil player, which are very robust plays and require a lot of capital. Recently announced a cut to their budget. That is a good thing. Their $400 million budget is going to be $300 million this year, and a big chunk of that budget is going to build their phase 1 deep cut gas plant that is going to be on stream by this summer. They are saying to the market that they are going to get their infrastructure beefed up to support their production growth. He would defer any purchases until sometime in the 2^nd quarter.

Had facility problems. Made an acquisition on Monday and then made an announcement where they sold part of the facilities in exchange for getting room on one of the plants with Keyera (KEY-T). That is why the stock was weak, so now nobody cares and there is going to be tax loss selling on it in the next couple of weeks. If you get through this and go to the other side, they are good finders, numbers are going to look good, it’ll take a couple of quarters for the market to care. He would think that 6-8 months from now, the stock should be a fair bit higher than it is now.

(Top Pick Nov 04/13, Down 42.68%) Sold last December. They cut guidance 2 or 3 times since then. They had severe infrastructure issues. They will be constrained for a quarter and a half.

Sold 50%. They have a major investor who is helping them out. When they go out and drill, they always hit oil. He is confident in this one.

Has been a Top Pick previously, but doesn't own it currently. Great track record of growing production to the tune of 30% a year on a production per share basis. Has done it on fairly modest leverage levels. A mix between oil and gas. Struck some very novel joint venture deals with a number of counterparties that has taken a long life resource and accelerated some of the future value to the current day. The issue he has is that they have become a victim of their own success. The tremendous growth rates they have had have now caused some fairly serious facility constraints. There are a number of pieces to the pie in terms of gas plants that are getting built and compression that is getting added. You can probably count on a certain amount of uncertainty about what the next 2 or 3 quarters are going to look like until the middle of 2015 before those issues are behind them.

Really got hit with the sector. Had a good run so it was easy to sell. Management did a good job. At the level it is today it is starting to look interesting, but you will need patience. It’s a question of what the sustainable growth rate will be. The new growth rate is still sustainable.

This is kind of small for him. Stock has been going down a lot. He would wait to see a bottom at around the current price. His model price is $18.68. He suspects that all the energy stocks will be coming down materially because earnings estimates will be a lot lower in a week or 2. If it went above $6.37, he would be interested in putting on a trade. This is not where the action is. The action is in the big caps, which is where he would go.

Very cheap. Had third party facility problems. Their own won`t be ready until spring. They can`t get their product to market. It is absolutely excellent value here. It may take into next year to rebound.

Good management. A series of poor things happened to this company. They did an issue very high up and things sort of choked in the marketplace. Immediately following that issue, the price of crude was falling.

(Market Call Minute.) Has done a good job.

There was some bad news yesterday, which pulled the stock down. Their problem has been execution. It is really, really undervalued. He likes it down at these prices. Under $8 is a good price. Its gas flows through third-party stations and they got notified that there will be a 1 week outage next week for 30,000 BOE’s a day, which works out to about 1,000 barrels a day on a 40,000 base. This is not big, but it happened this spring and now has happened again. They are fixing it by building their own which comes on stream in the spring. This stock trades at debt adjusted to cash flow about 3.7 and the group trades at 6. There is actually value of $12-$13 here. (See Top Picks)

Neutral on the name. It is pretty cheap right here. He does not think it will implode any further. They are doing a lot of JVs and drilling. They stubbed their toe this year and did not have the infrastructure. He would put new money into other names.

Sold half his position after a double. An activist investor wanted to see changes in the company as they were not happy with how things were going. However, to him the management has done a tremendous job since they came in. The stock price has moved up quite a bit. The company was having an awful lot of difficulties before that. There are good activist investors, and there are some that he highly questions. In almost every case when an activist comes in, the stock price goes up, as happened in this case. Can see this going to double digits.

They control their own facilities, which is good. He has been negative on the stock for several months. They are aggressively spending and their corporate decline rate is 45-47%, so they are not sustainable to pay a dividend at this time.

Chart shows a nice long consolidation from early 2011 and then broke out in 2013. On the short-term basis, the stock has pulled back but is trying to rebound.