Tourmaline Oil Corp (TOU.TO)

(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.

This had a negative transit in the 1^st week of August. It has tried to rally past that negative transit, and now we are floating down to another EBV level. It has a chance of hitting $15.80.

It broke the old trend line in early 2016. At the end of the year it started into a downtrend. Currently it is still in it.

An extremely well-managed company. Until recently, it has always looked expensive to him, relative to some of the alternatives in the oil patch. It is nearing areas now where it is beginning to hit his screens, and he is beginning to take a closer look at it. This could be a good opportunity.

A great Canadian gas stock. The knock has been their inability to hit guidance in the last couple of years. Have now set that as a priority in 2017 by building up a little more flex into the guidance to account for pipeline (?).

It seems like they need a strategy change. The traditional strategy was “if you build it, they will come”. You actually have to believe that maybe there isn’t a buyer and after building a great big production company you maybe have to live within the numbers. This has to be run for profitability, not for the resource. The strategy change is probably more important than driving the stock price. We have too much gas as well as pipeline constraints in the Canadian Western Basin.

One of those trophy stocks that institutions love. 85% natural gas, and one of the lowest cost operators in the industry. BV is around $25.61. Debt is only $1.4 billion against $6.9 billion, so a very healthy balance sheet. Have one of the lowest operating expenses in the sector, $3.50 per BOE. Great management. If the stock got down to the low $20s, it would be a great buy.

(A Top Pick April 5/16. Up 14%.) The 2^nd largest natural gas producer in Canada. Exceptional management team.