Eric Nuttall Cona Resources CONA-T COMMENT Feb 23, 2016

(Market Call Minute) They desire to make acquisitions, but it won’t go up until they do something.

(Market Call Minute.) This has lots of upside to higher oil prices.

(Market Call Minute.) Has been a huge laggard. He is tempted to buy this because it is unjustifiably cheap if you are optimistic on a $60-$65 oil price.

This would be a screaming buy if you believed oil prices are going to be $60, $70 or $80. Their production is levered to heavy oil, which means they get a discount from the headline oil prices. Reasonably well run and has good assets. This would be a binary call in that you either like the oil price for the leverage or you think oil prices will be lower.

Has a very small position in this. A heavy oil producer. They had a fully constructed 6000 barrels a day oil sands plant ready to go, and it is still not up and running. Although they were a heavy oil player, the oil was very mobile in the ground, and had some pretty interesting assets. The company has struggled a bit. They are 70% owned by a private equity fund. It doesn’t trade very much.

They messaged that they wanted to be acquisitive in what was the buying opportunity of a lifetime. But nothing has happened. He does not know if the market is going embrace this name.

(A Top Pick Aug 25/15. Up 29.76%.) A heavy oil name. They were being painted, almost by a bankruptcy brush, as it fell off, but 80% of their production was protected by hedges. That play has played itself out. He wouldn’t own this today, because as the hedges rolled off they were renewing them at lower oil prices.

(A Top Pick Oct 22/15. Down 18.86%.) Sold his holdings in the mid-$40 range. The focus is really on the dividend, so it is largely held by 2 private equity firms that are taking the dividend in stock giving it about an 8% dilution per year.

For a senior looking for safety of capital and tax advantaged yield? Generally speaking, he would put this in the “high risk” category. Predominantly heavy oil, both from conventional and SAGD methods. 18,000 BOE’s a day. Very illiquid because private equity firms own about two thirds. The high dividend is really a factor of the private equity holders like receiving their dividends in the form of stock. This creates about 8% dilution every year. They need to probably adjust the payout, because you can’t keep going through 8% dilution every year. He has a small toe-hold position, because he likes the leverage to improving oil. They are near the bubble in terms of breaking even and starting to generate real cash flow, so anything above $50-$51 is good for this company. Not a low volatility kind of holding. Prefers others.

A heavy oil producer. They IPO’d back in 2014 at the peak of market. This struggled, partly because they had a SAGD project that had a lot of technical challenges. He sold his holdings. As an investor, he didn’t like that they had a dividend reinvestment program. The move they did today was to reduce the dividend by 50% and eliminate the DRIP program. They also announced a tender for shares at $4, and he doesn’t think that is a significant vote of confidence for the 2 major shareholders to say that shareholders can have all of their stocks. He doesn’t look at this company as particularly investable. If you own shares, he would tender to the offer.