Crescent Point Energy Corp (CPG.TO)

14.8% yield means the market is telling you they don’t expect the dividend to be paid. The market is expecting a cut. He has not added to it here. Oil prices are still winding down. CPG-T has the cash and the great land position they acquired. A cut in the dividend should not do much to the stock price as the expectation of the cut is built into the stock price.

He does not think it is going away. Oil may not turn for a couple of years.

A lot of analysts embrace the model, but these models are only good when the commodity is doing well. It fought to stay above its peak for ages and then fell down. He thinks it will hold in here. Hold but don’t buy it.

He thinks this whole business model is coming under question. The real fundamental question is, should resource companies be the significant generators of cash dividends, when in fact they need that capital, particularly as commodity prices continue to disappoint. The dividend doesn’t make sense because they need the capital to keep the regular business going.

This is definitely going to survive, if any company is going to do well in this particular period of falling prices. Have good financing and good cash flows, and even covering their dividend at the present time. They’ve been good in hedging in terms of selling forward. He hopes they managed to pick up some of that $60 future oil when the market was in contango a month or so ago. Whether they can maintain that 14% dividend is open to question.

He likes them. The market is telling them it wants them to cut the dividend. They still might not do it. They didn’t have to earlier this year. If oil is still $50 when these hedges roll off, CPG-T will have to cut the dividend within a couple of years. The yield has spiked as the stock price came down. CPG-T can’t issue equity with a 12-15% yield and make it accretive. They should bring it down the 7-8%. Management does not want to do this, but it is best.

Has always been a very well-managed company. For many years, although they didn’t earn it, it was largely supported by the DRIP program. As production and cash flow grew, they were able to cover that. They have run a very effective hedging program. Have 58% of their output hedged at around $88, and 2016 production hedged at around $83. Regarding cash flow, although numbers have come off considerably in the last while, he is still seeing forecasts for the next 2 years of about $4, which allows them to maintain that dividend. Have a lot of very good properties and a lot of potential properties to drill extensively over the next number of years.

Would probably be at the bottom of his list of energy stocks that he would buy. Always had a problem with them raising money to pay their dividends. They typically raise money which dilutes shareholders, and then the growth kind of disappears from that.

Leveraged to the oil price, which has come down to $47. They are pretty much 100% oil. Very good management team and good operators in good oil fields. The issue is with the dividend at around 12%, clearly unsustainable at the current price. He thinks a wise decision would be for them to cut the dividend. Wait for a cut in the dividend before buying.

(Market Call Minute.) Dividend yield is now 14.7%. A Hold and maybe even a Buy at this level. They have hedges on through next year, so would only have to cut the dividend if oil stays at $45 for 18 months.

Now back to 2008 levels, but it is not alone. A lot of these companies had very strong hedging books going into this year that have seen them come through. When oil had the bounce through the spring, it pushed those hedges out a little bit. It is very difficult to hedge now into 2016. Thinks it’s going to be 2018 before we see a $60 oil price.

One of the better players in his portfolio. They will survive. He is waiting to add. Has noticed that inventory levels have started to flatten out in North America. His company has a $40 target and that the dividend is sustainable. However, he is not ready to add yet. Yield of around 14%.

(Top Pick Jun 25/14, Down 51.92%) The market thinks it should cut its dividend, but they are adamant they don’t have to do that. 13.6% is the dividend. They have a relatively good balance sheet. It is a buy here. It is trading at 2008/09 levels.

One of the better companies. Likes what they are doing. Good strong control. Picking up some of the weaker companies. The trouble is, you have low oil prices. Hopefully their hedges last long enough that they don’t have to start worrying about the current prices of oil. They have been able to hold their dividend in. There is a lot of pressure on oil. He is looking for oil to maintain at around $48. He is not a fan of oil and gas.

He sold all of his energy stocks last fall, hasn't dabbled back into it yet. It is a really interesting idea. If it could hold the December low, it could be an opportunity for a seasonal trade. Recommends sitting on the sidelines and watching.