Cequence Energy Ltd. (CQE.TO)

(Market Call Minute) Pure play on gas. 87 sections of Montney.

(A Top Pick March 12/13. Up 36.88%.) Things are actually better operationally than they were a year ago. There has been an injection of cash from the Canadian Pension Plan from a debt issue. Gas prices are probably up 35%-50% from that time. Recently there have been some very encouraging well results. Thinks the stock continues to go higher.

(His 3 Top Picks are all based on continuing strength in natural gas prices.) Has recently been drilling some very good wells in the Wilrich where they are partnered with Bonavista (BNP-T). As well there are more results out of their delineation of their Simonette properties both to the West and to the North. If those are successful in the next month or so, that will show that their Simonette has actually more scale to it. Has been a laggard in the market, but is finally getting a little respect. Thinks the upside is $3 a share. Canada Pension Plan’s recent investment gave it a very strong stamp of approval.

One of his favourite names in terms of a Nat Gas call. He likes it as a takeout candidate. They are in this phase where they have to get over a hump of how much they can drill from their cash flow. They are in a de-risking phase but he thinks the potential is there. He adds periodically and hopes this year will be a break out year.

(A Top Pick Oct 26/12. Down 10.64%.) These smaller stocks have lots of volatility. Canada Pension Plan basically de-risked the story through their debt deal of around $60 million. This money can be used to pay down their bank line but now have running room to finance some pretty exceptional growth, moving them from 10,000 barrels to 20,000 barrels over the next few years. Getting liquid rich gas wells in the Montney. Easily worth $2 a share.

(Top Pick Oct 26/12, Down 19.68%) Liquid rich Nat Gas.

Really likes how management is handling the company. Have the assets in the Montney that seems to have 4 different production formations. Those projects have some very low breakeven points. Have a little bit more need for some equity. Balance sheet is in reasonably good shape. Have a lot of opportunities in front of them. Can see a 25% upside.

Has been doing pretty well this year. Natural gas has been performing better than oil. Came out with a few very high rate wells and they are also in a very interesting area of the deep basin. Liquidity can be a little tight. They would need over $4 gas to mount and activate drilling campaign. If you’re bullish on natural gas, you should do pretty well.

Gas side. About 9k BOE producer. Sleepy last few quarters. They are building out infrastructure that will lead to production growth over the next year. A bit of an underappreciated story. Sees upside.

(Top Pick Oct 26/12, Down 4.66%) The decline was today. It’s a gas stock. Still really likes it. An ideal take-out candidate over the last 2-3 years.

(A Top Pick Oct 26/12. Down 14.36%.) His levered play on a recovering natural gas price. Gas was creeping towards $4 late last year but pulled back in December and January with the warmer than normal winter. Thinks it could still be a $2 plus stock in the right gas environment. Company is drilling liquid rich gas in the Simonette area. Dunvegan, Falher and Montney wells continue to post good economics.

Tied to his expectations of higher natural gas prices. At $3, $4, $5 natural gas prices, this play works a lot better. Has been a lot of insider buying throughout this year.