Veren (VRN-T)

It's gone through a huge transformation from Crescent Point Energy, which created bad memories. But Veren is very different and offers huge upside. Caveat: Veren is tied to the price of oil. Crude oil needs to stay around $75+ for Veren to really work. Their cost structure and balance sheet are sound.

It was rangebound in 2022-2023, but has recently broken to new lows. Not a great chart. Note that the energy chart (XEG) has been in a choppy trading range the past year with little real movement. But money managers seeking dividends have been moving out of telcos and into energy, which are now worth considering. Veren looks weak, though. 

Very cheap relative to peers. Oil patch, as a group, has a problem in that Trump is going to encourage drilling, which means a lot more competition. OK balance sheet, as is production and cashflow-per-share growth. 

We're in the midst of tax-loss selling, with so much pressure to pay less capital gains tax. People are just dumping stocks that are, otherwise, decent buys. All things being equal, will have a pop in January.

Hit pretty hard. Last quarter threw people off, with worries over growth. Otherwise, good drilling success. Great transition to Duvernay and Montney. Cheap valuation. Debt paid down to target, so more $$ (about 75% of cashflow) to shareholders.

Frustrating year, but that creates opportunity. Final opportunity will be M&A throughout the sector.

Oil hasn't been the best place. Best time to own oil or its producers is from March to early summer. Most of the producers have been in a sideways trap. This one has broken down, that's bad. If you own it, give it a chance. But if it doesn't start showing consistent up-and-down range-trading behaviour, don't hold for too long. See his Top Picks.

Huge disappointment, and management owns its mistakes. He's met with management and is comfortable with the status, but other investors are just done. Given current prices of oil and gas, trades at 13% free cashflow yield. Quality not impaired, but it will take time. He bought more shares.

There remains no appetite to own small/mid-cap Canadian-only oil producers. We haven't seen consolidation here, thought it did in the US. Don't sell at current levels. They are messing up on operations now, which hurt guidance. But long term the dividend and assets are fine.

Likes it. If you believe oil/gas prices will be higher in 1-5 years, Veren is interesting. But this is a commodity company, so it is volatile. New managers are smart with balance sheets and debt, so they don't need a much higher oil price to make money, but how excited will markets get if oil prices stay at current levels?

Over the past year, lots of insider buying. Cheap valuation, however other energy producers to invest in. Would watch company. Could be better options within energy. 

Trading under 3x operating cash flow and 15x free cash flow yield. They were always a big Bakkan player, but grew by acquisition then diluted too many, but recent years are focussing much more. This is nothing like the Crescent Point Energy of old. It's more focussed and productive and trading at a low valuation.

Company solving 3rd party challenges. Excellent recent well results. Very good Montney and Duvernay acreage. Recent sale of infrastructure good for balance sheet. Excellent cash flow, with strong inventory. Excellent CEO. Has been buying shares lately. 

Down, but he's buying as much as he can. He would have named it a Top Pick if he could. Mountain of selling the past few days, but he can't see any fundamental problems. 18% free cashflow yield.

Management reiterates it's done with M&A, laser focused on paying down debt and returning capital to shareholders.

Better opportunities elsewhere. More risk. If you own it, it's a hold, but don't add.

Significant weight for him. 20 years of inventory. Now has strategic positions in 2 of the best plays of inventory depth. Lowering costs. Super-strong balance sheet. No inventory challenges. Conservative management. Potential upside of 82%.

Classic oil producer chart. Broke out, pulled back to the neckline. Have to see if neckline holds, that would be good. If breaks down below $11 or so, expect it to return to the bottom of the range. He's not making any predictions.