Trican Well Service Ltd. (TCW.TO)

Bearish on the service sector. There are high expectations about west coast LNG and he thinks the contracts will be long term and low margin. He thinks the services sector is overvalued.

3-year chart was compared with its peers through the iShares Capped Energy ETF (XEG-T). He likes the oil services sector. Chart showed an underperformance in 2012, followed by an improvement, with another underperformance in late 2013. It is now “market perform”. This is now becoming a sector perform, which is a good thing. He would say this is bullish and it works higher.

One of 3 large Canadian fracing companies. This is an industry that, over time, is doing nicely. Out of the 3, this would be his least favourite, and would classify this as a “Weak Sell”. If you could get it in the $13 area, it could be very interesting. Prefers Canyon Services (FRC-T) which is also cheaper with a better dividend yield.

This is one of the premier fracers using natural gas production. Obviously all of the fracing companies have been benefiting from shallow gas plays and have done very well. As a result though, a lot of money has gone in and a lot of equipment has been built so there is a bit of equipment oversupply right now. Shorter-term, things are still going to be weak for a couple of quarters. Looking out a little bit, he sees gas prices going up and LNG terminals being built and all these companies are going to do well. This will be one of the leaders.

In the seasonal strength period. Don’t buy now. You want to wait until you seen an overall pickup in Nat Gas activity, which depends on LNG.

An energy company that benefits more into the winter months, from January into May. Not something you want to pursue now. It does have an average increase in the stock price of 30% between January and May.

All of the energy services companies have had revenues that have come down below previous numbers. Also, their day rates have been coming down. His guess is that it is going back down to $12. Expects there will be a multiyear positive story for the service sector. Right now though, with the industry hurting and not having as much cash flow, the service sector is getting beaten up. There probably will be a bounce in Nov/Dec into the drilling season but coming into 2014, the stocks will come into pressure. They will need a start of a multiyear positive cycle.

All the drillers are set up well for the next number of years. It will be choppy and range bound for the sector in the short term. He would be a strong dip buyer as a rule.

In later fall (Oct/Nov) he would look to get out. He took a half position and will add after the quarterly results are released. If they do better than the analysts’ expectations we could get quite a pop.

There is some optimism amongst oil and gas service companies. The balance sheets are healthier than other downturns in the cycle. If you believe in growth in oil, this is a good way to participate in this sector.

He is looking at this whole pumper area. The 3 key players in this area are Canyon Services Group (FRC-T), which he likes very much, Trican and Calfrac (CFW-T).

If natural gas gets to $4 and stays above $4 and fracing continues, there will be a pickup in demand for pressure pumpers.

(A Top Pick Jan 24/12. Down 12.81%.) Sold his holdings mid-February and is now currently Short the stock. A pretty strong performer year to date. Feels there is a lot of enthusiasm built upon 2014 spending surrounding joint venture agreements that have been announced. Also, going to be well over 100 wells drilled in the Duvernay representing a lot of CapX. However trading at a very high multiple of almost 6X Enterprise Value to EBITDA.

(A Top Pick Jan 24/12. Down 18.91%.) Sold his holdings mid-February at around $16.40 and made a little bit of money but the biggest issue was that we had suffered the second warmest winter in history.

Very strong company and he thinks there will be improvements in the sector.