Josef SchachterDelphi Energy Corp.DEE.TOTOP PICKSep 25, 2012

Auto parts have been a big target in the NAFTA war, so they received a lot of relief when that was signed. Auto stocks are cheap but could face a rough year ahead. We're late in the auto cycle. Don't need to sell. Hold. Don't buy.

This is one of his top plays in Western Canada. Delphi has done a gone job with its balance sheet. They’ve been moving more to liquids and this will be one of the takeover candidates when LNG exports finally start happening.

If the big one starts to go up, this are next. It has held in through awful times.

They have a higher than average level of debt but trade at a low multiple. If we have low gas prices for quite a while they will have trouble. If an LNG project gets announced in the next 3 to 6 months it might give investors hope we can get rid of some of this gas. She likes what they have done.

You are going to see the big bounce in production in 2018. The problem is the balance sheet: debt issues. They are about 40% oil and liquids and 60% gas. If it backs off it would be a good buy.

A Montney producer that has a deal with Repsol, where they got money from the government to help pay down debt. Now they are drilling together in some of the best lands that they have, in the Western part of the play. The wells that are coming out are fabulous. The problem is, they have 4 or 5 wells that they should be bringing on stream in Q2, but as a smaller company, getting access to the frac units is difficult. The stock is getting very cheap. He has a conservative BV of $.98. The balance sheet is in much better shape with $153 million in equity. The bank debt is $25 million and they have a million dollars in senior secured notes. They have a history of being a very good hedger. The low in 2016 was $0.22 and the high was $1.79 this year. If this gets below $1, he thinks it is a table pounding buy. This could get taken over because of their land position.

A small-cap that has been around for 12-14 years. They have a good quality asset with improving well results. They have an exploration well that is academically intriguing. Has always been challenged with such a small company drilling such expensive wells where the concentration risk is so high. The CEO left unexpectedly which makes him a little nervous. Also, the valuation is not compelling enough for him to get excited.

This has always grappled with debt loads that he felt were too high. Have always had a considerable hedge book. They’ve had to sell properties and do a joint venture.

This has struggled. Hasn’t invested in it in a long time because the balance sheet was so debt laden. In the downturn, they’ve struggled, and had big volume commitments in terms of gas shipments, and got themselves into a bit of a pickle.

(A Top Pick April 6/15. Down 32.4%.) Natural gas producer in the Montney. Very well-run. Likes the story longer-term. This could be a $3-$4 stock again, but the problem is low natural gas prices. They are managing themselves frugally for these tough times. A name that you want to buy on weakness. If they got back down in the low $1 range, it would be a great buy for small-cap investors.