Tourmaline Oil Corp (TOU.TO)

Very well run Natural Gas producer in Alberta. Good balance sheet. They are not big fans of the natural gas market now. The look more at the liquidy names.

He is light on the energy side. With $70 crude the energy sector will get better. As a sector these stocks are pretty cheap if we knew where crude and gas are going to be. There could be money flow into the sector if we knew where crude could move to. We need the infrastructure to come into place.

It went public in 2010 with 1 barrel per day per 1000 shares – now it is 30 barrels. They have become more focused on oil recognizing the difficulties in natural gas. They now have a modest dividend and he likes management. Differentials on oil have narrowed as well.

He thinks the resource space is being completely ignored. Their production growth has been amazing. A fantastic company. He wants to own this one if they would own 2-3 companies, but has selected Cenovus instead. He only has one bullet for this space.

They are the cheapest producer and worry about the product further through delivery. They have a diversity of market. He is sticking with it.

He believes this natural gas based energy stock is technically showing an upward bar recently on the weekly chart. This suggests a building point could be forming. If it falls below $19, he thinks this move could be a fake-out. He would expect resistance at $25 and then $33. He thinks there is a good risk-reward here. (Analysts’ price target is $27 )

(A Top Pick December 27, 2017. Down 10.29%). This is a natural gas stock. There is a cloud of negative sentiment around Canadian energy. He believes that the cloud of issues that plagued Canada in 2017 are resolving themselves. He sees this as a low-cost operator and disciplined. He expects this company to do well at the end of shakeout. Tourmaline added a dividend, which shows a lot of self-confidence in the company. They have very strong management, very high insider ownership, and is committed to the shareholders.

This was one of his top picks in December 2017 and still is. The issues that have plagued it in 2017 such as the production overhang and the demand issues will alleviate themselves naturally over time. For example, the Alberta government is talking about replacing coal with natural gas for electricity generation. Also the management team is very much aligned with shareholders. (Analysts’ price target is 27.00$)

He does not have this on the recommended list yet. He thinks it is a buy at these levels, but thinks it will trade lower on weaker oil prices. This company has traded up to 2.7 times book value, so the potential is up to $60 in the next 3-5 years. He would wait to buy it in Q2.

Early 2012 it traded at the same level. The production has gone up 9 times since then. Earnings have gone up 5 times. The stock is flat. The company has created significant value. 80% of their growth has been organic. (Analysts’ target: $27.14).

Some Canadian oil names are good, so it's hard to figure out why they've been beaten up like Tourmaline. Likes this stock. Reasonable balance sheet. Turned around negative ROIC to slightly positive. Good valuation. Overall reasonable. Find a good entry point, then you will be confident with it.

A lot of the Canadian energy companies are disadvantaged versus some of the US growth companies that are finding oil at very, very low prices. US investors no longer have to come to the Canadian market to buy energy. Canadian companies are suffering from a lack of pipeline capacity and the ability to get stuff to market. That's a structural problem that does not seem to be going away. This company is one of the weaker performers in the group. When you’re in a Bull market, you better get to the things that are working. He would suggest you cut this stock and move on.

A well run gas company. They came out with production forecasts at their analyst day and everything is going well, but they are a price taker and not a price maker so that is a bit of a problem. They are going to grow enough at this lowest valuation that you don’t have a problem. It will go higher from here eventually.

(Market Call Minute.) Had owned this, but cut it from the portfolio last summer. This may be the 2nd best house in a bad neighbourhood. It's growing quickly and is now a midsized producer, but has a very strong headwind of weak natural gas prices.

It was a love affair. It used to trade at two times book value. Because of the lousy Nat. gas price it went down and so he thinks it is cheap. In the next 2-4 years it could get back to the old high.