Whitecap Resources (WCP.TO)

(A Top Pick Jan 24/14. Up 0.55%.) Has cut back on this one, but still holds some. He is waiting to add to this one later. Yield of 6.6%.

Have a really good hedge position and a very good balance sheet. Every single employee is a shareholder in this company. Have very good projects and can weather the storm and come out the other side is a stronger entity than they were heading into it. Can maintain flat production and pay a dividend of 6.82%, while spending only 90% of cash flow.

If they cut the dividend, would you Sell the stock? You hope that they don’t cut the dividend. If they do so, they should do it right away and give an explanation. Make sure that it is not just a dividend cut, but a cut across the spectrum including their spending, and that they have a plan going forward. The people in his shop are saying this stock is okay to go, but he doesn’t own any.

One of the best run companies in the Canadian oil patch. Management is first-rate and has a long track record. They focus on high-quality, light oil resources, mostly through enhanced oil recovery such as water flood, and are running a sustainable business model. The dividend is sustainable, even including the capital expenditures needed to maintain the production. Obviously with oil prices going from $100-$50 it is going to impact on the business so expects you will see minimum production growth this year. This is one you should hold and possibly add to over the next few months. Yield of around 7%.

Sold his holdings. Had thought about Shorting but doesn’t think there is enough of a case for it. A well-managed company with decent growth prospects. Given the low commodity prices, he feels this is a Hold. 6% yield.

A very popular stock, but vulnerable.

One of the best mid-cap producers, and he has a very small, modest weighting in this. In the mid-cap arena, this is one of the best names. Has a very strong hedge book. Also, doesn’t have a lot of leverage. A very good operator. When he sees a recovery coming in the energy space, this is going to be one of the names that he buys.

Still has this in the portfolio even though he has reduced it. Thinks they will make it through this very well. Has a $21 target on this. Still a little bit too early to be adding. Wait until the new year.

Good balance sheet. A dividend payer like some of the others. Of the ones that he doesn’t own, this would be his choice. Well-managed. 1.2% debt to cash flow, the range that he would like. Thinks the dividend is sustainable. He’ll wait a while before he adds this.

Added this stock this morning. If you want oil exposure and a dividend there is not a better name to own. There is total indiscriminant selling. You have an opportunity to high grade in your portfolio. They already announced a dividend increase in January. The best most sustainable yield and they are still growing. Management owns a ton of stock. They fell as much as crummier stocks.

This is one of the best, most sustainable dividend names. At $75 oil and $3 natural gas, it still has a positive cash flow year-over-year, but very marginal. Effective payout ratio is 114%. If you are not in this sector, at opportune times like this you might want to start picking away on a name like this.

Very well run. A very sustainable payout ratio, even at these prices. Thinks their payout ratio and dividend are safe. With the wind coming out of the entire energy sector, the price has been hurt. If oil turned around and moved back up, the stock would normally be a Buy. He has turned back his exposure in energy. Probably has one of the lower energy weightings in his portfolio than what he has had in some time. If he saw some wind behind energy, this one would be on his radar.

There is a lot of good value here in these oil stocks. We do not want to see these companies having to start cutting dividends. If that happens, share prices are going to decline. We need to be sure that these companies are rock solid financially. This is one of the lowest “cost per barrel” companies at about $13-$15. Good dividend and management feels confident it will not be cut.

This has a good hedging position. His target on this is $21. Their CapX program is on line and there is some sustainability. It would be good to wait a bit. We are coming into winter. Also, there are the issues with Russia and Ukraine. There are a lot of politics in oil right now, and because of that market forces are a little dislocated.

Very sustainable dividend. Have been very focused on maintaining a modest decline rate. When your decline rate on your production base is lower and your capital efficiencies on incremental drilling are really good, you have a better chance of delivering free cash flow that you can pay a dividend out of. That is exactly what they do. One thing that is under-appreciated is the rock solid hedging they have in place. In the first half of 2015, they have about 60% of their production hedged at close to $100 a barrel Cdn. Yield of 4.95%.