Cardinal Energy Ltd (CJ.TO)

(Market Call Minute.) Has not traded as well as everybody else because their oil is little bit heavier and costs are higher. That has created a lot of selling whenever prices have gone down, but the optionality is huge. Solid company, solid management and a solid balance sheet.

He likes this, because it is still trading at a discount multiple, relative to some of its peers. It has a stronger than average balance sheet, lower than average decline rate, better than average properties and the ability at a higher oil price. 80% of their oil gets sold at a discount to light oil, because it is medium gravity and the product leverage to a rise in the oil price is that much more magnified. He could see this at $15 in 2 years.

Spartan Energy (SPE-T) or Cardinal Energy (CJ)? Not a bad company, but he prefers Spartan.

(Market Call Minute.) 4.5% dividend yield and is very stable. Hasn’t proven out their growth by acquisition strategy versus Crescent Point (CPG-T). He is watching this.

This is a really good mix of defence and offense. It has a really good balance sheet and low decline rates. Every year they don’t have to grow many wells to keep production flat. Operating costs are little bit higher, at about $20 a barrel, so they don’t make a ton of money with oil at $40 a barrel, but they don’t really need to. If you have a 5-year view on oil that it gets back to $50-$60, then the risk/reward is very good here.

Good sensitivity to oil without the financial leverage. Decline rates are low.

Whitecap (WCP-T), Crescent Point (CPG-T) or Cardinal Energy (CJ-T)? A really great company and doing a really great job. Low cost oil. Very focused plays. However, if you beat it up and you really have oil sit at $15, it gets in trouble. It looks like they want to build a big company, but are really paying up for things.

This IPO’d in 2013, and had the strategy right out of the gate. They were looking to have an oil focused company with a very low decline rate, have a balance sheet with very little debt and be very acquisitive. He likes what they are doing. Dividend yield of about 4.5%.

He likes this. A really good company with great management. The balance sheet is excellent. Thinks they are going to have $16 million draw on $100 million line of credit by the end of the year. They have about 125-130 well program going right now. There are tons of torque in this name.

(A Top Pick March 3/15. Down 24.74%.) Just raised $60 million. This is more of a medium gravity oil producer, so the margins are not quite the same. They manage that through low cost and a very low decline rate of about 12%.

This has been lagging the group even though it has a great balance sheet. This company was a rock star in the oil bull days because of management, low decline rate, clean balance sheet and 80% of their production is medium gravity oil. He is looking for 50% upside from today’s share price. Dividend yield of 4.35%.

(A Top Pick June 12/15. Down 36.56%.) With oil prices below $50, it is very challenging. Have done really well with hedging last year, this year and next year, so are quite well protected. However, they do need to see higher oil prices in order to do well.

We are still not out of the oil environment, and all things could happen. When the commodity is low he likes to buy something, and as clean a company as possible. This one has a great team and great producing assets in Western Canada. They’ve done a great job and brought down costs. If oil stays down longer and lower, it kind of gets in trouble on obscure things that normally wouldn’t matter. This has a bunch of old producing assets and they are going to reinvigorate the plays. Has a massive amount of environmental abandonment liability, which might never be an issue, but it is out there, so he goes for companies that are a little bigger.

A very low beta way to have energy. A Western Canadian oil producer with low decline. They are 60% hedged this year and 35% next. Good balance sheet. If he is wrong and oil goes down to $30, this will go down, but not as much as others. Dividend yield of 4.57%.

A medium gravity oil producer in Alberta. They were liked because of low debt and low decline rates. As oil fell, they got penalized because their oil sells at a discount. They have one of the highest leverages to the increasing price of oil. He has a 10% weighting. More than 5% dividend. They should be one of the first to increase their dividend.