Seven Generations Energy Ltd (VII.TO)

(Market Call Minute) It is an oil story. It has been an outperformer.

For this company, the price of natural gas is almost irrelevant because about 60% of production is liquids, and the vast, vast majority of that is condensate, so they are really like an oil company as opposed to a natural gas stock. This is in a hyper growth mode and is out spending cash flow. They will be one of the last companies standing in terms of asset quality. They are in the best spot of the Montney play. The only challenge he sees from now until Oct-Nov is uncertainty around the NDP. They are exposed to a royalty holiday, and if that gets eliminated the net present value of their wells gets decreased by half.

A relatively new offering. The valuation is quite modest relative to where it could be in the future. This is a carefully thought out business strategy. It is a very strong growth pattern and is natural gas focused. He is impressed with what he has seen so far.

(Market Call Minute) Don’t own it because it is oil.

He would hold off temporarily. There was a hold period after their IPO that comes due at the beginning of May so there may be some short term headwinds. It is possible the IPO shareholders who wanted to sell before May shorted the stock instead. At that time he will increase his weighting in the stock. They potentially have a funding shortfall late this year or early next, but the market knows about this.

Has an absolutely fabulous track record of accumulation of a massive amount of land in the southern Montney of about 350,000 acres, with what appears to be an extremely sharp management. Their target is 100,000 barrels a day in 2 years.