Surge Energy Inc (SGY.TO)

Recently changed to a dividend payer. Did one major financing to buy a light oil package from Cenovus (CVE-T). They are slowing down production and getting the decline rate down to 23%-24% which means the sustainability of the dividend becomes much more doable. Expect they will be quite active on the M&A front. .7.7% yield should be safe. Thinks it will be over $6 in the near-term.

Attractive because it is cheap. Does it have enough momentum behind it to keep going higher? His feeling is that it doesn’t. It has probably run its course.

A junior Crescent Point (CPG-T) and it is being held by one of the founders of Crescent Point. He now has the currency to be able to buy assets in a very asset rich environment. 8% yield.

Chart shows the stock is just recently taken a jump up so something has happened to get it going. In natural gas, there are probably better places to be. If you own, you might be better to take some money off the table and put it into some other gas plays.

A big shuffle at the top. Struggled over last 6-9 months. Problems in the field, missed guidance. New CEO. He has a plan to take the company into a premier dividend payer company.

Surge Energy just appointed a new president/CEO two days ago who is more conservative on the guidance front for production and cash flow. May consider in the next year adding a yield, ie adding a dividend for investors. Management change is positive and will help stabilize the stock price.

Stock has had a tremendous amount of selling. Have been some very large US institutional holders that got disillusioned by both the differential blow out and some missed year-end projections. There was also a VP that left, which really rattled the market. At this level, he thinks it is trading at well below what it should be worth. Excellent management team. There is a catalyst coming up with some properties they have in North Dakota that are quite valuable. Balance sheet is in reasonably good shape.

(Market Call Minute.) Dirt cheap. Missed its production guidance for the 4^th quarter. Likes the name but it’s a 2014-2015 story.

Trading at very, very low levels and is trading at its proved value producing reserve value. This means just producing existing production, and given no value for 1) proved reserves that hasn’t been drilled and brought on 2) probable reserves or 3) any un-booked upside (acres they haven’t drilled). The current value of the stock plus debt is implying that all of that additional upside is worth nothing. This company has had a number of stumbles. Stock is very cheap but he sees no reason to buy it. There are better names.

Got clobbered and yet when you look at the report card for 2012, you scratch your head and ask why, as they delivered some incredible results and added 40% to their proven reserves. Thinks they missed production targets in the 2^nd-3^rd quarters. There were some very large US shareholders that simply bailed. Trading at 2X this year’s cash flow only. The play inventory is spectacular. They’ve got a West Central Alberta oil focused. 70% of their assets are oil.

(Top Pick Mar 19/12, Down 68.64%) Likes the assets. Liked the management. They didn’t do a bad job on the production side. They spent over $100 million more in capital to miss their production target. They were arrogant and not listening and thinks there will be a move to find other management.

Had a really bad operations update. Wells were not coming on nearly as well as had been hoped. In the meantime, they spend a lot more money trying to get the area to work and debt to cash flow ballooned to 2X. Now the CEO is on a temporary leave. Name has become a value stock in oil/gas, which has not been the best way to make money historically, but he likes the board. Very cheap at 3.5X cash flow.

They have been so beaten up because they promised higher production. It is a show-me stock now. Some of the best light oil in Canada. If they stagnate, someone will step in and take them out. It is so beaten up now that he would be stepping in here.

Fallen 20% or so in the last week because of rumours that they are going to miss their guidance. Coming out with a new report on the 21^st of this month. Most analysts have a target price of around $12 a share. On a multiple and valuation basis it is extremely attractive. This is really “Sell on news” and “Buy on fact”. Doesn’t think there is much more downside to it but considerable upside.

Would be careful on this one. Solid team but really fell off the cliff in a hurry. Missed their Q3 numbers. Tried a completion technique that wasn’t working and then switched. Has been taking longer to get the wells to produce at the rates they expected. Also spent a lot more than they had intended. Concerned about their decline rates.