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Jean-Francois Tardif Wellco Energy Services WLL.UN-T TOP PICK Apr 19, 2006

One of the cheapest stocks in the oil/gas services sector. Made about $0.90 of earnings last year. Distribution is around $1.02.

Jean-Francois Tardif

Owned

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$11.250

Stock price when the opinion was issued

oil gas field services

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BUY

Made $.90 of earnings last year and expects $1.25 this year. 9% distribution which is very nice. The whole sector is doing well. Cheaper than the average.

BUY

Has a relatively low payout ratio. In an industry that is doing extremely well. Has a certain amount of volatility.

BUY

Earnings year-to-date are around $.57 a share. Usually 2nd half is better than the first. Expect they will make $1.30/1.50 earnings this year. Reasonably small company and still growing. Potential risk for all resource stocks is if the US goes into a very hard recession. Cheap at 7/8 X earnings.

BUY

An oil/gas service company. Hasn't done much recently because the price of natural gas has been weak. Trades and around 6.5 X earnings and yields around 10%. The price of gas has to go back to a 7 to 1 ratio to the price of oil, which would mean $10/11 at today's oil prices. Cheap.

COMMENT

An energy services company. All of these stocks have had a major correction in the last few months because of high inventories in natural gas. For it to recover requires the storage levels to come back to normal.

HOLD

This was hit by the government announcement on trusts as well as weaker gas prices. The price of gas will come back to normal levels, but he doesn't know how long this will take. It may take three more quarters to improve.

HOLD

Solidly managed and the distribution is reasonably safe. A little concerned that there is going to be a slowdown in the oil patch. Could have some trouble growing, but the recent quarter looked very good.

COMMENT

14% yield. Not particularly exciting and would rather own Vermilion (VET.UN-T). Will probably get taken out eventually.

DON'T BUY

11.2% return, but could come under pressure. Could be 2 years before drilling returns to where it was last year. The silver lining is that there are a lot of takeovers of trusts by private equity, which could give you a decent yield while you wait.

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Jean-Francois Tardif Wellco Energy Services WLL.UN-T TOP PICK Apr 19, 2006

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