Tourmaline Oil Corp (TOU.TO)

(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.

A contrarian play going into 2018. Sees a strong year in 2018 with a lot of the issues plaguing the company in 2017 alleviating themselves. In their last call announced they were going to slow production and instituted a dividend to pay that back to shareholders (Analysts’ price target $30.)

Do you see a double bottom? A double bottom is a very positive signal. We aren’t in high season for oil. We have seen a little bit of a pick up in the last few days for oil stocks. In January oil doesn’t do so well so in his perspective it's better to hold off a little bit. We don’t have a double bottom here, we can’t call that a double bottom until you actually reach the $38 point and have a breakthrough. Once it breaks through $38 that would be extremely positive from a technical picture.

He would buy it at this price. He has owned it all year. They have continued to grow. They have expanded production again this year even if not at the same pace. They will be flat on Natural gas for the next year because there is not a lot of demand for more. They will change from a pure growth company to one that will pay a dividend – about 1.5%. This is still a good bet for the long run.

It is a senior natural gas producer that he used to own. He holds the management team in high regards. They are remarkably managed to grow. He exited because he was not constructive on natural gas pricing. It was a goto name, otherwise. Production is growing and they are doing so profitably. It is hard for them to get their gas out of the basin and that is what keeps him out of the stock.

One of the best management in the industry and one of the best balance sheets. Has great properties, mostly gas and mostly in the Montney area. It has suffered from the huge decline in Canadian natural gas stocks. At these prices, it is very reasonably priced. Sold some of his for tax-loss selling but will be buying it back in 30 days.

One of his favourite non-dividend paying Canadian energy stocks. About 80% gas, but is doing more on the oil side now. He is prepared to buy more once he feels comfortable with where natural gas prices are going. There is still the problem of getting our natural gas to market, when we are at the end of the pipeline. With a 3-year horizon you will probably have an opportunity to claw the 35% loss back.