Leucrotta Exploration Inc. (LXE.V)

(A Top Pick June 23/17 Down 18%). This junior oil and gas producer has been a victim of the underperformance of the sector. He still likes the company.

He is quite bearish on the broader markets, but the sentiment in the energy sector in Canada has been so negative that he thinks it is undervalued. They have no debt and has 900 prime low-cost Montney drilling locations with significant infrastructure and only about 10% of it is dry gas. CEO owns about 30% of the stock. (Analysts’ price target is $3.25.)

Probably the next tier down in terms of a Montney player. Montney Northeast BC the main trend, you have Arc Resources (ARX-T) just to the south, Tourmaline (TOU-T) to the west. About a $300 million enterprise value. It has about 170 sections of land, and a big oil window, so there is a lot of latent value. Management has a history of monetizing assets, and own 16% of the company on a fully diluted basis. Key catalysts are to tie-in 4 wells in Q4-Q1 2017.

This is early stage, and he tends to focus on companies that generate a significant free cash flow. They have a great balance sheet and a great asset, and are now trying to prove things up and ultimately sell the company. Has a lot of confidence in the team behind them.

Had problems with drilling a few years back. Prefers companies that have a lot of production growth, and thinks this is more of a play on the land mass. Doesn’t think this is the environment for buying this type of company.

(A Top Pick Dec 22/14. Down 41.09%.) Had thought this was oversold from tax loss selling and it had a pretty good run into January. Thinks it will have a good run through January again. Low cost kind of development, which he likes. He would buy this for a trade again.

(Top Pick Oct 3/14, Down 50.46%) He was driven out of it by some external circumstances. He thinks it will have a pretty good run-up as things improve. It is probably a late cycle stock.

Pretty much a pure play as a natural gas producer in the liquids rich area of the Montney’s. This is more of a resource story than a cash flow story, given that they have locked up around 170 net sections in the Montney fairway, in an area where they have had very good success as has had Tourmaline (TOU-T), a couple of sections away. By his math, this company is going to have to come back to market in 2015 for funding. Sustainability, at today’s prices, might be slightly challenged.

Natural gas. Doesn’t think there is huge upside, but also doesn’t think there is much downside. Stock had a little selloff last week on a well that had a problem with some equipment. They were rushing to get that well done because they were making a land package acquisition in a competitive situation in the Montney. Arc Resources (ARX-T) is also bidding on land around this company, and he thinks that Arc could take this company out. Even at the current level of commodity prices, he thinks they are going to grow their NAV to $2 a share over this year. One of the very few companies that is fully funded at current levels of commodity prices. His one-year target is $2.

180 sections in the Montney. The most economic play of any in Western Canada. Liquids rich Nat Gas. It is going to be a great performer this year.

Markets are fixated on their location. He feels this one is mispriced.

They have a very clean balance sheet so they are well funded through 2015. He would pick away at it at $2.