Opinions

Bill Harris, CFA Zargon Oil & Gas Ltd ZAR-T COMMENT Aug 23, 2013

This had been on his Short List of about 10 companies. There is absolutely nothing wrong with it. He thinks you could get an 8%-10% rate of return. It just didn’t seem to have that key catalyst driver that could make it exciting. (See Top Picks.)

Bill Harris, CFA

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$7.660

Stock price when the opinion was issued

oil gas

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BUY

Very good management. Good operating costs. Good mixture between the 2 commodities. Good yield of almost 8%.

HOLD

Cut in dividend didn’t help but it is a hold. Not tremendous upside to it. Prefers large cap – ARC, BTE, etc.

DON'T BUY

Weighted toward gas projects and assets. Like many others are trying to increase capital expenditures and drive growth on the oil side of the business. Thinks management will be effective over time, but they are just performing in line with other gas companies.

SELL

Exited his position as it became clear that the company did not have a very sustainable model. Recently looked at it again but they are selling down assets to take care of balance sheet. Wont see material production growth until 2014. Thinks they will cut or eliminate the dividend.

COMMENT

Like all the other dividend paying oil/gas stocks, it has been weak over the past year. The bottom was put in, in the July/August time frame and it is veering down again. Generally a chart like this says you have a number of holders who are continuing to liquidate their positions. Has weak distribution coverage. 9.4% yield.

BUY

He is starting to get interested in the energy sector. Put your stop at the recent lows. They are probably going to be ok. He is starting to see bottoms in some of the oil services.

SELL

(Market Call Minute.) Has an unsustainable dividend and high debt levels. Will be outspending cash flow in bringing on the Little Bow polymer project.

DON'T BUY

Would be mildly cautious on this name. Did a presentation on an enhanced oil recovery scheme that they are implementing, where they are not going to get a production response for 2 years.

COMMENT

These are really, really high quality people. These are people who believe that you ought to make money in oil and gas. Very disciplined and very good in all regards. He has owned the stock for many, many years and he is completely unconcerned about the price direction.

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Bill Harris, CFA Zargon Oil & Gas Ltd ZAR-T COMMENT Aug 23, 2013

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