Obsidian Energy (OBE.TO)

It is no longer at risk of default. It was the largest oil and gas income trust, mature assets. He is just not sure what they have left now that they have sold off so much to pay down the debt. He would not be buying as it is a hold at best.

They had a management upgrade when they brought David French in. Have done a good job of selling off assets and paying down debt. Now they are in a pretty good position. They would be growing production in 2018 X 17%, and are trading at 6X enterprise value to cash flow. However, the average US company in 2018 is going to grow production by 47%, which is 10X this company’s growth rate.

He lost money on it. He held it. He likes where they are moving now. The likelihood of it being sold is greater than before.

She does not see a takeover happening. It is an interesting company, having gone through quite a transformation, selling a lot of assets, and changing management team. Analysts are impressed with this new team. She believes they will cut costs and focus them in their core area. She sees funded growth for this company.

This has been a turnaround/repair story. He didn’t sell when it hit bottom, and since then it has tripled. They had about $2.5 billion in debt, which is now under $500 million. Their capital budget is $180 million, and they estimate the production growth will be about 15% before the end of the year. Of course, a lot of this comes down to oil/gas prices. (Analysts’ price target is $2.76.)

A turnaround story led by David French. The company’s problem was deleveraging, which they have done a good job in fixing. Looking at valuations relative to some of its peers, he prefers them. They still have some dwindling down of assets and further refocusing.

He would not buy it right now because WTI will get a $10-$20 price erosion this year. The stock has gone up after people stopped worrying about them being able to repay their debt. The stock will go down if there is a retreat in the price of oil.

Everything that we know about the company is in the price right now. The volume is low and the stock is kind of flatlining here a little. You could be a buyer, but there are others he likes better. If crude is going to move, he’s not sure this stock will.

Unfortunately, the way the markets are focused on every little bit of data, there will be a move based in a large part on what the commodity is doing. January, for this company, traditionally has a pretty soft patch that dovetails with the overall market. Wait until early February, and then look at this again.

It was one of the worst mistakes he made of the last couple years. He hopes to sell it at $12-$14. He didn’t think this company would get into so much trouble. Since then they have paid off a lot of debt and now he is happy to hold it. The CEO came from Bankers and it was a top pick of his. There is one insider buying a lot of shares. He likes it and plans on holing it.

Feels that a lot of the street and analysts that will be covering this company, don’t know much about the new CEO. Thinks very highly of him. As the company goes through this period of divestitures, he thinks they are going to get down to 25,000 barrels of equivalent, and will be a much stronger company and much more focused. They are in the process of deleveraging their balance sheet, and thinks they are almost there. One to keep on your radar screen.

Thinks this has a fair amount of gas in its production. Although energy stocks in general have not been doing that well, the price of gas has just entered into a period of seasonal strength. Technically the chart is showing an improvement with the stock moving in an upward trend. Buy it for a move until around the 2^nd week in December.

(Market Call Minute.) He really wants to like this, because the new CEO was the former CEO of Bankers Petroleum. Because of their numbers, it is just not attractive to him.

New management has done quite well in trying to transition the company. The debt has always been a big stranglehold on the company, and they have done very well addressing it by selling off assets. Now they have a much cleaner company, focused almost entirely on the Cardium. If they can keep costs low, which historically has been a problem for the company, it could end up being a pretty good company.

(Market Call Minute.) They cleaned up their company with a major asset sale. They are paying down their debt and will survive. BV is $5.39. This will be a great buy on weakness, $1.60-$1.70.