Tourmaline Oil Corp (TOU.TO)

(Top Pick Nov 1/13, Up 20%) Increased size of position today on back of deal they announced. Every time these guys raise money the stock goes up. One of the best management teams in the business.

(Market Call Minute.) Great company, great management. Have grown by leaps and bounds.

Thinks the stock has a shot at $60. An expensive stock. An interesting study was done looking over the past 3 years as to which stocks did best and it was always the more expensive ones. Trading at about 8.5X Enterprise Value to cash flow but when you look at the rate of growth and the drilling depth that they have come, they have a long line of sight to double their production over the next several years. Management is strongly invested in the company. Could trade at $60.

Even though this has grown to a large degree, there are still periods of time when growth is accelerating and market realization is weak with that. Feels this is one of those golden moments to go ahead and Buy. Just went through 100,000 barrel a day equivalent ratio, but more importantly, the ratio of production is going to come from condensate natural gas liquids and a little less percentagewise in natural gas. Therefore, netbacks coming off production is going to be increasing.

(A Top Pick Oct 26/12. Up 27.99%.) His top holding and he has bought a lot more since picking it. Could have been his Top Pick again. Have a Charlie Lake oil play that is going to go from zero barrels to a visibility of 20,000 barrels a day next year. Growth in the next 4-5 months will be phenomenal.

(A Top Pick Aug 21/12. Down 0.39%.) Natural gas focused. Likes management and the financial position of the company and their attitude towards growing the business. Management has been very successful in running 2 companies prior to this. Debt levels are certainly manageable. Forward progress to growth is acquiring land and drilling it. Every equity raise that they do, management puts in for all of them. Have had great success on the drilling side.

Seasonal strength for natural gas is usually at this time of year and ends about Dec 21, on average. This is a run up to the winter heating season, so you want to get in before the cold weather sets in. This year hasn’t worked out so well. This one is more energy and you want to wait for the energy strength which runs from January into May. Chart shows a breakout above the 50 day. The 20 day and the 200 day are curling higher. Trading in a range of $38-$44 so he would like to see it break above the resistance. If it breaks out above $44 that would probably be a good entry point.

This is a trophy story, one of the premier valuations and one of the highest valuation stories but he would wait for a buying opportunity, especially in light of his remarks on oil prices.

Chart shows a strong upward trend line from early 2012, which is now starting to be broken. 2013 shows some support, but trend line appears to be in some danger of being broken. Relatively new break, so it might be a false signal. There are some danger signals here. Be cautious.

Sleep at night story. Potential to double reserves. It is on sale and has a rock solid balance sheet.

Mainly focused in the natural gas space. Has top quartile production growth. Fully financed and doesn’t need money from the street any more. No debt to capital so has lots of financial flexibility to fund its growth. Has a huge asset base it can focus on. Extremely strong management team. 12 month target of $50-$52.

Seasonality for natural gas is Sept 6 until Dec 21. This is the strongest time although you can get a run in April as well. Has consolidated in the last several months. Right now it is favourable. Chart shows a high of $45 but if natural gas does well, it could break above that. This is a good level to be looking at this. If it breaks below $39 that would show that it is breaking down.

Loves this company. One of the best operating teams in the basin. Stock is probably flat because of a negative view towards gas prices more than anything. The current lull in the stock is a good entry point. His target price is in the low to mid $50.

Management team has built and sold a number of companies very successfully. This one has probably been the fastest-growing small cap, turning into a mid-cap, turning into a large cap. Growing at about 45% both in cash flow and in production. In the last 18 months, it has built an intermediate oil company as well. Strong balance sheet. Represents exceptionally compelling value.

Very well loved name and rightly so because they have one of the lowest costs in the sector. Still making money at current prices. However, this stock has always been expensive. If the view is positive on natural gas, then it will probably move up. However, AECO is currently trading at a huge discount compared to NYMEX and so in the upcoming quarter there may be a little bit of risk and disappointment on the cash flow front. Alternatively, Encana (ECA-T) would be an interesting gas play as they are looking at strategic alternatives to turn the company around. Trading roughly at about 4X cash flow and debt is reasonable at about 2X. There is talk about them eliminating their dividend and if that happens, this would be a case of Buy on Weakness.