Josef SchachterLong Run ExplorationLRE.TOTOP PICKNov 15, 2013

Any danger of the Chinese deal not going through? There is always some risk when talking about foreign buyers. He doesn’t like facing this kind of a deal risk. There are plenty of opportunities without trying to play the arbitrage, etc.

(Market Call Minute.) Being taken over at not much higher than the current share price. Feels the deal risk is very low and would wait for the deal to finish.

(A Top Pick April 6/15. Down 34.46%.) This is subject to a takeover bid from a Chinese operation.

(Market Call Minute.) Have a bid from some Chinese investors. The company was going bankrupt were it not for this bid. He would do a happy dance and tender his Stock.

Is one of the most troubled companies in the business right now. It makes sense to upgrade the company right now. The company had an takeover rumour, which doesn't make sense because the stock is going lower. This indicates that the public doesn't believe in the rumour. Doesn't recommend buying based on the rumour.

Debt to cash flow is around 6X, which is high. Cut the dividend to zero, which led to a freefall in the stock. If you were an uber bull on oil, this is the type of name that could go up several fold. Personally it is not his strategy because he thinks he can make 50% or more buying more established names. Higher risk than what he would be comfortable with. In his estimation, they are unable to grow oil at anything remotely close to today’s oil prices. High debt, declining production, declining product pricing which is a tricky situation to be in.

She would call this a Sell right now. This is not the right environment now for a company like this. Unfortunately they implemented a dividend when they had too much debt and when commodity prices were in a correction. Dividend was unsustainable so they had to get rid of it.

Doesn’t like this. It is one of those companies that was acquisitive and used a lot of debt. It hasn’t played out well. There are not a lot of buyers out there and they have the ability to be very picky. This one is probably being run by its bankers at this stage.

Got themselves into a pickle in terms of debt heading into a collapse of crude price. Debt to cash flow is 4.6 times so they are getting up there. Has not owned it in 2 years. If you believe in $70 oil this name could double, but at $65, no. They could potentially sell some assets.

At these energy prices and the earnings this company is making, it is very difficult to forecast successfully that it will survive. If he owned it, he would continue to sit on it and cross his fingers.

They were caught offside with debt levels at 5 times debt to cash flow. The dividend is cut to zero. Debt and production growth are still concerns. They are challenged, as are most companies. Oil needs to get to $70 (local price) in order for them to growth production and resume the dividend. He believes they will sell assets to reduce debt. It’s not a terminal situation, but he does not buy companies with stressed balance sheets.

(A Top Pick April 14/14. Down 85.15%.) A lot of dividend type stocks got beat up pretty badly because of debt loads. This company has $600 million of debt. Have done well with hedging and production. Probably doing 32,000 BOE’s a day this year. Believes they can handle their debt. Great cash flow and should do $.80-$1 this year in cash flow. Will generate about $200 million in cash flow, and are only going to spend $100 million, use $100 million to pay down debt and they have asset sales to pay down debt. Stock could go to $3.50 if they resolve the balance sheet issue. Wait for 3 months before buying.

He would be inclined to stay clear of this. It has dropped quite dramatically because of the amount of leverage on its balance sheet.

From a price to book point of view it is at 20 percent of its book value. This stock is really cheap. The balance sheet is strong. Next year they are looking at a loss of 27 cents. He does not have a comfortable feeling on where the price of oil is going.

Cut their dividends to zero and trading at a deep discount. Highly leveraged. They were in the process of trying to improve their efficiencies, but unfortunately got caught up in the oil correction. Not a preferred name for him. He would focus on companies with good balance sheets, who cannot only focus on their existing asset base, but take advantage of possible asset acquisitions.