Peyto Exploration & Develop. (PEY.TO)

Definitely would consider it. $25 target. Cheap valuation. If you own it, average down. Sustainable 6.6% yield. Now is a great entry point.

This company is well managed. It is a low cost operator. Its price has come down enormously. Its dividend has been cut, but it offers a 72 cent dividend on a price (on day of interview) of $10.78. The company’s problem is its debt load, which has been rising. It is now $1.285 billion, up from $1.07, against $1.72 billion in equity. It is not good to have rising debt in a declining commodity market. Book value is $10.44. If he is right that oil prices will come down, the stock could go down significantly further, past $8 or beyond. At $8, the yield would be fabulous. He doesn’t cover the name because of the balance sheet issues.

It had to do some tough things a couple of weeks ago. They cut the dividend and the cap-X program also. Book value was $10.12 at the end of Q3. It could go down given problems in the sector.

They announced they cut their dividend recently. It is a gas producing name. They have done an incredible job and she is watching them.

Last week they announced a cut in the dividend and a cut in the cap-x program. They are going to try to keep production flat. $10.12 book value. The balance sheet debt is a concern. It still trades above book value. The numbers don’t make sense.

A super low cost producer, but they have debt. Book value is about $10-$12. People are worried about the dividend. This stock could see even lower levels if there is not the drawdown in inventories in January. He prefers other names – see Top Picks.

Although the price has dropped considerably, the risk is still very high. The company has gone a long way to improve its balance sheet, and has excellent properties. However, it is still very, very sensitive to the commodity price, which is where the main part of the risk comes in. The potential upside is many multiples to what he thinks the downside is.

Great driller and a low-cost producer of natural gas. However, the problem is the price of natural gas and how to get it out of Alberta and into a market that will pay more for it. That is a problem with a lot of natural gas stocks these days. Dividend yield of 8.96%, a warning sign that there could be a cut coming.

His only natural gas exposure in Western Canada is Tourmaline (TOU-T). You would have to be really constructive on Canadian natural gas pricing (AECO) to really want to own this. A very high-quality company with good assets, good management and a reasonable balance sheet. Pays a dividend yield of north of 8%, which is probably telling you something.

Chart shows a long downward channel from mid-2016. The fact that we don’t have a move higher, like we’ve seen in some of the other energy names, is a little concerning. All indicators are pointing down, and he can see nothing that will change this.

You should be scared of the 8% dividend. 145% payout ratio in 2018. It is very tempting. This is a company that has not shut down production because of ECO prices being so poor. The bad quarters that they have had should reverse itself through the rest of this year. All things being equal, it is probably a buying opportunity, at least for a pop.

The lowest cost gas producer in Alberta. He really likes management. They’ll produce BOE’s next year close to 120,000 a day with 53 employees, where over the last 5 years it was between 50 and 55. Very efficient. Natural gas prices have been improving lately. Dividend yield of 6.4%. (Analysts’ price target is $30.)

An ugly looking chart. There is no support on this stock. The last significant low, which was in 2015, has been broken.

(A Top Pick Oct 31/16. Down 38.27%.) Historically this was one of the very best and growthiest producers in the Canadian oil patch. Unfortunately, they are swimming upstream in the natural gas environment we have seen. He sold his holdings.

Canadian gas has not been the most popular place to be, but this has been one of the great gas plays. When gas comes into favour, this company moves. The gas story is not as dead as the market makes it out. The US is now an exporter of gas, which is a big change. The petrochemical industry in the Houston area is a huge consumer of gas, and will be because they are building plants left, right and centre. Mexico is getting gas exports from the US. Even Canada is getting some. The market is changing, and at some point, the favourable sentiment will change to the gas industry.