Petroleo Bras Sa Petro (PBR)

She is light in oil, because the US shale producers have come back a lot faster in terms of production. That is more than offsetting whatever OPEC is doing on the cutting side. This company is very inexpensive, and has great assets. Management has laid out a plan to divest non-core assets, pay down some debt and right size their balance sheet. If you have a long-term time horizon, this is a good risk/reward. There is some near-term noise around Brazil, which will be a bit of a headwind.

You can’t really talk about this without talking about Brazilian politics. This company has very, very extensive resources. Unfortunately, they also have a lot of debt. A very levered play on oil prices, and a small move in oil will result in a big move in this company.

(A Top Pick Sept 26/15. Down 130.15%.) He closed this off about a month after he had recommended it, because oil started to ramp up. The company had an extremely high debt load and oil prices looked under pressure. Also, there was a corruption scandal going on. The company has slashed their CapX to the bone and were able to keep their free cash flow on side. The story has improved materially.

SHORT. It is a mess. It is going to be negative free cash flow for another 4 years. Cash will go to servicing bond holders. There is also a corruption scandal and there are also the low oil prices. He thinks it will go down to a dollar.

Prefers Canadian oil companies because he thinks the Canadian oil complex is one of the best in the world. This company has a lot of deep oil. Doesn't know if, with the horizontal drilling and the shale plays, if that oil can come on shore or not, because their cost of production is very high.

There are big expectations baked into this story. $45 billion worth of CapX per annum for a long period of time to take off huge oil reserves from the ocean floor. Company has not executed well. Also, issues of political interference. Thinks this will be a “show me” story.

(Market call minute.) Great resources but a huge CapX build ahead of it.

Big Brazilian oil producer and has a lot of growth plans to develop some offshore drilling projects. Her preference in energy is to play the smaller and intermediate domestic producers that have very good land positions in Western Canada and that pay a dividend.

The prospects that they have for production growth offshore are tremendous. The problem is that the Brazilian government has used their stake in this as a lever. Any time a government has a major stake in a company in certain countries, it can have an impact on their ability to make a profit.