Canadian Natural Rsrcs (CNQ.TO)

(Top Pick Dec 23/11, Down 25.37%) It is really, really cheap as it was a year ago when he also recommended it. As refineries come on it will increase. It’s a bench mark name. He overweights it and will continue to.

All of the names such as Husky (HSE-T), Suncor (SU-T) and this one are very cheap and some are trading very close to BV. Issue is going to be, when do we see natural gas prices turn? Also, in the oilsands projects, costs, ability to expand, shortage of manpower, etc. are bothering the market right now. If we can get some progress on the fiscal situation in the US and more progress on the banking situation in Europe, heading into 2014-2015 he feels we are going to see a decent new economic cycle. But there is more pain ahead of us right now.

Right now the oil space is not a good one to be in. This one is hitting a 52-week low. He would rather it come off its low so you have a better place to put a stop loss. The one positive thing is that there appears to be a lower low. The names he prefers are Husky (HSE-T) and Suncor (SU-T). The latter one for the yield play.

Going to spend $500 million on CapX, an 8% modest increase from last year. This is the largest producer in Canada. These companies are all way off the top and there is no significant fundamental reason why they should be very much higher. He doesn’t have any particular expectation. It should stay around this level.

Horrible performer. They have to seriously think about increasing their dividend to improve valuation.

He has this as an outperform with a $42 target. Yield of 1.4%. One of the issues that he has with Canadian oil is that he thinks that we are in a tough predicament of where he thinks oil prices are going to go in North America, so he is a little bit cautious.

Encana (ECA-T) or Canadian Natural Resources (CNQ-T)? Go for Encana. It is much better. 200 day moving average is flat and the stock is starting to flirt with it and probably going to break out. Downside risk is about $1 and the upside is to about $30. On CNQ the problem is you still have a falling 200 day moving average.

Looking back 5 years it is attractive because it is at the lower end of the range. Owning it at this point is ok but in the next couple of years it will be range bound. Get out at $33 and when it dips down you nibble at it again.

Just sold his holdings, partly for tax loss reasons and partly because he is changing his focus somewhat away from energy into other resource plays that will have better opportunities over the next 12-24 months. This is a 1^st class company but he is getting a bit nervous about the oil sands and their exposure there.

(Market Call Minute) Thinks it is a very difficult environment for them.

It has done nothing and yet it is one of the premier companies in the oil patch. The last quarter was a big miss for them due to higher royalties and the heavy oil royalties. If you look at the production profile it could be up significantly over the next few years. It is looking attractive at the current levels.

(Market Call Minute) pricing is going to be tough.

Sold in May, went away, now it has gotten under $28 and is fairly compelling. 50/50 oil and gas. Less than 5 times cash flow. Discount to net asset value. The only problem is the differentials between heavy oil and WTI. That is why the stock is low. He thinks the differentials will narrow.

Another very cheap name. Execution has been largely very good and management team is well regarded. They don’t have refineries so are more exposed to heavy oil differential. Some refineries have been knocked down by Hurricane Sandy. Is planning on buying next year.

Continuing problems. Well managed, though. It would be good to get one solid year of production out of Horizon. It is at a great entry point right now. He would look to add to this when he puts more cash back into the market.