Cenovus Energy (CVE.TO)

One of the better asset based, especially on the SAGD oil side. Breakeven point is more like $65 rather than $80. Their issue earlier in the year was that they were over levered with the commitment to the capital expenditure. The big equity issue fixed that problem, so they have a good clear line to having this built. However, it is one of the more expensive names with the uncertainty that is going on in Alberta; the potential royalty review and potential emission charge increase.

Cenovus (CVE-T) or Husky (HSE-T)? He moved some money to Husky when oil prices came off, as he felt they would benefit from the retail side of their business, and he would still feel that way.

His favourite of the large cap integrated companies. It is caught in a market sentiment cycle. Long term they are a low cost producer with assets that are decades long. They had some operation issues. People are concerned about a dividend cut, but he has been buying it. He really likes the management team.

This was a spinoff from Encana (ECA-T). It has been under pressure with the fall off in oil prices. He is going to continue holding.

They are going to have some difficulty with the prices being where they are and the cost of exploiting oil sands projects. Thinks this will be one of the survivors. Have some very good properties and some where they could do a royalty spin off on, which could be a couple of billion dollars for them. Over the next few years, he expects to see the price have much more appreciation power than what the downside risk is. Current yield of 4.5%.

Energy stocks have been doing quite well. A lot of them bottomed in January and some have gone up 20%, 30%, 40%. This one hasn’t participated the way he would have liked to see. The chart shows a descending trend line from September, which is presently being tested. There isn’t too much reason to get in now.

This is not a growth situation any more until we sort out the oil prices, but feels the dividend is safe. The oil price may take only 6-9 months. This is probably as low as it is going to get.

(Market Call Minute.) He doesn’t mind this, but in a pecking order, why go there?

Very oil sands focused. They raised $1.5 billion this year to shore up the balance sheet. You kind of wonder when they are paying $900 million out the door on the other side, if they are raising money to pay you back in the form of a dividend. Have had operational challenges is some of their oil sands projects, and he thinks these are largely behind them. As a long term holding, this is all right. Thinks you can do better with something else.

(A Top Pick March 12/14. Down 24.17%.) Sold his holdings last fall at $28.80 (1% loss).

They want to keep their development plans on track so they have to issue stock to finance it. It is one of the higher quality asset plays in the oil space.

(A Top Pick May 7/14. Down 29.42%.) Long-term assets and low cost producer of SAGD in Christina Lake and Foster Creek. Have other assets they have delayed putting money into, but will do so longer-term. Balance sheet is in pretty good shape. Just did a $1.5 billion issue. Instituted a DRIP program at a 3% discount. Also, have royalty properties that they could sell. Management has stated that protecting the dividend is very important to them. Yield of 4.89%.

(A Top Pick March 7/14. Down 24.69%.) He just participated in a recent equity issue they just did. Management has been very proactive. They have taken a couple of rounds of cutting back their CapX for the next couple of years and have raised equity to shore up their balance sheet. It is a tough environment for these companies, but these assets are 30-50 year assets. Expects cash flows are going to be severely hit this year. However, given a turnaround in pricing somewhere along the line, this is going to come back fairly quickly.

He is not fussy about it and there are others he would rather own such as ECA-T and TOU-T.

Just raised $1.5 billion. Thinks they are raising capital to take advantage. A quality name with quality operations with an opportunity to buy quality names that are out-of-favour. He is cautious in the near term on oil stocks, so he is not a buyer of oil stocks and would probably wait for the 2^nd quarter for some weakness, before getting involved.