Tourmaline Oil Corp (TOU.TO)

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.

Look at net asset value. Strong growth over the next few years. Great management. Expensive stock. Use price and net asset value to determine value. There are other names he would buy at this level in the energy space. He would add at the $37 level.

Has come off about 10% from its highs recently and is growing production and cash flow at around 40% per annum.

This is one way to play the recovery in natural gas. Still has a lot more to go. Probably the best managed energy company in Canada. Tremendous land base.

There are times in the year when this company sells off and we are not in that environment right now. Company is executing spectacularly.

Although they are growing their oil side, their main focus is on natural gas. They are the low cost producer so if there is a decline in natural gas prices, all of their projects are still profitable. Management team is exceptional and very shrewd. Strong experience in building companies of size and acquiring and building acreage better than others.

More of a natural gas story than an oil story. If the index comes down it is one that is a high value, high multiple and a premier story. When there was a correction in 2011-2012, the stock did get hit down to the $20 level. Stock will come down $4-$5 and at that point it would probably be a good buy. It will never be cheap. Take advantage of any market malaise in the next few months.

About 80% natural gas. Management was in a private shelf which gave them the advantage of buying a lot of acreage in some of the very best areas of Alberta. Recently down about 10% along with other natural gas names due to short-term weakness. Really compelling especially if you can average down over the next few weeks. Trading at around 9X 2014 cash flow compared to 12-14 times in the past.

(Top Pick Oct 26/12, Up 18.31%) Could have been a top pick again. Low cost producer. Wishes they had a dividend. They own the biggest land position in the deep basin so would be attractive to a larger company that needed land.

Bellwether company in its peer group. One of the largest intermediates. A growth profile 4 or 5 times its peer group. Risk is that it has some exposure to Nat Gas. He is pessimistic short term on Nat Gas.

Have enormous running room. Trading at the lowest multiple that he has seen, roughly 8X enterprise value to cash flow. Have multi-decades worth of profitable inventory. Could be a $50 stock sometime next year. Bulletproof balance sheet.

(A Top Pick June 20/12. Up 77.56%.) Just announced some great news in that they are increasing their exposure to the Spirit River area as well as giving new guidance for 2014 production where they are looking at 105,000-110,000 barrels a day.

(Top Pick Jun 21/12, Up 69.56%)

What should retail investors pay attention to or ask questions about at their annual meeting next week? You should ask them when they are going to sell the company. They’ve done a great job and this is one of the best performing stocks. They can continue to grow the company for several more years. His view is that the company does get sold at some point in time in the next year or so.