Canadian Natural Rsrcs (CNQ.TO)

Just acquired working interest in the Athabascan Oil Sands. Once again we are seeing foreign companies exiting the Canadian oil patch, which seems to happen every couple of decades or so. Every time they do so, it tends to be a good time to get in. On a running cash flow basis, it is basically a cash flow machine, using the money to buy more properties, grow more or return it to shareholders in the form of dividends and share buybacks.

Has a Short on this and has been Short for quite a long time. The stock jumped on the acquisition of some oil sands property last week. Everybody was excited about it. He would suggest that if crude prices do go higher, it is going to look like a great acquisition. However, if crude prices are stagnant or lower, it would look like a very, very large acquisition at a very inopportune time. He is happy to keep his Short on for the time being.

He likes this. If you look at the Canadian large cap space, this is a super E&P company, but a very strong name. The biggest catalyst for oil/gas investors is the commodity itself, but he doesn’t see a tremendous upside in the commodity.

Just came out with a very good report. This is the biggest Canadian producer. He is moderately bullish on oil prices, and feels that a move into the $60 range is probably likely. This is a good quality company. There is the worry about the US cross-border tax, which would be a big negative.

A lot of the large Canadian oil producers have gone on sale recently. There are 2 big concerns in the market. One is the possible border adjustment tax, which would raise the price of retail gasoline in the US, and he doesn’t think that is likely to pass. The 2^nd is how much production comes on in the US and what happens with the OPEC deal. The WTI strip has hung in their pretty solidly, even with some big inventory builds over the last couple of weeks. The stock is cheap. Dividend yield of 2.52%. (Analysts’ price target is $49.74.)

It is similar to SU-T, being a big cap, and it is important to own big caps in this industry. They will do well whether oil goes up or drifts lower from here.

Peyto Exploration (PEY-T) or Canadian Natural Resources (CNQ-T)? Two different companies. Apples to oranges. He wouldn’t own either. This has great stewards of capital. A big company and doesn’t know why you would want to own a large cap Canadian stock. He can buy a company that can grow production by 10%-15%, spending 1X cash flow with a good balance sheet that has well over 10 years of inventory. Prefers others.

If oil can creep up to the mid-$60s, CNQ-T should go up another $5-10. It is how well they execute on the oil sands side. 2.5% yield. This time last year they were building their business. Now they are waiting for everyone else to develop their technology and then drill up everything and make tones of money. (Analysts’ Target: $49.78).

Have done exceedingly well. Book value is $24.05. It got down to below book value last year. They were impacted by the problems in Fort McMurray. Volumes will be coming back from their oil sands business. This stock is impacted when the market gets nervous about the price of oil. They need to start generating the free cash flow they are talking about and to pay down debt. He thinks they will go to the acquisitions trail again in the future.

*Short* A pairs trade with BTE-T. Any good news you could possibly get is already priced in. (Analysts’ Target: $49.64).

An excellent Canadian company. Its track record is impeccable. He is looking at this as a potential additional oil name as he adds more to his oils. If oil stays north of $50, this stock is going to go well north of $50. When the world wakes up to Canada and Canadian oil, this will be one of those “go to” names.

(Market Call Minute.) A solid company. He liked their close to 9% dividend increase in the last quarter. They’ve had 16 straight years of dividend increases.

A great company. With their projected cash flow, because of the increase in production from Horizon, they are going to be in a free cash flow position in a year or 2. The CEO has done wonders with this company. This is one of the 2 best managed energy companies in Canada. He would like to see it pull back a bit.

One of the better managed oil companies. Good balance sheet with very good assets underpinning their Horizon Oil Sands project, as well as good gas assets. They’ve put themselves in a very good position to generate a lot of free cash flow in the next couple of years, as long as oil stays above $45-$50. This should be one of the core holdings in your portfolio.

(A Top Pick Sept 1/15. Up 51.58%.) He would be a little hesitant to buy this at over $40 for new accounts. It is one of Canada’s best run companies, and will continue to be one of the foremost companies in the oil patch.