Cequence Energy Ltd. (CQE.TO)

Gas weighted. Recently sold one of their non-Montney assets, which really cleared the balance sheet and put them into a position to become a focused Montney gas player, with a balance sheet that could finance activity, for at least the next 12-18 months. Getting over the hump where you are self financing is very important. They are kind of at the higher end of the per-share growth phase for 2015, 25%-30% per-share growth in production and probably something greater than that on the cash flow side.

Spartan Energy (SPE-T) or Cequence Energy (CQE-T)? Spartan would be his choice. (See Top Picks.)

One of the Montney players he fell in love with. Liquids rich. The team has done a transformation a couple of years ago. He likes it, but the market is critical in the progress they made. Hang in there.

Sold off from about $3 early in the spring. Came down initially with some of the natural gas stocks coming off on lower natural gas prices. However, they also had a couple production hiccups as well. Have focused their efforts on the Montney. Trading at just over 4X cash flow. This has big potential.

Last winter was cold and we depleted storage so demand should have been strong, but then North America increased production, and then it turned out to be a cool summer. Weather forecasts for this winter are from cold to warm so you can’t predict this trade. This stock is more reliant on the Nat Gas price than others in the space.

He has been using $4 natural gas for 2015 for his own modeling, which is proving to be where the futures price is coming down to. This one screens out as a very cheap stock, but unfortunately is somewhat cheap for a reason. Had an asset in the Wilrich, which they sold to Bonavista (BTE-T), and they took the cash and de-levered the balance sheet, which was fine. They were also ramping up CapX very meaningfully. However, when they came out with their pro forma guidance in terms of production, relevant to the increase in CapX, it was overwhelmingly disappointing. Also, there has been a massive turnover in sentiment with respect to natural gas.

Nat. Gas. Made a nice base after a sell off. It went into a trading range, building a base. This year it had a break out and an up leg. We are now going through a bit of a correction and now it is starting to be a good stock to be in.

Things were doing well and had a little bit of a selloff because of the gas side. Long-term it is fine, and the balance sheet looks fine. (See Top Picks.)

Number 4 or 5 in his fund. Pulled back after selling assets, but in his opinion is now a better company. It is down really hard today. You have to have a 6 to 12 months horizon.

The 1 year chart shows a good long base from August through to February. Then it broke out, which was a great time to buy. Chart shows a little bit of a breakdown, but it may not be game over because often you will see that you can get a test of the old breakout point. That may be what this is doing. If it successfully tests and bounces off, wait for 3 days, which could be a very good trade.

Sold non-operated, non-core assets to focus on their Alberta Montney play. This hasn’t got a ton of respect from the market in the past couple of years, but have now demonstrated they deserve the multiple they are currently getting. Boiling down the numbers, you can build a case for cash flow escalating from $0.30-$0.40 to $0.75-$0.80.This will probably garner a premium multiple as they develop their Montney assets. Have lots of play content in the Montney. Have $10 million in the bank and an undrawn line of $135 million.

If the price drops further it will intrigue her, but she is looking closer to a $2 entry price. There probably won’t be a lot of results for a couple of months. Likes the team, the assets and everything about it, but it is not fitting her criteria right now.

(A Top Pick June 6/13. Up 53.16%.) Has revamped itself. Likes it even more because they sold off a non-core asset and cleaned up the balance sheet which really puts them in a position to finance their key Montney project. Thinks it can grow 35%-40% over the next 2 years in each of those periods.

This company should be held for a period of 2 or 3 years. If you’re talking about short-term trading, he can’t give any recommendation. Longer-term he does like their concentration of the assets. 3 different formations in the same geographic area, seem to be producing very nicely. Very good lift they are getting from natural gas prices.

Likes the liquids rich gas that they produce. The commodity story looks good for the next year. A great real estate play as they are in the Simonette/Montney play. Have 200 or so sections and lots of drilling inventory. Very prolific wells. More recently have been drilling some great oil rich wells at Ansell with their joint venture partner Bonavista (BNP-T). Have 2 legs of the stool right now that are running on all cylinders. Stock is dropped from $3+ down to $2.50-$2.60. Has pulled back enough that it is a great entry point again.