Peyto Exploration & Develop. (PEY.TO)

Except for one small acquisition, they have drilled and found everything they have done, from zero to $5 billion in market cap. Just went through 100,000 BOE’s a day, a huge milestone. They did this by doing one of the most incredible jobs of crushingly low operating costs and incredible capital efficiencies. Concentrated in natural gas and trading at very low levels, and are profitable at these levels. They are now taking countercyclical behaviour and are drilling quite aggressively for natural gas, in this environment. Operating costs are less than $5 BOE, which is remarkable.

(Top Pick Jul 31/14, Down 21.94%) He got out very shortly after. It is still a low cost producer, but not cheap relative to its five year. The dividend is good and the payout ratio is good now, but if these prices continue, it may not be safe.

It lines up well as a safe dividend paying stock. The dividend score is about average, but he likes the payout ratio. It is the lowest cost Nat gas producer in the region. It is a relatively safer bet than CPG-T.

The lowest cost natural gas producer. Natural gas prices have basically been in the $2.50-$3 area for the last couple of years. As a result of service costs coming down with drilling companies having problems, their margins have actually widened. One of the few companies that is actually increasing volumes. They are drilling more wells at lower costs. The only intermediate producer that has increased the dividend over the last year. Dividend yield of 4.77% is sustainable.

(A Top Pick Aug 22/14. Down 19.93%.) Holding up better than similar companies and he still likes it for the long-term. A low cost producer in the gas space, using the cost deflation on the server side to ramp up their drilling and increase profit margin. Top-notch management team and good properties. When the sentiment turns back towards oil/gas, he would expect it to do very well.

(A Top Pick June 12/14. Down 18.65%.) They are doing everything right. Reduced their CapX by 17% and yet their guidance is the same at 96,000-100,000 barrels a day. Very low cost producer. Profitable even at these levels. Will probably grow their dividends. Just ignore the noise and hold onto it. Someday natural gas is going to be better and this company is going to go up a lot. Dividend yield of 4%.

One of the most sustainable and best names and is almost all natural gas. Even at $3.25 gas, their debt to cash flow is fairly reasonable at 2X, so their balance sheet is still pretty good. Their payout ratio goes to 144%, which is a whole lot better than the group of 216%. If gas prices stay low, they all will be forced to cut their dividend, but this is a quality company that continues to grow production. If you are going to bet on the natural gas play, this is a good one to own.

86% natural gas, which is at about $4. Their metrics are good and they are growing. Even though he likes it and thinks it is sustainable and a good play on LNG, if there are really weak energy prices, oil companies are not going to cut production so fast, but are going to switch production to natural gas, which could pressure natural gas more as well.

Has done fairly well over the last couple of years. Traded along with the rest of the group. When you enter the group on this downturn, you look to the quality names and this would be one. Great production, growth last year, and forecasted into next year as well. Have utilized horizontal drilling explicitly well. They shouldn't be hurt as much by the falling oil prices.

There are others with better production growth outlooks. Prefers TOU-T. The management at PEY-T are very well respected. Thinks people will move from this stock to another.

Very high quality company and basically the low cost producer in Western Canada. There has been a little check back in the price of gas, which we don’t normally get. This is one you typically buy on pullbacks. Good dividend per share growth. All their lines are very concentrated and they own the infrastructure along with the land, so they have the ability to participate in the upside, but it takes longer for natural gas to work out. A low cost producer so can survive the downturns. Could see this at $45 with stronger gas prices in the winter.

Really strong cash flow and production. He sees 30% cash flow growth over the next couple of years. Their all-in costs per barrel of oil is equivalent is $7.42, which is unheard of in the industry. Solid balance sheet. Trades more or less in line with peers, but has much better growth.

Can make money in a three dollar gas environment. Likes it for the longer term lower volatility. Split your investment between this and ARX-T.

They are a smaller producer. She would be included to go international. Nat gas will be stuck in a range. Prefers CPG-T and PD-T.

Had a good run and trading in line with peers, but he sees continued strong cash flow growth and an industry leading cost structure. Lots of production growth. It will be hard to replenish Nat Gas inventories by the heating season.