Opinions
Eric Nuttall
Crew Energy Inc.
CR-T
COMMENT
Oct 11, 2019
$0.580
Stock price when the opinion was issued
oil
gas
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DON'T BUY
He used to own this when natural gas was $3-$4. The equity value of this company is being ground down, day after day. It has to spend money to keep going. Be careful with these small cap names. These will be one of the first ones that banks will require to consolidate due to credit exposures and bank line covenants. A high risk investment.
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BUY
Enterprise value is very cheap. But the issue is they have debt. They did an infrastructure deal to reduce that debt. A big part of that debt is a 2024 maturity at a low interest rate, so Crew will survive. Their liquids are in a condensate-rich area. The stock has been hammered because of high debt. He's bought more of this in the past week.
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RISKY
It is a stock that is very cheap. With high energy prices, that has lifted all of these companies. It was as low as 10% of its book value. His fair market value has been going literally straight up. He would stay with it. He recommended it as a speculative buy a while ago as it made sense. He would prefer to buy a junior oil ETF rather than bet on one junior oil company.
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VII-T vs CR-T? He would stay away from CR-T due to its debt level. VII-T has a good management team, but its slow down in growth highlighted their 50% decline rates in existing assets. This causes too much of their cash flow to still be required for maintenance. He would prefer NVA-T, which trades at a lower multiple of cash flow, has a better balance sheet, and lower decline rates on production.