Cequence Energy Ltd. (CQE-T)

This company has a bond maturing next year and the performance of the stock has been poor. It has production of 6713 boed in Q4 down from 8609 boed the year before. The balance sheet has been the problem and people are worried whether they will be able to extend the bond. It is very high risk.

BNP-T is a much bigger company. CQE-T is a smaller company and has a different risk profile. He prefers BNP-T.

(Market Call Minute.) A small emerging Montney play. The Board recently fired management, and he is not sure where the company goes from here. He can think of better Montney players.

They ran a strategic review, which resulted in no buyers, and the CEO decided to leave the company. If you own, he would just sell the stock.

(Market Call Minute.) This is under strategic review. Probably gets a bit higher than the share price, but you are not going to get rich owning the stock.

(Top May 21/14, Down 77.12%) Turned into a small cap company. He got out into a higher liquidity name. He would need oil in the $70 range to get back into this story.

(A Top Pick June 27/14. Down 71.67%.) Still owns a little. Thinks it is a solid asset base. They just did a deal to sell 50% of a gas plant along with the joint venture on a pipeline. This is a good step to free up more cash flow and to move the needle.

A good tax loss candidate unless you are a raging bull on oil. There is no compelling reason. He doesn’t see it gaining traction. They can’t grow at a depressed natural gas price, like some others.

(A Top Pick July 16/14. Down 64.82%.) He liked everything they had going, but as redemptions rolled in, he had to make a decision as to what to remove and what to keep. Just announced a transaction that makes a lot of sense. Have consolidated their interest in the Simonet field and have sold part of the facilities. That will allow them to carry out some CapX. This is a name that he will look at again.

(A Top Pick March 13/14. Down 57.27%.) They are now just hunkering down and trying to spend their money wisely. We just have to wait it out until we see better gas prices. It is going to hover around $1 until we get interest in gas and small caps again.

(Top Pick Sep 4/14, Down 45.09%) Likes it for the same reason. They are still backed on their debt with CPP and they have a good quality asset. They need a mixture of higher condensate and gas prices. It should get back later this year.

If you are not a bull on natural gas, which he is not, this company’s wells historically have had a pretty low liquids cut given were they are in the deep basin. If you compare this to some other companies, you are much more reliant on the price of natural gas to determine your payback. Unless they come out with some boomer wells, he is really challenged to come up with a Buy thesis.

This was criticized for having 2 great assets. Sold one of them because no one believed they had the capital to develop both. They paid down all their debt and are now sitting with a great play at Simonette. This has multizone opportunity and they have infrastructure in place. They have gas gathering systems, processing capabilities, etc. Now they just have to throw some capital at it. He is very excited about how they can be looking 12 months out. With roughly 10,000-11,000 BOE’s a day, they may probably touch 15,000 this year, there is plenty of drilling opportunity left. Thinks it can be a 20,000 BOE a day producer. He loves the story. A target price of $1.50-$1.75 would not be unreasonable.