Spartan Energy Corp (SPE.TO)

Big name energy stocks are under giant pressure. Smaller ones like this are probably just going to be forgotten for a little while. This one looks like it has found a level and is not going anywhere. It would have to clear the hurdle of about $4.50 to get moving, and that won’t happen without a rally in the big names and in crude itself.

(Market Call Minute.) Great company and great management with lots of growth opportunity. Feels they are going to be an acquirer in this market. Very good balance sheet.

After a multi-year base you have your breakout to a bullish consolidation with decreasing volume. We need a break to the upper end of the trading band and then increasing volume.

(A Top Pick Oct 17/14. Down 22.96%.) This would be one of the more defendable business models, but at $40 oil the production falls. They would need about $50 oil to step on production again. They are sitting on probably a 10-12 year drilling inventory in south east Saskatchewan. He would buy this at around $2.10.

(A Top Pick April 7/14. Down 29.17%.) This is in good shape, which has been his focus on Canadian energy. Have just short of 1000 drilling locations in Saskatchewan. Spending cash flow at $45 in 2016 allows them to really not take on any more debt. Debt to cash flow is below 1X. This is a quality company.

This one really depends on your outlook for oil over the next year. Definitely in the camp of premier light oil companies. 100% Saskatchewan so won’t be exposed to any potential royalty reviews. Hopefully later this year we get some results in terms of what the royalty rates are going to be. Because this is such high quality, you are being asked by the market to pay a pretty healthy multiple. While they have one of the better business models relative to their growth, they are only going to spend their cash flow, which means that they can just about keep production flat. Valuation is a little ahead of itself, relative to where we are.

The caller was correct to average down. This company has great respect in the market place. You immunize yourself from any NDP fallout from Alberta. It is unparalleled. It could be one of the early movers in a recovery.

This is an oily, small to medium-size Calgary producer. Well-managed and well liked but just struggling against the oil price. You are not going to get your money back until you see $60 oil.

They like it and are invested in it. A great quality company. It's been hurt a lot because it's a smaller company, and smaller companies are the first to be sold off when the economy goes bad. It's not likely to pay a dividend anytime soon.

(A Top Pick Sept 16/14. Down 41.84%.) He is still buying this. They continue to execute their business plan very well. It has all the right attributes. Exceptionally strong and disciplined management team. Low cost structure and lots of resource.

(A top pick July 25/14. Down 49.38%.) At $40 oil, their production is falling just like every other oil company in North America. In south east Saskatchewan, probably the most economic area of all of Canada. They are immune from the NDP uncertainty. Has just been buying yesterday and today. At $2 it looks pretty attractive.

(A Top Pick July 10/14. Down 34.5%.) Still likes this. His view on the energy sector overall is that you want to pick the best companies that will be able to weather prices at $40 or $70, and this is definitely one of those names. Great balance sheet. Even at $40, they are able to take the cash flow and not accumulate debt and manage through the cycle.

The management team has built up and sold other companies in the past. They have a good balance sheet and there won’t be a debt problem. Their internal rates of return are extraordinarily good. It’s a good company.

He equates it to RRX-T. They are focused on investing all their cash flow and have low debt. They have proven their properties are fine and it is notable how management can make a difference. He owns RRX-T.

(A Top Pick June 30/14. Down 21.59%.) This has all the characteristics that you want in an oil/gas company. Very strong management, strong balance sheet and good resources with low cost structures. Have grown their production by about threefold since it became public. This is a company that could snap its fingers and raise $200 million and make a major acquisition and double its production.