Vermilion Energy Inc (VET.TO)

This is an interesting name, because we all focus on the traditional Alberta, Saskatchewan, BC names, and this one has made significant investments in Europe. They have done a remarkable job in terms of managing their business. Because of their European exposure, they are not getting domestic North American pricing, they are getting Brent prices. Good balance sheet. He is looking at this.

Partially in France with a decent dividend, but if you have energy in your name right now, the stock is going down. Even though it is well-managed, good dividend and good balance sheet, unless oil goes to $40, it is probably somewhere near its bottom.

A non-north American oil and gas company. One of the most interesting. They produce very high rates of return for a long period of time. They have assets in Europe as well as North America. They are putting online one of the largest natural gas fields in off shore Ireland very shortly.

It is a wonderful company and he would look to buy it on a pullback. They have operations around the world.

He likes this because it gives him a bit of diversification through being in France, Netherlands, Australia and in Canada, but also because a significant portion of their production is Brent. This affords him a bit of buffer against dislocations between WTI price and Brent.

They are managed differently than most other dividend paying companies. They price a lot of their crude off the higher Brent price because of global exposure. They have always had a very good balance sheet so they can spend through the troughs. They are working on an Irish off-shore oil project which should come on line soon.

(A Top Pick Feb 19/14. Down 8.62%.) This is down, but relative to the rest of the space it has some pretty good legs. He would probably pick up more if it trended into the low $50s. Great diversification, in that 40% is tied to Brent. Also, tied to European natural gas and you are looking at another $1.75-$2 per share extra of cash flow coming on stream once the Irish project gets underway.

Change from Crescent Point (CPG-T) to Vermilion Energy (VET-T)? We don’t have the thematic backdrop that is good for energy. This has European exposure which is a positive, but it is going to get painted with the same brush that all energies are going to get painted with. Doesn’t think you should be switching horses from one energy stock to another. Thinks you should leave energy and move on to a different sector. Both are going to have difficulty if energy prices move lower. None of these dividends are safe if oil prices go lower.

One of the better names you could be in, if you needed to be in the oil/gas space and the dividend was important. His view is that oil prices will be weakened and you won’t be happy holding this.

You are trying to pick a bottom here. but he thinks this sector will be weak for some time. This one will not bounce back to $100. They don’t have the same tail wind they used to have. Take a look at some other sectors that do have a tailwind.

Was very expensive at EBV +5. It hit a negative transit some time ago, and if you were using his system, you would have sold the stock back at the $70 range. In all likelihood this goes back to EBV +3 of $39.55. There is a bounce coming, so if you own, your decision is to either Sell the position on the bounce or Buy more. If it were to go below $49.50, he would Sell the position, because it is certainly going to go to $39.

Doesn’t know of any reason the stock has been dropping, other than oil prices. The 5.2% dividend yield hasn’t helped. Tends to have a balance sheet that is a little bit stretched to pay the dividend, so they have done worse as people have worried about the dividend. Probably not a bad entry point, but he is not looking to add anything, so it is irrelevant for him.

They are sensitive to Brent pricing. The company’s balance sheet is in excellent shape. They have a long term project in place in off shore Ireland. It will produce cash flow at a very dramatic increase in 2015. This has been known for a while, but when the stock goes down this is less valued. Well managed and have an excellent allocation of capital. The dividend is safe.

A great operator with outstanding production growth. At $92 oil, they have cash flow growth of about 15% net, next year over this year. But with oils down at current levels, he is modelling negative cash flows, shrinking by about 7%. Balance sheet is in good shape, but gets a little bit more pressured. Still very good, relative to peers. The dividend, even with the oil where it is right now, should be fine. If you think oil prices are going back up, then Hold it, otherwise consider taking profits. He still owns a little.

Very well-run company. Has about 2/3rd leverage to oil prices, which he likes. About 35% of their leverage is to Brent crude pricing which he aalso likes. In the 10 years he has been following it; it has never cut its dividend. Getting very close to the start-up of its Irish gas field, which should contribute about $190 million cash flow, net to the company.