Canadian Natural Rsrcs (CNQ.TO)

(A Top Pick Oct 10/12. Up 12.79%.) Oil sands producers are doing a little bit better lately. The big concern was that there was no way to get their product to market. We still don’t know about the Keystone pipeline. People are concerned about oil by rail. Sitting on terrific reserves and are getting to be more efficient operators as time goes by. Operating at a very low multiple of cash flow. Feels there is real value here.

It is hard enough to make money in the oil sands stocks without them having operational issues as well. Prefers SU-T.

Almost a top pick. $45.13 model price, 35% upside. EBV+2 is $35.85, which is resistance. It has to go through that to realize higher prices. If you are patient you make money with it.

Had some problems operationally. Very well run. Have enormous natural gas assets that are not contributing to the bottom line right now.

A lot of uncertainty that will take a few months to resolve. Believes it will resolve and the asset is still there. Have to look at differential. This will come in eventually regardless of the XL pipeline. Oil will find its way to the US.

Very high quality company. Recent dip was probably a combination of rising rates in the economy, as well as Cdn resource companies having to deal with an ongoing struggle of getting their product down to the Gulf Coast. We are going to have to see some resolution as to what is going to happen with the pipeline infrastructure.

Lagged because of operational problems. He rates higher than SU-T, but still vulnerable to pipeline decisions.

(A Top Pick August 28/12. Up 7.46%.) Sold his holdings.

(A Top Pick August 12/12. Up 6.11%.) In the penalty box and probably deserves to be. Now at the lowest valuation on a relative basis to its historical valuation that we have seen in many, many years. One thing that it has going for it is that the heavy oil differential has narrowed significantly over the last year.

For him, this was a choice between this and Suncor (SU-T). Suncor has a more diversified business. This one really needs that heavy oil differential in Canada to go up and stay up. Other than that, these 2 companies are almost equal. (See Top Picks.)

(Market Call Minute)

Have been having issues on their Primrose property. They think they have identified the leaks. Have seemed to have gotten around their Horizons problem of last year. Still remains a free cash flow juggernaut where, over the next 10 years, free cash flow will exceed their current market cap and their debt. People have to be patient with this one. Great company and long-term fundamentals remain very good.

Oil/gas company with international operations, both in the North Sea and West Africa. The Canadian operations in the oil sands continue to generate excellent returns. 10^th consecutive year that they have increased production. Had a hiccup when the Primrose East had seepage from their cyclic steam operations. This caused a $3.5 billion hit on their CapX. One of the largest reserve bases in its group. Yield of 1.62%. Price to cash flow is very cheap at 5.1X compared to 6.1X of the comp.

Historically does well in the summer time. The summer trade is coming in, a nice little trading range. Will probably get a nice little move on soon. A number of analysts are jumping on this to see it go higher.

There is uncertainty about one of their properties, Primrose, which has 2 leaks and is releasing bitumen. This company had this problem in 2009 and were ordered to stop steaming. Short-term guidance from this company is that there are no changes. Have stopped steaming but still have production. The concern is the impact for 2014. Has a proved reserve value of around $27, which would be his absolute worst scenario. If it ever approached that level, he’d be a very active acquirer.