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Opinions Eric Nuttall
Painted Pony EnergyPONY.TOTOP PICKSep 19, 2012
Eric NuttallOwned
$10.13
Stock price when the opinion was issued
$0.69
As of Oct 08, 2020. Market Open.
oilgas
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DON'T BUY
He is bullish on Albertan-based natural gas because we have declining production and supply, increased take away capacity and inventories are at a 10 year low. The winter will eventually come and then there is the prospect of depleting storage. A lot of Nat gas companies have hedged away their Alberta gas exposure. Pony still leaves him a little uncomfortable, however. He likes BRK-T, TOU-T and ARX-T. The balance sheet of PONY-T leaves him pause.
oilgas
BUY
They have significant assets in the core area that will benefit from LNG. They had a tough second quarter and production came in because they shut in some production. The fourth quarter is going to be good. He thinks they can buy down debt next year. It is a higher beta stock and not owned by institutions. They could be a takeover candidate 3 or 4 years down the road.
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BUY
Results are not out yet because of a pipeline issue on the West Coast of BC. He thinks their volumes will pick up again as the pipeline issues are resolved. It is a very cheap stock at one and a half times cash flow. We need LNG takeaway capacity on the west coast, which will benefit them in 2024. We are probably going to have the lowest storage levels in a long time in North America due to cold weather. And Canadian Nat Gas prices are above $3 right now. It looks like cold weather will go on a little longer.
oilgas
A call on natural gas and West Coast LNG. This is the most likely take out candidate for 2013. Very much a one-year call. Expect there is a 50%-100% upside from today from $10. They were neighbouring Progress Energy that was taken out at a tremendous premium. There was a 2nd bidder so there is someone with $6 billion cash burning a hole in their pocket that needs feedstock for LNG. Baseline value for him is their 2 P reserve value (Proven + Probable), roughly $14.50.