Crescent Point Energy Corp (CPG.TO)

A great oil/gas company. This would be in the basket of high quality companies that you would want to gravitate back to. Have had tremendous success. Sort of stalled in the last year or so. Pays a nice dividend. Has some great exploration projects. A little more highly skewed to oil than what he would like.

Suncor (SU-T) or Crescent Point (CPG-T)? Two totally different stocks. We might still see oil production pushing down here a little bit, but that will take a little while for it to roll through. He looks at this from a seasonal perspective. If the oil sector really starts to ramp up here, you are going to get more bang for your buck out of Crescent Point. Because the energy sector is out of its seasonal period, he would be going with a more defensive oil play, which is Suncor.

People are selling because they worry about sustainability of the dividend. But you should be buying these when they are weak. You should be more defensive when things are looking good. You need to re-frame your thinking since that is not the case. Oil will be volatile for the next year.

(A Top Pick Oct 21/13. Down 2.31%.) This is a company where you really have to have a 5-10 year view because, in their thinking, they want to be a very major player. They're looking at 150,000-160,000 barrels of oil a day. He thinks it can go to 200,000+. They do this by having a huge inventory of wells that can be drilled for not only primary purposes, but also where they can apply secondary recovery methods. Yield of over 7%.

If WTI is at $80 and natural gas is at $3.50, he is modeling a debt to cash flow of 1.1X on 2015 estimates, which is very reasonable compared to the group at that level at 3X. A 2015 estimated payout ratio, so their dividend sustainability would be 114%, which is not bad. The valuation they would trade at would be 7.4X enterprise value to cash flow. You want to be closer to buying at these levels then to selling.

Feels the dividend, even at current oil prices, is fairly sustainable. Their all-in production costs and payout ratio is probably just slightly over 100% at this level. Hasn’t owned this for a while because he prefers other dividend stocks such as Surge (SGY-T) and Cardinal Energy (CJ-T). Crescent Point seems to be continually issuing stock as they buy more companies.

He turned negative 4-6 months ago. Now he bought it at $36-$37 and it is neutral to up a little right now. You don’t need to rush into it as you will see a lot of up and down in this sector. Wait for the Russia/Ukraine situation to be resolved.

Cash flow per share is the more important metric. Don’t get fussed about the high PE ratio. The cash flow has to pay the big dividend and replace assets as they deplete. He has never been bullish on CPG-T because their payout seems overly optimistic. The payout ratio is unsustainable if oil prices stay low for any period of time. If they cut the dividend then the stock will fall like a rock. He only has SU-T and CNQ-T.

120% payout ratio with low oil prices. But their cash flow sensitivity is not that related to the oil price. The dividend is safe.

Dividend stability depends on the price of oil. If oil falls, he thinks either cap X or the dividend will have to be cut. Does not like names with relatively high debt that attract investors with the yield.

You do not want to sell these names at this point. This one is giving you a 7.5% yield. In fact he has been looking at buying some of these names.

Recently did a stock issue, so his figures do not include this. He would like to see the new balance sheet when it comes in. Not a fan of this. This is the 1^st time in 4-5 years that it is actually trading below his model price calculation. Thinks this is on its way down to $32.

For a very long time, this company had a higher multiple and used its paper to issue, acquire and grow. It is a very large company now. Has been a good operator. Doesn’t have an enormous amount of debt and pays a very, very high yield. The question is how long does oil stay down. In really low oil prices, these shale oil plays are not the ones to look at for a safe haven in dividends. It is the bigger names that don’t have decline rates and have better balance sheets.

(A Top Pick Oct 22/13. Down 3.82%.) Down, but this is just a measure of the panic in the market. This is one of his favourite stocks. Pays an excellent dividend of well over 7%. Have an excellent production record. $81 US for Bakken oil now. A fantastic operator and they have years of drilling to do.

(Market Call Minute) Great company, but wrong sector. He came out of this one some time ago.