Precision Drilling (PD.TO)

He doubled down at $9.22. He is predicting increasing profit in the next two years. It is very cheap. Don’t do anything before the OPEC meeting. PD-T has priced in $65-$70 oil so he is not too worried. 66% of all drilling is just to maintain current production and this should shelter drillers. This is one of the premier drillers.

Stock has pulled back significantly with the problems in the oil sector. This is now at a level where he thinks it is very attractive. This is Canada's largest drilling company. Have significant operations in the US. If you have faith in the oil/gas industry, this is a very good entry point. Yield of 3.06%.

With everything that is happening in the energy sector right now, he has taken a bit of a backseat and doesn't have a lot of energy exposure. Certainly a great company and a great management team. If he started to see oil prices stabilize, so that he would know where capital budgets were going to be for exploration companies, it would be a great point to enter back into this company.

Is a victim to what is happening in the underlying commodity. As it comes down they are all looking to insulate themselves. They will probably drill less and this means less contracts for PD-T.

(Top Pick Oct 30’13, Down 16.53%) They beat analysts’ estimates last Monday. Their payout ratio is extremely low. 10% is from international, which they built rather than buy. He is still excited about the company. He would buy it here.

Sees upside of nearly 70%. This is one of North America’s leading drillers. They are really 2 separate businesses in Canada. The drilling associated with the potential LNG pipelines along with the rest of the western sedimentary basin. Rigs required to drill for LNG are very much more sophisticated than traditional. Yield of 3.07%.

The problem with drillers is that they are dependent on the cash flow of the oil/gas industry, so when oil/gas stocks are coming down and their cash flows are getting impaired everyone worries that the drillers are going to take the first heat on that. Thinks the drillers are still a great long-term story. Valuations in Canada are much cheaper than they are in the US. The drillers generate very good cash flows. (See Top Picks.)

You want to stand aside on the energy services side. It had a big pullback and he does not know where support is. He wants to see things change.

Longer term the trend is up and it could be coming down to that. There was a head and shoulders put in over the summer and it broke it. If the previous low is not taken out it could be okay. Make sure the longer term trend line holds also.

4-6% gain in 4-6 months. The big plus for them is the North American exposure. They signed a deal with SCL-T. This will be one of the major positives going forward. President said that if LNG projects go forward this one is the best positioned to benefit going forward.

Doesn’t see much more downside. Now would be a good entry point. Prefers Trinidad Drilling (TRI-T) which has potential to move more. This company has very good rigs that can do more complicated drilling, including horizontal drilling.

We need fewer gas drilling rigs for the number of holes because of horizontal drilling. They can produce far more per well than on the conventional vertical. However, on the whole natural gas picture, there is a lot of supply. We are coming into winter right now and storage currently is 20% less than last year. We’ll see better pricing on natural gas and more exploration. However, you get through the winter and you are into the 1^st year of LNG exporting. Because of this, she thinks we are in a bottoming phase for natural gas prices over the next few years.

He sold it higher. It is pulling back. It is getting interesting at these levels. They are a deep driller and doing better now. In the short term you have to look around at other factors. $90 oil prices leave less cash to be spent on drilling. But he does not see a problem in starting to step into it. He would not sell it. There is a little more room on the downside on oil.

(Market Call Minute.) Likes this. It has pulled back with the energy, but price related, it is activity related. Thinks this is an out and out Buy.

They drill and others frack wells. Share price driven by activity. There will still be a lot of activity in Canada for them. There is money to be spent in the industry. As LNG expands over the next decade you will get more wells drilled. The pullback in energy gives you the opportunity to buy. It is a pretty good entry point.