Tourmaline Oil Corp (TOU.TO)

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.

(A Top Pick Sept 12/16. Up 2.14%.) A great company. They have liquid rich natural gas in the Montney and the deep Basin in Alberta. A management team that is incredibly great at finding energy molecules. They bought a company, sold it, bought a company, etc. This is their 3^rd iteration of a company. Management owns about 25%. Recently did a big deal of buying about $1.5 billion of assets off of Shell. Most of these assets were ones that they sold to Shell 7 or 8 years ago from their last company.

He is positively disposed to natural gas. Because of the quality of the team, he still thinks you can see 25% upside in the next year. They are at 230,000 barrels a day now, and over the next 2 years they are getting up to 320,000 barrels. (Analysts’ price target of $43.59.)

Strong management are doing great things. They are the lowest cost operators in their plays. He does not think you could go wrong long term in owning this. He feels the price of oil may take a bit of a breather.

3 days ago it hit some volatility stops. Long term it has come right back to some support (an ascending line he drew under the lows). It is a pretty good risk to reward. Right now would be a good place to step in. If it goes down more than 3% then get out.

(Market Call Minute.) Go ahead and buy this. Just made an amazing deal buying some assets from Shell, sold them for $6 billion, and bought them back for $1.3 billion.

Mainly gas, and is on his watch list. There is no dividend, which is why he has stayed away. This, along with other natural gas stocks, have been doing much better. He owns Arc Energy, and if he were adding to this, his preferences would be Tourmaline, Peyto (PEY-T) and Advantage Oil & Gas (AAV-T), in that order.

It is not too late to get in this. It had a bit of a bounce on the back of a very big transaction of about $1.4 billion to buy Deep Basin Montney in Northeast BC and Alberta. This is a core name for him. Trading below its historic norms in terms of multiples, which is an opportunity.

High quality assets and high quality management. The stock has been working awesomely because they have been usurped by other companies such as 7 Generations which captivated people’s imagination by being able to grow production on a higher rate and was spending less relative to their cash flow. They have been fighting that, but people have been concerned that they have been so good that they had gotten too big to be able to grow at the same pace. He would buy this if you are bullish on natural gas heading into this winter. This is on his radar screen.