Spartan Energy Corp (SPE.TO)

Likes it a lot. In a flat to down market he prefers a sustainable dividend. Cannot think of a better name in Canada. Very low declines. Efficiencies of plays are very economic.

Recapitalization. Same management team. Sold off asset and are going ahead again. They are now successful. It is like a blank sheet of paper and lot of cash to go ahead. Tremendous experience. Very low debt to cash flow and lots of money to spend.

This company can continue to keep its production flat at $65 oil. At $70 oil, they are just fine. The company has one of the best balance sheets in the sector. One of the lowest cost operators. Debt to cash flow next year, at this kind of price, is going to be around 0.8 times, which is one of the best in the industry. Have outdone their targets every time. Prudent.

This has been caught up in decline of commodity prices. Nonetheless, a very well-managed company with a great balance sheet. At $65 oil, they can live within their cash flow. Production is still growing, albeit at only 3%, but at $65 oil. Debt to cash flow levels would still be far under 1.

(A Top Pick Feb 20/14. Up 15.38%.) Their 3rd iteration and have made money every time. Following a formula of buying oily assets that have high net backs, moderate declines, good capital efficiencies, and they put the numbers on the board in terms of growth per share. They are looking for 30% growth in production every year. Debt to cash flow of 0.3 times. They are knocking the ball out of the park in terms of well rates they are bringing on stream in the 2^nd half of this year. Well positioned to beat their numbers and blow through their exit guidance.

Best prospects of any North American oil company. This is part of a flight to quality. They have so little debt. They have a seven year inventory of wells. There is a possibility they could be a full year ahead of their production success. Can grow cash flow at 29%. They could massively surprise to the upside if the remainder of their drilling program come in as expected. Strong balance sheet.

Spartan Energy (SPE-T) or Cequence Energy (CQE-T)? This one would be his choice. Management team has been successful in a couple of previous iterations. The current pullback is because of the oil price. Because this company is run by a high quality management team and it has high quality assets, you can have a bit more confidence versus the average intermediate or junior E&P company that it will rebound on an oil price correction. (See Top Picks.)

This is the third iteration for this management team. The multiple is high because the management team has done it many times before. You want to continue to hold this. These guys are explotationists and accretive acquisitionists.

There was a quite a breakout late last year. News shows up on the charts. It could be in a new era of laddering its way up. It based a bit just above $3.30. April to now has been consolidation. If it holds this level about $3.55-$3.60 then it may do another leg up.

It made its projections of 7000 barrels a day on its most recent quarter, and that is when they were only able to drill 60% of the wells than they were hoping for, because it was so wet. It just shows how conservative and how much they build in problems into their business model. The criticism that they are just buying assets is not a fair accusation. They are clearly skilled operators and skilled at buying companies at reasonable valuations. They have lots of land to grow their business.

We are not seeing seasonal tendencies materialize for the price of oil or the energy sector. This is not expected to do well if the price of oil is declining quite precipitously here. On the positive side, we’re not seeing the huge negative drawdowns that we have seen for some of the other stocks. Basically this has flat lined, so you could say it is consolidating. There is resistance at about $4.30 and support at about $3.75. Those are your Buy and Sell levels. Energy stocks do not perform well between now and December.

Not an overweight position for him. They acknowledged weather was a problem this summer. $3.75 is a great entry point. All analysts rate it at a buy.

Is going to have one of the highest production per share growth rates next year. It is a hyper growth stock lead by a management team that has done it twice before. It is stuck in a range right now, so they need to come out with more drill results or other news.

His company has stopped coverage of this company. It has good management and has been increasing production. He finds it a little too junior for making changes and adding. If you own, he would suggest you continue holding and maybe move some money off of the table if it continues to move the way it has been.

We have reached a point where the oil/gas sector is extremely interesting. It’s positive in Canada.