Joanne A. Hruska, CFA Perpetual Energy PMT-T COMMENT Jul 16, 2014

Holding depends on your outlook for natural gas. If the rally on Nat Gas is durable and if we have a hot summer and may not be able to build inventory levels. They are heavily leveraged to Nat Gas prices.

Add only if you think Nat Gas is going significantly higher. Debt to cash flow is 8 times and is well beyond what he thinks is acceptable. However, they have great assets.

Have done a really great job of deleveraging. They took advantage of the frothiness in the royalty companies, so they sold some royalty acreage to Freehold (FRU-T) at an eye-popping level. Thinks their debt to cash flow is now sub3X. If he were more bullish on natural gas, he would have bought this. If it were to pull back to $1.70-$1.80 level he would probably buy.

Bond 8.75% Mar 15/18. Stay short, buy credit and select high quality names. This is one of them. There is a great story behind this one. Just under 8% yield for a 3.5% piece of paper. It is a speculative pick in the bond market. You have to go through a broker. They are unsecured notes.

Has not invested in this, simply because it is overwhelmingly natural gas. He has been cautious on natural gas. Also, it seems to be more dry gas than anything else. A lot of leverage in terms of the net backs that they get for that production. Had a crushing amount of debt until recently. Thinks things are moving in the right direction, but this is not even on his radar screen.

This was a gas story at one point, but the leverage is excessive. If he wants to be in the gas business, he wouldn’t be going to this one.

This company is in a tough spot. They inherited a bunch of good quality assets in the face of a natural gas price that has plummeted. Have done their best to diversify into liquids play and have had good drilling success. Have a rights offering which is backstopped by Mr. Ridell. There is not going to be a dividend on this name anytime soon. He would not buy or own it at today’s gas level.

Has a lot of respect for management and the family. Generally speaking, these plays are not tier 1, although they’ve done a good job in the past couple of years to rein in costs. There are better names if looking for oil exposure.

Pengrowth (PGF-T) and Perpetual (PMT-T)? Had some challenges with their balance sheet over the last couple of years with the collapse in oil prices. This one would be a little riskier. If you really see a big jump in commodity prices, this probably has a lot more upside than Pengrowth (PGF-T).