Obsidian Energy (OBE.TO)

There has been quite a bit of consolidation in the oil patch. He follows it and rates it as a sector outperform.

Used to own but sold a year ago. Company is not making the kind of progress needed to justify their payout even though they cut it the dividend. They are a long way from good health. Prefers CPG or BTX.

Has been in transition, trying to deal with staggering debt load. Thinks they still have a long way to go.

His sense is that there are still too many issues around their debt leverage. They are getting through that slowly but surely. New management is in place, good operators and good team. You’ll have to be patient.

It was a big accumulator of assets for years. Now with new management they are refocusing and trying to improve efficiencies. Continued asset sales, reducing head count. There is still some bloodletting with this name. He wants to see some sustainability.

Thinks this will survive. Have a great board and have a new management team this year. They are repositioning the company through sales of assets that doesn’t meet management’s criteria. He prefers Arc Resources (ARX-T).

Will never buy anything that is trading on the lows for the year. This one has been a particularly weak performer. There are lots of companies in this group that are performing well.

She is watching this. Have gone through a management change. Have some good assets. Streamlining their portfolio to focus on core areas and are selling off non-core assets. This will take some time. Cut their dividend when new management came in.

Doesn’t like it. Too defensive. They have been struggling to come up with a new strategic direction. It has been trying to right size itself for some time and it is quite painful to watch.

You have a big moving ship here with new management moving in. Laying off employees and dealing with a lot of issues that is taking their eye off the ball. Trying to divest assets in a market that is flooded with assets that are for sale. Have some heavy lifting in front of them. This is the perfect time of the year where you could sell your holdings and crystallize a tax loss.

A turnaround candidate. Have real good assets but they are a bit unfocused, which is why management is trying to focus and sell some assets. This will take a little while. Had a bit of a setback with the new management team having internal issues. Believes they will turn it around, but it will probably take a couple of years and there are a lot of other things you could buy.

Earnings estimates are $0.09 for this year and next years mean estimate is $0.13. They are paying out $0.56. They know that if they cut the dividend, the stock will go even lower. They need to do a whole corporate reorganization.

In the process of right sizing itself. Selling assets to pay down debt. Other companies have done this successfully, however these guys have not done it well at all, given the performance of the stock. Better companies to be in. We are 6 months away from knowing where they are going to be.

Had to restructure and sell some assets to refocus on core areas, downsize their overhead and are in the process of doing that. Stock is probably cheap at current levels, but the market is going to want to see the cost structure for BOE, all the metrics where the norms would be for the industry. They also want to see that sustainability of the production is there. If there is a strong recovery in natural gas, they will benefit, but like everyone, they are focusing on oil. This will be a 3-4 year story before you see material upside in it.

Got massacred on a bit of a miss. Did another asset sale and the market doesn’t like it. Doesn’t have the same growth as some of the others. Payout of 6% is a little bit high. (See Top Picks.)