Tamarack Valley Energy (TVE.TO)

60% oil and liquids. Canada. This company keeps outperforming his targets.

Screens very well on his earnings based approach. Management team came from Apache Canada where they grew production from under 20,000 barrels a day production to 100,000 in less than 7 years. They are applying the same discipline to this company. Currently there is a huge discrepancy between Haves and Have-Nots in the Canadian oil patch. The people who have access to capital can get into and drill undeveloped properties and this company falls into that category. Just made an acquisition.

Very fast growing company that has done very well with acquisitions. More importantly, they have enhanced the value of the acquisitions. Drilling results are quite good. Spending a lot of time in the Viking formation. High rates of return and drilling costs are relatively modest.

Likes the company. They’ve made some acquisitions and are moving more and more towards liquids. Have done very, very well. Probably doing about 3200-3300 BOEs a day. NAV at the end of last year was $4.28 so it still has room to go. Low-cost operator. He has a $5 target.

Recently acquired Sure Energy, which is a great acquisition. Very confident operators. What really lies in front of them is the Viking opportunity and the Cardium opportunity. They have something like almost 400 locations on these 2 assets. Trades at a discount to its peers, which is not justified.

Doing almost 60% of their production liquids from 2 areas. Did 290,000 BOE’s in the 2^nd quarter and he thinks the cash flow will be over $1 this year. BV for Q1 was $286 and the NAV is over $4. He has a $5 target on this.

An undervalued junior. Have oil plays in the Cardium and Viking as well as heavy oil in the Lloyd Minster area. Have something like 150 drillable locations. Very experienced management team. Surpassed analysts’ expectations. Demonstrated excellent F & D costs, in other words their capital efficiencies are amongst the best. If you have limited cash flow to drill wells, it is best if you can do it very efficiently. Trades at about 50% of its peer group.