Kelt Exploration (KEL.TO)

Really likes this company. One of the more successful management teams out there. Had owned this going into the selloff, but once the stock hit a certain price and the commodity was at a new level, he sold it. On his list of companies that are going to make it through and do well 3 years from now. Costs are slightly too high for him right now.

(Top Pick Jun 25/14, Down 50.72%) He still likes the company. He likes what they are doing. The balance sheet is in good shape. They are making good accretive acquisitions. They have become more successful.

(A Top Pick Aug 11/14. Down 33.97%.) This remains one of the best financed companies. It has all the attributes that he looks for including good resources, low costs and good management teams. Have bought a lot of assets in the last year for very, very little money. The wells they are drilling right now are huge, booming liquids rich oil wells. Decline rates are quite good. When oil prices go back to $80 or so, this will be a $20 stock.

Exceptionally strong management team which has built and sold companies to larger companies in the past. Their production is just shy of 20,000 barrels a day. Have one of the largest land positions in BC and Alberta in the Montney, the sweet spot, where all the LNG players are operating. They are surrounded by all the majors and have major land positions. A perfect target for a Shell (SHC-T) or an Exxon (XOM-N) to acquire. Very, very strong balance sheet and a very low cost operator.

Absolute brilliant execution on the operating front, but this is a tight market. The team demonstrated their abilities in the past. You can take comfort in the quality of management in this organization.

Growing very, very rapidly. Has a highly respected management team. Sold their last business to Exxon and made a ton of money. Have been accumulating more land. Just shy of 20,000 barrels a day in production. Have all the resources they need to grow their production substantially and have the cash flow to do it. There are going to be LNG facilities in North America, and that is going to change the liquids rich gas business in Canada substantially. Because of this, someone is going to want to own a large, large resource-based company, and this is one of them.

(A Top Pick March 13/14. Down 30.17%.) Liquids rich gas, so as oil starts to climb towards $60, you will have a very important liquid in the gas stream called condensate, which will start to move up again. Acquiring Artek (RTK-T), which will be a very good fit.

It is a good entry point. He just bought it last week. They have a massive land spread that is LNG rich. This is where the upside is. Management is buying stock right now.

Liquids rich natural gas. Company has a lot of credibility. It has a valuation that reflects how investors feel about the management team. Probably trading at about 14X on an enterprise value to debt adjusted cash flow basis, which is fairly expensive, but is a company that has delivered shareholder value in the past. Recently completed a merger which effectively consolidated the Fireweed play that they have. This is one of the highest rate plays in Western Canada.

(Top Pick Jun 25/14, Down 51.67%) He kept his position. They did well until IMO bought them as Keltic. They then turned around and did it again better and faster and more efficiently. They know what they are doing. Great internal rates of return and a clean balance sheet. He will wait because it is a good quality team.

Purchased their 50% partner Artek Exploration. Originally targeting a Doig play in Northeast BC, but the last couple of wells were Montney, and really liked what they had done with the wells and some of the economics. Feel they can improve this further and make it one of their better plays. One of his favourite names. Good management team. They are making sure the balance sheet is clean in order to make more M&A activity.

(A Top Pick Jan 21/14. Down 45.4%.) Likes the management team very much. One of the lowest cost operators in the oil/gas sector. Have already announced a reduction in their CapX, and he imagines that they will do so again. They have an enormous amount of resource. Once oil/gas prices recover, these stocks are going to be back up in the teens.

An excellent management team. They are in the Montney region specifically looking for gas. This is a firm that has a lower debt to equity profile than a lot of the others, so he thinks they can survive without having to do anything drastic. They can probably take some advantage of the situation because of their low debt.

Same management team that sold off a previous company and restarted. Extraordinarily well financed. They are going to repeat their success again. The last company generated breathtaking rates of return. He likes the company.

Has really trimmed back his energy exposure, but one area that he has held onto are natural gas stocks. He uses a weather service out of the US, which is really accurate. It is calling for a colder than normal winter in the eastern part of North America. That will draw down the natural gas supply, so he thinks the stock will be fairly firm. This company is very well-managed and are in the right location. It is just a matter choosing between one or the other, and he has actually picked Pine Cliff Energy (PNE-X) and Storm Resources (SRX-X), which both have great balance sheets and the ability to make acquisitions. Fairly low decline rates and production costs are low. However, he would be comfortable with this one.