Cenovus Energy (CVE.TO)

(A Top Pick Jan 3/13. Down 8.8%.) Had “best in class” operating metrics coming out of 2008 in the downturn and they got paid for that in the marketplace. Had some operational difficulties last year, but these assets are multi-decade assets and there will be a bad year here and there, but as a long-term investor, that just gives you a chance to accumulate more. Have been growing their dividend which he likes to see. Going to have lots of free cash flow but it’s a little bit further out because they have growth projects in front of them that they are spending money on.

Integrated oil/gas company. Designing the best projects on the best reservoirs on SAGD projects. Has been suffering with the same type of events where US investors look at the sharp discount to the WTI price and have been selling their Canadian assets. Small but growing dividend. This is just a matter of patience and waiting for markets to re-erect themselves.

We are approaching the seasonal strength for energy, which runs from January through to May. However this stock is not looking as appealing as he sees for other energy stocks. Technically trading in a bit of a range, with the high side being $31.40 and the low side at around $20-$29. You want to see it break out of its range at $31. It is significantly underperforming the market.

He likes the peers. This one is lagging. He can’t see any harm done. 3.2% yield is good. He is fine with it. He would like to see it get above $32-$33.

Sold his holdings and bought Suncor (SU-T) instead. Well run company but, over the last 8 months or so, they have really dropped off and costs were going up. His view is that oil is going higher, so these stocks will perform well.

(Market Call Minute) Avoids heavy oil and oil sands.

(Top Pick Dec 10/12, Down 4.73%) Thinks they have turned the corner. They have good quality projects underway.

Market reaction has been a little too harsh. Having some operational issues at one of their flagship oil sands properties, Foster Creek. Steam oil ratios are a little higher so is costing a little more. Believes the underperformance of the stock versus the peer group is about 16% in the last year and therefore it is a good buying opportunity. Has a tremendous premium to the peer group because of the long life, high-quality oil assets. Dividend yield of 3.09%.

Haven’t kept pace with their peers recently. Had issues with rising costs in their key operations, but when you look 3-4 years away, it continues to be a very well run company, having low-cost oil sands production. Also, have one of the better reservoirs. Costs have come up, but are under control and scheduled to come down. Should continue to grow on a per-share basis.

One of four he holds. Likes it broadly. Operating results have not been as expected. Their last couple of quarters showed increasing costs but management thinks they will get back down to historical numbers over time. Dividend is well funded. Some of the best producing properties. He sees rising dividends. The WTI differential will be a problem for a year or so but not beyond.

Increased their dividend by about 10% this year and feels the dividend increase in 2014 will either be less or delayed. Have 2 challenges out there right now. Their SAGD operations where the steam ratio has moved up a little and they have to work to get that back down. Their short-term problem is with the refining side on their US joint venture where refining margins are being squeezed. These are temporary problems and he is sticking with it.

(Top Pick Nov 5/12, Down 8.13%) It has been a tough market and the TSX has underperformed. He sold it. Supposed to be a core holding but the costs went up and he had to get out. Moved into SU-T

(A Top Pick Dec 10/12. Down 8%.) Missed a couple of quarters. Part of it was that they had positioned themselves that they couldn’t do any wrong having the best reservoirs, best steam oil raid shows (?), great management. Thinks they now have their act together and he is looking for some very strong quarters. 3.25% yield.

Had liked this because he felt this was a company that had great assets and were really concentrating on cost structure, etc. Lately he has found that from a cost perspective, they weren’t as conscientious. Missed some numbers over the last little while. Sold his holdings and moved into Suncor (SU-T), which is a better play here.

(Market Call Minute) Stay away until they get Foster Creek issues resolved. US short community is active in the stock.