Canadian Natural Rsrcs (CNQ.TO)

Likes them but right now the energy sector is range bound and CNQ is at the top of the range. He would want to take some money off the table. At the bottom of the range he would be a buyer. If we get the pipeline built then we have the case for revenue streams to go up.

(Market Call Minute) He would add if you want to play the differential improving through the end of the year.

He bought this one because he thought the differential was really wide on the heavy-light side and it could only narrow and it would narrow this year.

Very well run company. Management team is exceptionally good. Have massive resources. Been struggling recently because of heavy oil differentials. Earlier had problems with the Horizon upgrader, which seems to be operating at a really, really good process now. Good balance sheet. They can sustain themselves through any economic cycle.

One of the concerns he has with big producers in Canada is that they have to stay in North America. Prices have come down. Without pipelines to ship it out, it is creating some pressures. Trying to decide what to do with his holdings and whether there are better alternatives.

Has had a good recovery from the bottom. Has a great history. If you own, you could take some profits, but otherwise it is a Hold.

Great management team with a long track record of delivering on what they say they are going to do. Had more challenges in the last couple of years. Has been a more difficult operating environment because of the large differential that Canadian oil has been getting. Also, problems in their own projects. His biggest problem with Canadian oil generally is the difficulty in getting it moved. Pipelines are going to take a long time to address the problem in a meaningful way. If he were to own a Canadian oil, this would be on his short list.

If the Keystone pipeline gets built, which company benefits the most, Canadian Natural Resources (CNQ-T) or Cenovus (CVE-T)? If the Keystone is approved, a lot of companies will benefit including these 2. His 2 favourites would be CNQ and Suncor (SU-T).

You look at this one on oil sands business going forward. These companies are being caught in the differentials. This is always on his list of 4 or 5 companies to own. Probably not a bad entry point but he would really like to see the differential get fixed. It’ll probably get fixed in 12 months time, in which case this is probably the right time to buy it.

Cenovus (CVE-T) or Canadian Natural Resources (CNQ-T)? If you are a trader, this would probably be the better of the 2 but if you are an investor Cenovus is probably the best. Both are excellent names. The difference is that Cenovus is SAGD where this one is mining. This one is more of a heavy oil story. If you believe that the differentials are going to close, which he sort of does, this would be one way to go.

Chart shows a long downtrend from early 2011 which has now been broken and sets you up for good risk/reward. Has been looking at this. If it breaks $30, you haven’t lost that much. Pretty good risk/reward. Resistance doesn’t come into play really until $34 and the next one is $40. This one also has 2 bottoms, which is really good.

He asks himself why he would buy a Canadian oil stock here. What is going to drive the stock price is the price of oil. Has a real problem buying Canadian oil stocks here, possibly for the dividend. He is steering clear at this point.

Usually doesn’t invest in resources because this is not where you make money. What you want to do is buy the companies that supply the resources. This one hasn’t done well because of the differentials in oil.

Trading at a slight premium to its proved reserve value and you get good exposure to a shrinking in the heavy oil differential, but unfortunately this is going to take until 2014. Expect it will be the top performing large cap this year, in the 2^nd half rather than the 1^st half.

(Market Call Minute.)