Opinions
Eric Nuttall
Trilogy Energy Corp
TET-T
COMMENT
Mar 11, 2014
Stock price when the opinion was issued
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It has been a decent performer. Almost hit guidance in Q1 and there are rumours they will hit guidance for Q2. Struggles with the fact that they are trading at $14,000 per acre, which is kind of approaching fair value. But well results continue to get better and better. He doesn’t see a huge home run unless taken out.
Built a really, really enviable position in the Duvernay shale. A couple of years ago they made a really exciting Montney oil pool discovery. Since then the production from the Montney oil pool has been disappointing. Results from the Duvernay have been encouraging, but they have been trying to make it more economic. They have extremely limited financial flexibility. Production is falling because they are not generating enough cash flow to maintain flat production. It is tough to get excited about this one.
Hasn’t owned for some time, and it has a lot to do with the balance sheet. A little bit more debt than he is comfortable with. They have Montney light oil, as well as a pretty good land position in the emerging Duvernay Shale. The problem with the shale play is that it takes a lot of capital. Wouldn’t be comfortable with their heavy balance sheet.
Could very well be a takeover target. Have a very large land spread in the Duvernay which is being drilled by the likes of Chevron and Shell. Just came out with stellar results last week. Has had a decent run. If there was a joint venture or a corporate sale, you could see $35 but it comes down to the selling motivation of a family that has a controlling stake in it. There will be more drilling results as the year progresses and the stock may go up on drilling results. Very much a catalyst driven stock.