Tourmaline Oil Corp (TOU.TO)

Natural gas. These companies have really cut costs in a very major way. If, as in when, prices start to go up again and volumes increase, this company has some very aggressive targets. Their current production rate is 250,000, and they want to get that to 400,000-450,000 by 2021. Has good management that is thinking ahead, and this could be a great long-term hold. It does not pay a dividend.

In 2014, this was a $60 stock. In early 2015, it bottomed before a lot of stocks did in Jan/Feb 2016. The high was just under $40 in Oct/16, and is currently in the $29-$30 range. In the 4^th quarter, they were doing 192,000 barrels a day with $4 annualized cash flow. They did a massive acquisition in December from Shell, so production volumes will continue to go up. Operating costs are excellent at $2.90, so they will do over $4 in cash flow this year. BV is $6.8 billion, and their debt is only $1.4 billion, very manageable. Any time you see the stock below BV it has been a gift. If he is right about the downside in the next little while, you are potentially going to see this company trade below BV in late Q2 or late Q4 and that is when you would take a serious look.

This has struggled along with natural gas prices, along with some of the egress issues that a lot of producers in the Canadian Western Basin are facing. There is a lot of gas being produced in Western Canada, but not enough pipe to take it away to market. As a result, the Alberta price for gas is trading at a pretty steep discount to the Louisiana price. This is one of the best producers in the basin. They produced about 190,000 barrels of oil equivalent last year, predominantly natural gas. That is going to grow to about 240,000-260,000 barrels this year, mostly on the back of the acquisition of the Shell assets.

(A Top Pick Sept 12/16. Down 16.96%.) He still likes this, although he doesn’t know if he would be buying it just yet. We have had a very warm winter, the 2^nd one in a row, that has really put a negative sentiment into natural gas. However, the positive thing is that the inventory levels are 10% below where we were at this time last year, and we are sitting right around the 5-year average. Demand has been picking up significantly, both from US industrial users and exports.

(A Top Pick March 21/16. Up 2.93%.) Primarily natural gas. There is some concern that Canadian natural gas will be trapped in Canada if we can’t move it. This is a great company, and the current price has always been a good entry point. As a growth stock, this would definitely be one of his picks at under $30.

Natural gas. This has a far bigger runway ahead of them over Peyto (PEY-T). They’ve recently just made a great acquisition of some assets from Shell which ironically, was sold to Shell by this company’s predecessor. Tourmaline’s team is very, very familiar with these properties. They are contiguous to some of their properties in the Montney, and the synergies they can get are going to be very, very favourable.

(Top Pick Dec 1/15, Up 19.05%) You benefited from the run up in the Nat. Gas price. He would be in an energy infrastructure stock.

He believes it will be headed upward because of the commodity and production growth. But there may be some more near term downside, based on technicals. You are going to see this move to a higher price point, but short term there will be some volatility.

It is able to raise equity at a significant premium to book value. Management is first class. If there is a correction to the price of oil, then this is a high beta stock. He thinks you may be able to buy the stock below $30 in the next quarter or so.

(A Top Pick Nov 21/16. Down 7.31%.) He still likes natural gas going out the rest of this year. Demand continues to pick up. North American gas inventories are down by about 10% from where they where last year. Industrial use is increasing. The company has a track record of building things and selling them off, and they have a big stake in this company.

Management has brought the costs down and are buying things cheaply. No one finds energy like this company does. The go-to gas name in Canada.

His preference currently is natural gas. There is potential upside than there is in oil, and a lot less international stuff that can affect it. He just bought this today. It doesn’t pay a dividend, so only bought it for accounts that are not dividend sensitive. They just bought a lot of Duvernay assets from Shell at ridiculously low prices. Good management and good properties. (See Top Picks.)

He really likes this company. Doesn’t own it, but only because he owns other companies instead. It has been one of the best managed of the gassy companies in the oil patch, and the price has always sort of reflected that superior management capability.

One of the premier natural gas producers. They have an excellent cost structure and a pretty good balance sheet. Recently did a pretty big acquisition from Shell. His issue is that the company is bumping up against 200,000 barrels a day. If you pick a decline rate, which he would imagine would be close to 40%, the company basically has to replace 80,000 barrels every year, either organically or through acquisitions. That becomes harder and harder for a company this size.

Tourmaline (TOU-T), Seven Generations (VII-T), or Whitecap (WCP-T) for price appreciation? All 3 of these companies are really well run energy companies. They have all done well operationally and stock-wise over the last year. His 1^st pick would probably be this one, which has the best combination of quality management and growing its earnings and cash flow, with a relatively reasonable valuation.