Canadian Natural Rsrcs (CNQ.TO)

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.)

Likes at this price. Been hurt recently by the heavy oil spread in Canada and the widening of the spreads. He expects this problem to disappear. If they don’t go ahead with the Keystone pipeline, there could be a rift in the stocks further out. Cheap.

Has been a very disappointing stock, presumably because of the concerns on heavy oil differentials. Very well run. Has potential to grow their oil part. If natural gas prices came back, they could certainly jack up that part of their business too. Cheap. Would buy it now with a 2-3 year view.

Likes energy. Would be a buyer. Model $37.28, 21% upside from model price.

Trading at roughly about 5X cash flow. Very cheap. Has been hurt over the past year because of the differential. If you have an optimistic view about future oil prices and narrowing of the differential, at these levels this is a good one to pick away at.

(Market Call Minute.) Has all the things he likes about the heavy-light differential. One of the “go to” names.

One of his favourite Canadian oil/gas companies. Have extensive properties in Canada as well as in Western Africa. Stock has come off quite a bit because they are essentially getting Canadian pricing for gas and oil. Starting to rail some of their oil down to the US. Once firmer gas and oil prices start to prevail, this should bode well for them.