Granite Oil Corp

GXO-T

A mico-cap that had some major issues. He would not look at this at all.

Hasn’t followed this super closely due to the market cap concern. He is surprised at how quickly production is falling off. Their priority now is to try and pay the dividend and pay down debt as a consequence. He wouldn’t be devoting capital towards this.

(A Top Pick July 21/16. Down 23.74%.) This is a product of a split up of D3. A little bit less than 4000 barrels a day. They have a novel gas flood enhanced oil recovery they’ve been trying to get going for several years. A single asset company, very concentrated concept. He sold his holdings.

(Top Pick Nov 25/15, Down 42.90%) It was a play on recovering oil. He thought they got the better assets, but they missed on earnings a couple of times. Price to free cash flow is 5 times. It has a yield of 8%. A high yield always concerns him. He sold it.

A very small dividend payer, which has probably hurt them right now. The market is looking for a little more torque, and opportunities for future growth in the oil/gas space, so this hasn’t factored into the picture much of late. Put out some well results recently which look pretty encouraging. They are in the Bakken and are essentially re-injecting gas to help keep up the pressure and help push production. She feels they are going to do well in terms of sustaining their dividend. She likes this.

This has very good concentrated oil plays. Their whole idea over the long-term is to use an enhanced recovery method, such as water flood. This has done quite well compared to the rest of the sector, and will continue to do well as long as the oil price doesn’t collapse back to sub $40. If the price gets above $50-$60, there will be some growth opportunities. A good dividend play with a 7% dividend yield. Good company to hold.

A very small company that pays about a 6% dividend. A little less than 3000 barrels a day. He likes it because the management team, through a predecessor company called D3, discovered an Alberta Bakken oil pool. They have a commanding presence in this play and own 100% of something like 80 sections of light oil. They have an enhanced recovery scheme, where they are pushing natural gas down into the ground, to bring up the pressure of the reservoir. This could be a good takeover target for a dividend payer at some point.

Shares on this have done very well in the last little while. A spin out from DeeThree when they split into 2 companies. Sound balance sheet and a payout ratio of less than 100%, and have been able to increase the dividend. Thinks it will continue to outperform in an environment where most people are talking about dividend cuts instead of dividend increases. If you believe oil prices are going to rebound, then you are probably going to get more out of companies that have underperformed and have cut their dividends. Dividend yield of 5%+.

Wants stocks that will benefit from a cyclical recovery, which he is expecting, but without breaking the bank while you wait. Located in the Bakken. What is remarkable is that for an oil stock it scores in the top for him against all of their stocks, energy or not. Decent ROE. They make money at these oil prices. Have a lot of running room. The only knock is that they have a fair bit of debt, which gives them leverage to a rising oil price, but also increases the risk. Dividend yield of 4.84% which appears to be sustainable at current prices.

There has been pretty heavy insider buying. The challenge is that it is a single asset dividend payer. This gives you concentration risk. Came out with a 1200 barrel a day test in their core play. He is concerned that institutional support will never be huge because of the size of the company and the single asset risk. If you are looking for a fairly steady, low payout hedge producer, it is not terrible, but there are names he likes better. Yield of 6.8%.

This and Boulder Energy (BXO-T) were spinouts from DeeThree Exploration (DTX-T). She liked the combined company more because there was a sustainable model in this company, and a growth story in Boulder Energy. They spun it out to give investors a pick. Likes them both so has chosen to go with both for now and see how they operate individually. This one is very small for a dividend payer. Good management team.

(Formerly DeeThree Exploration which spun out this company and Boulder Energy (BXO-T).) He applauds the deal, but if you add the sum of the parts it may not equal what was there before. Thinks the deal probably makes sense. These are the Alberta Bakken assets. Very little capital required to hold production flat, and low declines. There is lots of running room in this play. A dividend has been implemented, which he feels is very secure.

An interesting story. Half their portfolio is low decline, cash flowing and that cash flow can fund their operations. Because of this, they have chosen to split it up, so that on one side you are getting the dull, boring dividend type of company. The other side is pure growth. Hold your shares, give it a year, and see how management is executing.

