Opinions
Martin Davies
Painted Pony Energy
PONY-T
COMMENT
Nov 11, 2015
$4.400
Stock price when the opinion was issued
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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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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.
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Has a great sensitivity to natural gas. The operating cost structure is in good shape. There have been some excellent processing plants that have been joint ventured with Altagas (ALA-T) that allow them to get this gas on stream. There will be a big change on his valuation and perception, it we go ahead on an LNG project on the West Coast. He likes the company. Has been hit by heavy, relentless foreign selling, but has heard that the Shorts are finished and some of them are covering.