Compton Petroleum (CMT.TO) Buy, Sell or Hold

Compton Petroleum (CMT.TO)

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3 watching

DON'T BUY

New management team has a plan in place but not sure it will be enough because debt to cash flow is almost 17X. Trying to re-capitalize but it will be difficult. Overvalued.

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SELL

Doesn't like this name. Would exit it immediately. High levels of debt. Disorganized management.

SELL

In an exceedingly precarious position right now because there debt to cash flow is 17 times. Normal for this time of the cycle is 2 times. Has the potential to go to zero.

SELL

(Market Call Minute.) Has been a troubled company. Seriously disappointing on per share growth. Now going through transition with the CEO leaving.

SELL

Put themselves up for sale but nothing really happened. Weaker management and properties. Could have a slow death.

HOLD

90% gas. Possible takeover target. Would Buy on a pullback.

HOLD

Had an early successful history. Hit the wall in 2000-2001. Its Achilles heel has been that it is great in assembling and growing its reserves at a low cost but has stumbled on production growth. Always over leveraged. Now up for sale.

COMMENT

Natural gas. Sold off a lot of their oil assets. They need natural gas prices to go back to $9 or higher. Not a great growth story but they have good assets.

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HOLD

(Market Call Minute.) Good assets.

PARTIAL BUY

Very exposed to gas. They are now exposed to the Alberta royalty changes as well as tax loss selling. It's down to a point where there is decent value here. You may want to just stick your toe in. Cash flows are going to be restrained for this type of company and they could run into a bit of a cash crunch in the next couple of months.

COMMENT

Debt level is quite high and much greater than the average. Although they have a solid team and a huge suite of assets, it is gas weighted. If she were getting into gas stocks right now, this might not be her first choice. In market upswings, affect will be greatest in companies with higher debt levels.

HOLD

Has been hit along with gassy stocks. They need $9 or $10 gas to do very well. There are a lot of stocks very similar to this. Feels gas prices will recover but not sure if it will be in the winter of 07-08. By the winter of 08-09, there will be so much lower deliverability in Canada and the US because of the slower amount of drilling.

COMMENT

Natural gas stocks have really suffered. Have recently made acquisitions, growing their base a little bit. Could go into the mid-teens if he is right about commodity prices in the winter of 07-08. Will probably stay where it is in the meantime.

SELL

Hasn't done much in the past year because of the erosion of the natural gas price. Had some fairly negative announcements recently. Would sell this and would buy Rider Resources (RRZ-T).

DON'T BUY

Have never liked it. It might be recovering from it's big selloff.

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Compton Petroleum (CMT.TO)