Pengrowth Energy (PGF.TO)

Business strategy is not one he supports. Debt levels are higher than he likes to see them. They are selling stuff in a market that has too much for sale to build something in the oil sands that is a value proposition that it not without risk. Company has reaffirmed dividend but with high payout ratio he is not with them.

Stock has been severely punished. Had a couple of dividend cuts. Have been trying to focus more on light oils. Yield of 5.5%. There are probably safer areas to be. Would prefer Bonavista (BNP-T) where you could see some significant appreciation over the next few years.

Nothing that is going to substantially move the needle for this name. Nothing wrong with the company, but it is a middle of the pack performer, not the top tier. If you own, he would tend to lighten up seeing that there is going to be softness in the next 3-4 months, particularly in the resource names. Live to fight another day and have the cash to Buy this cheaper.

Have a good long-term plan to sell old assets and fund their way to Lindbergh, which is a nice niche play without a lot of competition, by 2015. Last quarter was a little bit more encouraging. Debt to cash flow was a little bit lower.

Although he holds in a couple of accounts, he has others that he favours more. Recently cut their dividend and hopefully they can sustain their current 8.5% dividend. With better natural gas prices and from oil prices, hopefully they can.

Doesn’t see it climbing any time soon. The dividend is suspect. He would not be a buyer.

Takes issue with the business model the company has adopted. Spending $250 million annually on dividends and debt level is high at about 3-3.5 times cash flow and are embarking on an oil sands project. Oil sands projects take longer and cost more. 11.5% dividend yield is not sustainable.

Stock has been losing value quite steadily. Trading well under its NAV making it a potential takeover. Maintained their dividend, much to everyone’s amazement. Really shouldn’t be maintaining it because they’ve had to sell assets to pay it. Have decided to move towards oil Sands production. He is willing to sit on the sidelines and watch. Yielding close to 12%.

Energy has been underperforming because of discount to WTI. PGF has had falling revenues with flat to negative earnings. There are better places to be.

Payout ratio is very high and current commodity exposure and cash flows really don’t support the dividend, especially considering the amount of capital they are committing to their Lindbergh project. Wouldn’t be surprised to see them sell some non-core assets this year. Doesn’t see a lot of upside in the near-term. On any rally he will sell his holdings.

Doesn’t like old income trusts that still pay out too high dividends. This one pays way too much at $0.48 a share, 170% of the cash flow they are taking in. Sustaining it by selling assets, which is not a sustainable business model.

Had this is a Top Pick Nov 6/12 on the assumption they would have asset sales, which they have done to a certain extent, and the debt to cash flow would go lower and effective payout ratio would go lower. Did the sales but debt to cash flow still stayed high at 3.1 and their effective payout ratio is about 160. Likes the company's strategy and what they are trying to accomplish. Growth he is looking for doesn’t come until 2015 and they have to navigate there with their debt. Will probably have to do more asset sales. Not for the faint of heart.

There was a big management change a few years ago and he is a big fan of the new management. Criticism has been on too much debt but you have to realize that it is essentially a term debt with a fixed rate of interest over a long period of time. Recently sold their interest in the Weyburn unit, a mature oil field in southeast Saskatchewan and are using the proceeds to augment the capital they need to develop their Limburg heavy oil play, which is a stellar asset.

(Market Call Minute.) Still has a payout ratio of about 150%-180%, which scares him.

Hopes the stock has bottomed. Likes the story at these prices. If gas prices come back or people stop hating the stocks, you should see a little bit of a bump here. 10% yield.