Crescent Point Energy Corp (CPG.TO)

They are being prudent. They cut back their cap X program as well as the dividend. 35% of this year’s production is hedged at $80. They can still grow production and it is encouraging. It speaks to their inventory of land. There is still a bit of a yield. It is a call on crude oil at this point.

This is one of those “go to” names when people want to get back into oil. Had a nice bounce from its low. His guess is that we are close to the bottom in oil. Would prefer buying an ETF, a safer way to play oil.

Hedges – when do they start to disappear? They have 30% of their oil hedged over $85/barrel for the remainder of the year. The next two years have about 10% hedged north of $80 and then it is nominal.

This company has 33% of their book hedged out at $83 for 2016, so it has some time. Looking at demand going up in oil and supplies slowly coming down, at some point there is going to be some support. They are managing their balance sheet quite well.

This could be $20 by year-end. If you were to own one oil name, it would be this. It gives you the combination of very high quality assets, modest debt, good hedge position and high netback light oil. Has been out of favour and is now in favour in large institutions. They may cut their dividend by 20%-30% again in the next couple of months. If they do, he thinks the stock will actually go up.

This company always issued equity to pay for their dividend and fund some growth. If there is an energy rebound, a company like this should do well. They have decent long life assets to support dividend growth going down the road. He is cautious on energy stocks, and would be cautious on this.

Definitely a “go to” name for the Canadian retail space, but would not be his 1^st pick for energy. You can get companies cheaper that have better price momentum. Pays a good yield, but that alone is not a good reason to own energy stocks. Reasonably valued, kind of the middle of the pack, but high volatility, negative ROE’s and they don’t make money yet at these oil prices. Would prefer something like Raging River (RRX-T) or Granite Oil (GXO-T). Has a small Short on this. (See Top Picks.)

Much more levered to oil prices than a lot of other companies, so if oil goes up you are going to get a bigger return. He would stick with companies that are more integrated like Suncor (SU-T) that has good balance sheet. Thinks oil will be touching the lower end of the range between $20 and $30 as opposed to going up.

She picked this, not only because she thinks oil prices are going to go up, but the business has not been impaired like others in this environment. You want to be exposed to a company that is not going to fall apart, but also has an upside opportunity. Operationally things are going great for them. Decline rates in production are slowly coming down, which means they have to spend less capital. Dividend yield of 8.66%, but wouldn’t be surprised if they cut this again.

They had said their dividend was safe, and then followed that by cutting it. Based on where we are with current oil prices, they may have to cut the dividend again. At these levels they are barely covering their cash costs, and are not able to spend enough money on maintaining their production to capital expenditures.

In his view this as a bit more of a conservative energy stock. Chart shows a double bottom (August and January), which is quite interesting. That is where the market has seen value. You are probably going to find resistance right where we are right now. This is not a bad place. Dividend yield of 7.9% is a little high.

A name he would probably want to own when it is a good time to own energy stocks. For the most part, this company is not in Alberta. Has a decent balance sheet. Cut back on their spending and dividends. A good history of hedging production. They should be a survivor and a name you want to own in the future.

They had always done significant stock issues. Now that energy prices are a lot lower, they cut their dividend. It will trade in a range for a while.

The energy sector has been in under a lot of pressure. This is the time to start doing homework on higher quality companies. They generate good cash flow and have hedges in place. The market is forward looking and there is a lot of bad news about oil. When things swing a long way to one side, he tries to look at the other side. CPG-T is a good quality name in the space.

You wonder why it has been a favourite when you look at the chart. We are below the financial crisis low. There has been a volume increase during 2015. We have probably had a bottom, but how high is it going to go? There are better places to go. It is for traders only.