Baytex Energy Corp

BTE-T

It's consolidating and could return to the bottom of its trading range. It's sideways. He's lukewarm on it.

(A Top Pick Dec 14/18, Up 12%) He is surprised it is not getting more favour than it is. He is seeing good exposure to the Duvernay and Eagleford plays. It is trading at a 25% free cash-flow yield. He thinks they could even privatize themselves by buying back their shares.

Because the balance sheet has been repaired, when they trade at a discount to book value they can use free cash flow to buy back shares. They are trading at a 25% free cash flow yield -- in theory they could buy back their shares in 4 years using this strategy. Yield 0%. (Analysts’ price target is $3.90)

Not a fan. Debt level is high at 69%. Narrowing differentials is helping. Management increased its pay package, even though stock is on sale at 2 for 1. This isn't right. When you get your proxy, take a stand and make your vote count.

He has a $4.50 target but this pays no dividend. Has owned this in the past. He avoids Canadian oil companies given the lack of capacity, owning only 6% oil mostly outside Canada through the HPF-T. That said, we've seen a rebound in oil prices.

It's caught in the Canadian oil stock downturn. They cut the dividend. They hold big assets in Texas shale, so there's opportunity there. But the chart shows no sign of perking up. Maybe higher oil prices will help.

This is a Canadian energy company. They made an acquisition in the US unfortunately at the top of the cycle. He does not own highly levered oil and gas companies. There are others that are much more attractive. He prefers clean balance sheets.

In 2015, it traded at $40. At $2 today, he doesn't know what to say about BTE. Its balance sheet is okay, but its intrinsic value is plunging to the dumpster; its balance sheet has been in a four-year decline. He can't say to abandon ship though he can see the stock going lower. The oil patch in general: at least 20 Canadian oil stocks are in the same boat. Either there will be some bankruptcies or the stocks are so cheap we can get one heck of a rally, rising 100-200% quickly.

Has been massively under performing the move on WTI. If you believe $60 WTI, this is a $4 share price, he thinks. You are paying for their existing production, not including future growth or value for their Eagleford assets. They are trading like a bankrupt company. Yield 0%. (Analysts’ price target is $3.77)

Light oil companies will benefit more from an advance in oil price to $70+ this year. He is concerned, though about the balance sheet here and would pass on it. In a couple of years, all these stocks will go up, however. There are other bargains out there, especially natural gas picks.

Too much debt, making acqusitions, and need to fix the balance sheet. The current $2.50 price is too low, though. They are oil-levered, so if oil recovers, you can make a lot of money with BTE. He predicts oil going to $50-60.

He would have thought the bottom was higher than this. They did some great acquisitions recently and are in much better shape balance sheet wise. It is a better company than the market gives it credit for. You need crude to get out of the $45 range.

Oil forecast? Used to have a great a balance sheet then levered up at the wrong time to make an acquisition around 2014. It takes a long time to unwind. Some say you can get great torque on BTE, because an upside in oil means an upside in earnings, but it's not worth the risk. Oil price is a little cheap now, so you can dip a toe into oil now. But look for good balance sheets in a company. It's rough to see the WCS differential so wide, but the reason is the lack of pipelines. Things can't get worse, but it can go away as soon as you start building pipelines. Also, demand growth in oil is okay actually.

World oil demand is still growing, so he's not concerned about the future of oil. That said, he'd own the lower-cost oil companies. BTE is well-run, but at the whims of the oil price. If that price is flat in coming years, look at other oil companies.

This offers great leverage to higher oil prices and tighter heavy oil differentials.. Over 37% of their cash flow comes from the Eagleford and have enormous exposure to the Duvernay. The value of this asset is in excess of the share price. It has had enormous tax loss selling recently, so it has great upside. At $60 WTI prices, he gets about a $4 share price. Yield 0%. (Analysts’ price target is $5.09)