Encana Corp (ECA.TO)

This has had a nice jump with the recent rally in crude. A well-managed company with good assets and low costs. Longer-term this is a good name to hold. She is not sure she would put money into energy right now, because the sector has done so well on the supply disruptions. If there is strength in the US$ there might be a pullback, and that would be an opportunity.

She sees oil going up, so this probably will go up as well. Their costs are high and they are doing well ratcheting their costs down. To close the funding gap between cash flow and CapX is in the $60s. This doesn’t fit into her investment criteria.

Encana (ECA-T) or Crescent Point Energy (CPG-T)? Wants to sell one to buy the other. He would sell this one. If you didn’t have to sell, he would continue holding this as well.

There are lots of senior oil companies’ debt still considered to be investment grade, so he is personally looking at some of the senior bonds, because they are well off the price close to par. If you can pick it up somewhere around 80 or 90, you are getting a pretty good yield, plus a potential capital gain. He hasn’t pulled the trigger yet.

Nat gas has a seasonal period from March to mid-June. He would not short it at this time. Wait for October to November. If it pulls back below its double bottom, then that would be fantastic as a short. Keep a tight stop on it.

(Market Call Minute) You only want to own the really indebted oil companies if you believe oil is going straight up, which he does not.

Short-term trade? A short-term trade is kind of speculating on gas and oil, which is something he doesn’t do. A much better way is to trade a company over a 6 or 7 week period buying into lows and selling on highs. You could also get exposure through high-yield debt. (See Top Picks.)

These stocks came under pressure starting in July 2014 with oil at $106 a barrel. The sector fell close to 70%. Since then stocks have been recovering. He looks at energy as likely a trade, not a long-term new bull market. This is because fundamentally the way we find oil has changed. Wouldn’t make these any more than market weight against the index. Doesn’t think this is necessarily going to be a long-term rally. He would be fine with this one as a large cap holding.

(Short?) Has always found Shorting to be one of the toughest things to do in this business. There is a technical target of $17.75, but we are right at some resistance and there is a lot to shoot through from here to the $12. If it gets above its current price, it is probably going to push a little bit higher.

Years ago they split off the oil part and are now mostly gas related. It is a pure natural gas play in Canada. They have balance sheet problems so if gas is lower longer, then they are in trouble.

A very difficult environment. Management is to be applauded for trying to cut their cost structure by selling off non-core assets. What is ultimately going to hurt is that natural gas remains very, very low and their cash cost production is much higher than other companies. You are better off owning other companies such as Tourmaline (TOU-T) which have lower costs and can actually grow.

This has done a remarkable job of selling assets to raise funds, and have been selling them at far higher prices than what people believe that they could. They have repaired the balance sheet. It is much more oil focused now. To be in this, you have to believe that oil prices will continue to march higher. A levered way to play oil if oil goes up. His view is that oil will pull back.

A really tricky company. There was a time where it really looked like their numbers were pretty good, but it sort of became average. That’s okay, but gas prices are so low that the best guys are so good at what they do and so prolific, that this company is just average. Also, has a ton of debt. You need to be in the lower cost producers at this time. If he owned it today, he would be looking at getting out.

Remains cautious on energy. A high risk area. Doesn’t see the political situation, as far as the Saudis are concerned, being settled at all. A very, very tricky situation. Doesn’t see the Saudis backing off until the supply side really corrects at our end. On gas, we are at low prices and we’ve had a warm winter.

They reported their results and slashed their dividend, but also announced streamlining their business. In this environment no one will be penalized considerably for making downward adjustments to their dividend. It was the right decision for them to make. This business is making the adjustments they have to make to survive in this environment. Management is doing the right things.