Canadian Natural Rsrcs (CNQ.TO)

Has sold out of his energy positions recently. This one is below its 50 and 200 moving averages. Had a downtrend through the greater part of this year and there was an attempted breakout but hasn’t done a great job doing that. As we move out of this seasonally strong period for oils, he would not be overly bullish on oils. It really needs to break out past the $32-$33 area.

Suncor (SU-T) or Canadian Natural Resources (CNQ-T)? Owns both but if he had to choose he would probably go with CNQ, particularly today where it is selling off big on what he thought was reasonably good news. Could easily see $40 in the next 12 months.

(Market Call Minute.) Has been adding to his position recently. Likes the oil stocks in general. Great growth.

Would you switch from oils to golds? Energy stocks have done very well over the last 6-7 weeks. Period of seasonal strength for energy is from approximately July 24 until Oct 3^rd. This year the seasonal benefits for this came in little bit earlier than usual but now it is starting to show signs of rolling over. Now is the time to take some good profits. Gold “stocks” has seasonal strength from July 27 to Sept 25. Gold started earlier than usual this year but peaked out.

Canadian Natural Resources (CNQ-T) or Crescent Point (CPG-T)? Both are good companies but in the case of Crescent Point you do have the higher yield. This one is more of a capital gains story. Have a lot of cash flow to pay down debt. Their Horizons project is moving smoothly now. As they pay down debt, they will probably have another growth spurt.

Difference between this and Suncor (SU-T) and Cenovus (CVE-T) is that this one does not have upgraders so does not upgrade into refined products. Because of the wide differential between Brent and WTI, the companies that can crack the crude oil benefit more from Brent. Stock is discounting $80 long-term oil which he does not feel is sustainable. Good management. Stock is undervalued. Thinks fair value is about $40.

(Market Call Minute.) Chart is shaping up and it looks more interesting.

[Caller asked if banks were better] Oil prices are going up over the years. Financial services are a little more constrained. Depending on horizon, banks are less expensive than oil companies, so short term, he would favour banks but if you are trading, then you get more upside in oil sector. It is going up because of geopolitical risks, what is happening in the middle east.

The street has hated this company from when the Horizons trouble started last year because they are considering it as more of a gas weighted company and for the oil they have they hate the Canadian differentials. 1.3% dividend.

This is the broadest and widest diversified oil/gas play and has one of the best management teams in the country. Gives you a terrific exposure to different types of bitumen. Because they have their own heated pipeline, this allows material to flow more freely. Have all kinds of acreage in the event natural gas gets back to $3.50. Very cheap at 5X cash flow.

Has under-performed all year. It has not done as well as the others so there is catch up. They are not fully integrated so doesn’t benefit from the downstream. Brent vs. WTI impacts them negatively.

Sees some upside potential. Canadian oil prices have not been nearly as strong as West Texas Intermediate. There has been a bit of a discount on heavy oil prices so a lot of Canadian producers, including this one, have been impacted by that.

Got beaten up tremendously but has had a nice rebound in the last 6-8 weeks. About half oil and half gas and of the oil, you have oil sands and heavy oil as well as some international. There is a little bit of risk if the gas price retreats between now and end of October so there might be a bit better entry point. He would like to see it under $30.

Has just added more to his position. Extremely undervalued. Horizon was shut down for a while because of production problems but is now fully back on line so you have the heavy oil side looking awfully good. Good production development growth. Not as levered to natural gas as they used to be so generating great cash flow. Good story. Cheap. Wouldn’t see $40 as being overly expensive.

Is a favourite of his and a bigger holding on the senior side. The market is looking for a rebound when Horizon gets back to 100,000-barrel range. It doesn’t have an upgrader so it is feeling the differential bite. Execution is the key always. Market is sensitive and is looking for execution. A great free cash-flow generator. Has the best leverage amongst the seniors except for Encanna. He added to it recently. The worst is over but it doesn’t mean you can't have problems.