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Stock Opinions by Joanne A. Hruska, CFA

COMMENT
Producers are already saying they are going to cut back their production. Capitalism usually finds a way to make it work, but would like to see if happen faster. We need to get a better price. Royalties and government revenues are going to be significantly down. This is not just an Alberta problem, but a Canadian problem. Albertans are very frustrated at lack of pipeline construction progress. If Bill C69 goes through in its current form, there will be few if any pipelines ever built again. Need more forward looking management and Boards in Canadian energy sector. She would like to see more 5 year strategic planning in the energy sector like you are currently seeing in other sectors.
Unknown
WAIT
They brought in a partner this summer to help develop the East Duvernay. They still have too much debt. She is watching it but not recommending it. Not everything is cheap in this sector, still have to selective.
Energy Infrastructure, Industrials & Utilities
HOLD
2 years out from now the stock should be significantly higher. They may struggle in the next quarter. They have low decline rates. Their main goal is to keep their dividend safe. If the oil differential continues longer term, then they may have to cut dividend, but it is safe in the near term. Yield = 14%
oil / gas
WAIT
They have cut back and preserved capital. They do not have a debt issue. They are a gas play. If gas prices stay strong, they should do well. She anticipates their 4th quarter production being lower. She is not buying it today, but the future looks good.
oil / gas
BUY
If you want more oilsands, less debt and more valuation, go with Suncor. CNQ is less oilsands, slightly more debt, and slightly less valuation. Both are on watch list. They will have tremendous free cash flows in the coming years as the oil differentials tighten. Both are low cost operators. Both are good buys, but would slightly prefer CNQ.
oil / gas
BUY
If you want more oilsands, less debt and more valuation, go with Suncor. CNQ is less oilsands, slightly more debt, and slightly less valuation. Both are on watch list. They will have tremendous free cash flows in the coming years as the oil differentials tighten. Both are low cost operators. Both are good buys, but would slightly prefer CNQ.
integrated oils
HOLD
She owns it but would consider it a hold and not an immediate buy. They are trying to sell some assets but may have some difficulty doing so. She expects some uncertainty in the coming quarters. She believes dividend should be fine. If they can’t sell their assets, may see a dividend cut, this is why it is a hold. Yield = 7%
oil / gas
DON'T BUY
Their debt level is too high for her right now. Debt levels are so important in a cyclical businesslike the energy space. They will be hurt by recent weakness in oil prices.
oil / gas
HOLD
They are not getting the benefit they should be. They have done a complete change in their strategy. Their stock price has held fairly steady over the last year. They are experiencing better numbers than a lot of the small to mid cap names. She thinks it will be considerably higher stock price in 2 years time.
oil / gas
WAIT
This is a long term, well run, mostly gas run company. When LNG Canada project production starts, it may not specifically benefit Arc, but it will take some of the natgas out of the current pipeline infrastructure, which would benefit Arc. It is on her watch list. She thinks they will be buying Arc in the future.
oil / gas
PAST TOP PICK
(A Top Pick Feb 02/18, Down 57%) She recommended it on the date of the announcement of the Baytex intent to acquire Raging River and sold on the announcement of the date of the takeover. Therefore, Raging River no longer exists.
Oil and Gas (Integrated Oils)
PAST TOP PICK
(A Top Pick Feb 02/18, Down 23%) Vermilion acquired Sparton so SPE is no longer listed. She acquired Vermilion stock on the acquisition. Vermillion is down about 20% since the acquisition. Still owns Vermilion stock.
oil / gas
PAST TOP PICK
(A Top Pick Feb 02/18, Down 34%) This is a light oil company. She is still buying at these levels. She thinks dividend is safe. She thinks it will improve when light oil differentials improve over the next few quarters.
Oil and Gas (Integrated Oils)
BUY
They are mainly gas focused. They are well capitalized and debt load is good. They are waiting for gas prices to improve and then will increase their production. She is continuing to purchase today.
oil / gas
WAIT
Debt is too high for them with the lower light oil prices. She has them on the watch list and likes them but too soon to purchase. Yield = 12%
oil / gas
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