Precision Drilling (PD.TO)

(A Top Pick Aug 25/14. Down 58.97%.) To keep production going in the shale oil area, you have to drill an increasing number of wells to stay even. That has been dropping and it will continue. Drilling will come back, but it is going to take a year or 2.

Drillers are going to be a little late to move. The service companies need the spending from the industry. This group will be the last one to see much of a recovery. Move your money to a producing company.

It might be far too early for this. He wants to see positive transits in the stocks, not negative. Thinks this goes lower.

(A Top Pick July 28/14. Down 62.07%.) This was his favourite in the drilling space. Had always thought that there was a chance of a takeover. Sold his holdings at about $7.33 at the end of 2014 for tax losses. If he were going back into this space, this would probably be his #1 pick.

The trend line cracked last year. His rule of thumb is “don’t buy anything that looks like oil” until we see the base on oil that proves that oil is at a bottom.

No dividend any more. You are looking for a turn in commodity prices. The downside is that the wells are getting more productive. He stays away from drillers.

A little bit early, but not a lot if you have a long enough view. You want the drillers. They tend to get hit more, they react quicker, and have bottomed in rig count. This is pretty well managed and would probably be okay.

Not all rigs are the same in this world. Some are getting to be old technology. The utilization rate is much better for their rigs. They have fantastic tier one blue chip clients.

(Market Call Minute.) Sold her holdings very early on during the energy correction. If you are Long on this one, she would continue to hold, but she wouldn’t Buy as she expects there is more volatility coming.

This is part of the oil service sector, and historically the sector does very, very well from January right through until May of each year. Chart shows a gorgeous reverse head and shoulders pattern. The trend is there and it is above its 20 day moving average and outperforming the market. Today, the Philadelphia oil service sector broke out on the charts on a beautiful double bottom pattern. We are just getting started on the seasonal service trend. Seasonality is positive until the end of May, so at that point in time you will probably want to take some profits.

Drilling companies are totally dependent on the E&P companies. Doesn’t think we have seen the price declines on the server side yet. This sector is dependent on the fortune of others, and he expects it will go lower rather than higher in the near term.

Oil services companies are going through difficult stress and strain, but this one has a good enough balance sheet to withstand this. They are the largest drilling contractor in Canada and getting into foreign ventures. The efficiency of their current North American rigging is tremendous. They help oil and gas companies lower their costs. You have to time it for when there is definitely a bottom in global oil prices and they are going back up again. We need to see oil go back up.

$15 as a target is a little aggressive because earnings forecasts have collapsed. It is looking on the expensive side. Around $6 for a long term hold it would look okay because the balance sheet looks okay.

He doesn’t own any of the drillers and hasn’t since 2008-2009. This is challenged like all of the drillers because the producers are cutting back CapX. There are not only the cutbacks, but there is big pressure on them to cut their drilling costs 20%-25%. There is no hurry to get into this.

Way too early. The rig count is dropping rapidly, and fields around Edmonton are filling up with rigs just sitting there. You really want to stay away from the drilling sector in the oil patch, both in the US and Canada.