Leucrotta Exploration Inc. (LXE-X)

They're in northeast BC where Tourmaline is consolidating land and assets, near LXE. So, LXE will become topical. LXE has reached an inflection point after acquiring a lot of land and pushed the Montney play to the northeast. Now, they need a lot of capital to move to full development. They're talking to potential buyers, like Tourmaline who have bought land from LXE before. A spin-out of lands further north may happen. Take some profits.

(A Top Pick June 23, 2017. Up 3%). This is the biggest position in his small-cap fund. He likes it from the fundamental change perspective and as a possible takeover..

This is a junior producer in the Montney. They have 140 sections in northeast BC. Current production base is 3500 barrels per day and they just had a discovery in a different area, which can increase their production to 4000. The cost of each well is very low so there is fast payback, typically 18 months to pay for a well. He thinks the new discovery is drawing attention from bigger players, such as Tourmaline, that might buy the new play or the whole company. The CEO owns a big chunk of stock and has been in this type of situation, and sold his company, before. He thinks a takeout will be above $3 and that it should get close to $3 even if there is no takeout. (Analysts’ price target is $2.73)

Met with management within the last month. He likes the management team and likes the land spread. He likes the story but is waiting for a more appropriate time if the stock became a bargain. He has other names that are more interesting at this time.

It is a great company. They are drilling wells across the existing. They have support from institutional investors. He is considering it. If they build up what they are talking about it could be $5 Billion. They could be acquired. He is about to do a big work up on the numbers.

(A Top Pick March 26, 2018. Up 18%). This is one of his biggest holdings. He thinks it is the number one takeover candidate in Western Canada.

This is roughly half oil and half natural gas condensates. So there are 90% liquids in general which makes this a good target for acquisition. There is almost no debt. M&A globally has picked up tremendously but not in the energy space. He thinks that this will pick up, especially for small-cap companies like Leucrotta, The CEO is a large shareholder and would be well-rewarded by a good buyout. He has done it before. (Analysts’ price target is 2.52$)

He says they have assembled a good Monteney holding. The market is not including all the drill targets that he thinks exists. Also, he likes their water flood technology. He sees them as an excellent take-over target. Yield 0%. (Analysts’ price target is $2.54 )