Vermilion Energy Inc (VET.TO)

(A Top Pick Nov 10/16. Down 13%.) Has most of their oil production in the North Sea, France and Australia, so they are linked to Brent prices. Brent prices are up over 18% since this was picked, and is surprised the stock hadn’t performed better. Close to 6% dividend yield.

It is coming down because the French government has said they will stop hydro carbon production but that is a long way away. The market is nervous. They have supported their dividend and over time they will replace France.

One of those favoured few companies with unquestionably high asset quality. A management team that lets you sleep well at night. Payout ratio is fairly sustainable, and has the benefit of international diversification. Their multiple has held up much better than some of their peers, so not a name he would buy. Dividend yield of about 5.8%.

Has operations in the Netherlands, Germany, Ireland and North America. A very solid free cash flow generator even at today’s prices. Well valued and well-managed. Dividend yield of 6.1%. (Analysts’ price target is $50.)

Most assets and cash flow is coming from Europe. The French just announced they are going to be restricting drilling, which is great for this company which is already there. Not subject to the same stress and strain as oil companies in North America. Dividend yield of 6.2%. (Analysts’ price target is $50.)

VET-T vs. CPG-T. VET-T never cut their dividend with the low in oil prices. They are a diversified, very well run company. CPG-T is more of an oil play and more leveraged to the price of oil.

Oil. SU-T vs. VET-T. They are getting a well developed trading range. Oil could have $55 on the upside. If oil goes back to the $50s then the sector is quite oversold. SU-T protects you and has held up rather well. But it does not have the same upside as VET-T.

Just reported Q2 results. Average production rose 4% to 67, 240 BOE’s a day. Cash flow is up 3% to $147 million. Very active in Germany and offshore Ireland, so they get European pricing which is 3 or 4 times the price we get here. They are also in Australia, US and Canada. This has some vulnerability to the mid to high $30. There is a chance for the stock to back off. Over 6% yield.

One of the favoured few within Canada, where International investors are comfortable with the CEO and management team. They have the benefit of global diversification. It has always traded at a pretty healthy multiple, which has prevented him from owning the stock. It is probably better to go a little further down the risk profile in names that have been sold off.

Has been Short the energy sector since January, and has covered about half of his Shorts. He doesn’t tend to try and find better companies in a bad neighbourhood. Every time energy rallies, new production in the US comes on. He would be careful on energy.

A 6% dividend yield on the stock. They didn’t cut their dividend when they converted from an income trust, and didn’t cut it in the downturn of 2015. The dividend is well supported. A diversified asset base, largely in Europe, Australia and a project in Ireland as well as some in Western Canada and Western US. Good disciplined management team. A good allocator of capital. (Analysts’ price target is $58.50.)

(A Top Pick May 10/16. Up 14%.) Still a core holding for him. This is something with multiple basins, it has hedging, it has a dividend. At 70,000 BOE’s a day, his expectation is that it can grow organically at 5%-10% a year.

One of those names that is loved by the street because they get foreign prices. They sell in Europe with production in Ireland, Netherlands, Germany, US, Australia. Getting $9 MCF Canadian equivalent in Europe. A very lucrative business. Pays out a nice and very healthy dividend. BV is $13.54 at the end of Q1 2017. Dividend yield of 4.6%.

This space is tough. Oil continues to erode. This closed at $42.63, and his model price is $18.06, a negative 60%. Their dividend is $2.58, and they are only earning $.75.

A gas producer, with operations around the world, including Australia, France, Netherlands and Germany. Quite a well-run company. Their assets are starting to perform well. They are partners in an offshore natural gas project in Ireland. He likes this. Good balance sheet and well-run. 6.2% dividend yield.