Really not getting a lot of respect from the market. When they announced they were splitting into 2 companies, he expected the stock price to appreciate, but it actually went down. The company is really trying to unlock the value. Created a dividend company which will have their Bakken production, sort of a steady state production requiring minimal amount of cash flow. It will have a nice dividend, probably in the 12% range. The bolder company will be their growth assets in the Belly River area. As a combined entity, they weren’t getting any respect. Once the street gets a better understanding of the 2 pieces, this should be trading at higher multiples.

The 3-year chart shows a low that is under $4. Currently this is above that low so it is probably okay. If there is a bounce, you might want to reduce in the bounce, because he thinks there is more to come. On a relative basis, this is one of the better ones.

Bought this recently because he felt the stock got too cheap. US investors pile into Canadian stocks, and then exit in a less than graceful way. He had felt that one of the top shareholders was liquidating their position, so he used the weakness to Buy. Delivered over 40% per share growth through light oil over the last number of quarters. Have a significant inventory in 2 core plays that should give them a depth of low risk development drilling for years to come. They have done this with very modest debt levels. Trades at just over 4X on a debt adjusted cash flow basis.

Rock solid balance sheet and wells are getting better year after year.

Not a top holding. It is oil weighted. If it pulls back around $9.50 it has strong support.

(Top Pick Apr 30/13, Up 28.70%) Has been blessed with some wonderful oil assets. He took some profits.

Struggles with this because they have just been knocking the ball out of the park. The reserve report is probably going to be top decile. They grew production and reserves much more than he feels the average consensus was, by about 10%. His only struggle is that they’ve now broached the 10,000 barrel a day mark because they’ve been so successful and drilling production, and because of their high declines, it is becoming more challenging to sustain the same growth rate. They believe they can add 1000 barrels per day of production per quarter, but the execution risk is starting to creep up. If the stock fell back into the mid-$8, he would be buying.

(A Top Pick Nov 2/12. Up 34.5%.) Still very positive on the company. They know how to find oil in locations where others have struggled. Payback on new wells has been quite significant. Earnings are expected growth from $0.35 in 2000 to $0.68. This is against the PE of 13.4 times.

Have done a good job finding two big oil pools. What they need to do now is to grow production and she thinks they can do that. Balance sheet is good. She hopes they will get taken out as soon as they prove it out.

Has been a huge winner. Team did a fantastic job of identifying not one, but 2 huge light oil plays. When the stock hit around $9, the risk/reward was not as compelling and he sold his holdings. Approaching the 10,000 barrels per day mark, which, historically for a company, creates major logistical issues. He would like to buy back in the mid-to high $7’s.

(A Top Pick April 30/12. Up 9.06%.) Thinks the company has even more coming. Just released their 2^nd quarter, which was very good.

One of the best performing stocks he has owned. Execution by management is top decile, if not top of the entire sector. Has some excellent play potential in the South Alberta Bakken and their Brazeau area. In the last 10 quarters, they’ve grown from 500 to 7000 BOE’s a day. That kind of production curve is hard to find these days. Think they will grow to 9000, possibly 10,000 BOE’s. Possible takeover candidate.

Found a very large new resource in the Alberta Bakken. Management has done extraordinarily well and have taken to buying some other assets that were underexploited and have knocked the ball out of the park in development wells. $12 in 12 months.

Exposure to two emerging oil plays. Well costs are reasonable. Ability to demonstrate recoverable reserves of 50+ million barrels. Expecting an increase in guidance.

(Market Call Minute) Southern Alberta. Continue to marvel at their lands and bring in nice light oil.

(A Top Pick March 30/12. Up 64.41%.)

(Market Call Minute.) Likes this. Would like it at $6.50. Possible takeout later this year. Have 2 great light oil plays.

Active in the Alberta Bakken and Belly River plays. Payback on their wells is very attractive, anywhere from 9 to 15 months. Expected to be about 6000 barrels per day by the end of this year and growing to 8000-9000 barrels per day at the end of 2013. His target is $10. Have enough land and prospects that it appears to be a potential acquisition target for very large companies. Expect that announcements to new reserves will also be quite significant. Trades at 5.4X cash flow.

Drilling the Alberta Bakken oil plays that had been overlooked previously and are having a lot of success. Recently had a resource update that was very robust. Have close to 900 million barrels of oil in place. So far have only booked about 10% of the resource so there is a lot more upside to be had. Very cheap.