Parex Resources Inc. (PXT.TO)

A great company, but the stock has had a very, very great run. Looking at the valuation, relative to what he can buy in Canada, he doesn’t understand this one.

Management did a great job. They have low cash costs and have a lot of exploration opportunities. It is one of his largest holdings in the fund. All the metrics look outstanding. They continue to do well, underpromising and overdelivering.

(A Top Pick April 2/15. Up 34.85%.) Still continues to be a core holding. In the international space it is one of the very few stocks you should consider owning. They have a lot of flexibility in the capital budget. Can dial down capital expenditures, or up, depending on oil prices. A completely pristine balance sheet.

(Canada is cheap from a cyclical basis, so his 3 Top Picks are ones that fit that theme and are cheap with good price momentum.) An oil stock that you can hold and that will survive. Best in class in terms of adding resources. Growing their reserves even in this environment. Trading at 3.3X cash flow and 1.3X BV, and most importantly have no debt. Have cash on their balance sheet and a $200 million line of credit, so have room to grow if oil prices move higher. At around $40 Brent they can actually grow. Trade on a flowing barrel of around 37,000, versus its peers at around 60,000.

It was up 34% last year. He thinks it is time to nibble away at energy stocks again. A year from now you have to look at companies that are still going to be there. They operate in Columbia, no exposure to Alberta and royalty concerns. 4.5 times next year’s cash flow and no debt.

(A Top Pick Oct 29/14. Down 18.28%.) Actually not bad relatively speaking. Part of the reason the decline has been muted is because the balance sheet is in phenomenal shape. They have cash on the balance sheet and no debt whatsoever. This has allowed them to continue their production program.

(A Top Pick August 28/14. Down 30.75%.) This didn’t work out so well because he had got this just about the time when oil was around $100 a barrel. This is one of the few companies that have been able to grow production this year, from about 22,000 barrels a day to 27,000. They are looking at 30,000 next year. No debt on the balance sheet. They operate in Colombia where they have some great properties and where they continue to extend those properties. Pretty cheap at these levels. Trading at about 4X this year’s cash flow. Still a Buy.

A very, very solid company. Strong balance sheet. In fact even stronger since they did an equity issue. They operate in Colombia and have expanded production dramatically since their inception in 2011. Trading at about 6X cash flow, which is pretty reasonable. One of the few companies that will have production growth this year.

Primarily in Colombia. Colombia was hot years ago and has been out of favour for a while. There were a lot of Canadian companies operating there, but this one has really become the standout and is the only one that you want to invest in Colombia. They have done an excellent job of growing production to 26,500 barrels a day of light oil production. Very little balance sheet debt. Very conservatively managed.

Great company and great management team. Historically they have faced a discount because they didn’t have much in the way of reserves, but have done such a good job in building a reserve base. Just released their reserve update showing their reserve life Index growing from 5 years to around 7 years. That is very positive. Despite the weakness in the market, they can actually afford to spend some capital in exploration. She thinks this is going to be a company that will keep adding to their drilling locations. Has an absolutely clean balance sheet.

(A Top Pick Nov 27/13. Up 73.93%.) Down 33% from its highs of just 6 months ago. Dirt cheap last year and still cheap today. Recently sold their Trinidad and Tobago properties to rededicate that money to Colombia. Had 56% production growth over the last year. Even with an oil price of $70, they will cash flow something like $2.50 next year. Trading at a little over 4X earnings. No debt and well-funded.

Relatively low cost, high return on capital and lots of growth prospects.

Had a little bit of a selloff in the last 6 weeks or so and is down about 10% from its highs. Part of that he thinks is related to the fact that they have called in their convertible debenture. Trading at about 4X cash flow. A Colombian oil/gas play. Had extremely great success in growing their production. Exited 2013 with under 16,000 barrels a day and that number will be 27,000 this year.

Columbia. He owns stock and the debenture. He likes the story and it had a great run. They brought more resource into reserves and the market likes that. Thinks it can keep moving. You could buy it here.

Sold this as part of her international trimming, but doesn’t see any reason for others to do the same. It’s in Columbia. Management is good. The land continues to prove fruitful for them. Not overly expensive.