Opinions by Eric Nuttall | StockChase
1278
Eric Nuttall

Senior Portfolio Manager

ON STOCKCHASE SINCE Mar 2010

Ninepoint Partners

1278
Eric Nuttall

Senior Portfolio Manager

ON STOCKCHASE SINCE Mar 2010

Ninepoint Partners


Opinions by Eric Nuttall


Signal Opinion Expert Chart
N/A
General Market Comment 

November 15, 2017

Energy. He made the decision to leverage up earlier this year and buy some oil stocks, on the belief that the macro for oil was and is continuing to improve with the continued drawdown in the oil glut. With the passage in time due to strong demand growth, compliance by OPEC and by faltering US production growth, means inventories will draw, and would normalize towards a more normal oil market. At the end of October, the OEC inventory glut fell by 60% and should continue. Oil is up on the year, and yet his fund is still down 38%, a huge disconnect between the commodity price and stocks. This is because energy has been the worst performing sector on the planet. There is an OPEC meeting on the 30th and an element of uncertainty as to whether the agreement will be extended to the end of 2018. Oil is up 2 days ago, making a two-year high. Inventories are falling at the fastest pace in history. He is hoping that in the next couple of weeks buyers will come back, recognizing the opportunities that are available.

Energy. He made the decision to leverage up earlier this year and buy some oil stocks, on the belief that the macro for oil was and is continuing to improve with the continued drawdown in the oil glut. With the passage in time due to strong demand growth, compliance by OPEC and by faltering US production growth, means inventories will draw, and would normalize towards a more normal oil market. At the end of October, the OEC inventory glut fell by 60% and should continue. Oil is up on the year, and yet his fund is still down 38%, a huge disconnect between the commodity price and stocks. This is because energy has been the worst performing sector on the planet. There is an OPEC meeting on the 30th and an element of uncertainty as to whether the agreement will be extended to the end of 2018. Oil is up 2 days ago, making a two-year high. Inventories are falling at the fastest pace in history. He is hoping that in the next couple of weeks buyers will come back, recognizing the opportunities that are available.

Unknown
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$0.020
Owned Owned
_N/A

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COMMENT

A heavy oil producer, primarily in the oil sands. Their leverage to the oil price is higher than others. It’s one of the high beta names that people typically trade around, as opposed to investing in.

oil/gas

A heavy oil producer, primarily in the oil sands. Their leverage to the oil price is higher than others. It’s one of the high beta names that people typically trade around, as opposed to investing in.

oil/gas
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$1.170
Owned Owned
No

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PAST TOP PICK
Birchcliff Energy Ltd.(BIR-T) 

November 15, 2017

(A Top Pick Oct 7/16. Down 45%.) The only natural gas name he owns. He gets excited when sentiment gets so universally bearish, and worst-case expectations get built into the stock price. He finds this name attractive.

oil/gas

(A Top Pick Oct 7/16. Down 45%.) The only natural gas name he owns. He gets excited when sentiment gets so universally bearish, and worst-case expectations get built into the stock price. He finds this name attractive.

oil/gas
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$5.030
Owned Owned
Yes

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HOLD

The hang-up on this is debt. That’s been restraining their ability to grow. He was optimistic that they may be able to monetize their Russian or south American operations, or even their US operations in order to pay down debt. Unless they are able to monetize their US operations, he can’t see how they will get a re-rating of the story. If you own it, he would just let it ride, as the backdrop in pressure pumping is very strong in Canada.

oil/gas field services

The hang-up on this is debt. That’s been restraining their ability to grow. He was optimistic that they may be able to monetize their Russian or south American operations, or even their US operations in order to pay down debt. Unless they are able to monetize their US operations, he can’t see how they will get a re-rating of the story. If you own it, he would just let it ride, as the backdrop in pressure pumping is very strong in Canada.

oil/gas field services
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$5.640
Owned Owned
No

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TOP PICK
C & J Energy Services(CJ-N) 

November 15, 2017

A US pressure pumper with ancillary services trading at about 4.5X next year’s EBITDA. The frac market in the US is tight, and will remain tight throughout all of next year. These companies will be able to push through more price increases. A good way to gain exposure to US pressure pumpers. (Analysts’ price target is $39.)

Energy Infrastructure, Industrials & Utilities

A US pressure pumper with ancillary services trading at about 4.5X next year’s EBITDA. The frac market in the US is tight, and will remain tight throughout all of next year. These companies will be able to push through more price increases. A good way to gain exposure to US pressure pumpers. (Analysts’ price target is $39.)

Energy Infrastructure, Industrials & Utilities
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$29.350
Owned Owned
Yes

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PAST TOP PICK
Cardinal Energy Ltd(CJ-T) 

November 15, 2017

(A Top Pick Oct 7/16. Down 44%.) One of the few Canadian names he has actually added to recently. Oil is down about 1%, while this name is down 57%. Over that time period, they did an acquisition. The balance sheet has always been pretty good. Yielding 8.9%, which is sustainable.

oil/gas

(A Top Pick Oct 7/16. Down 44%.) One of the few Canadian names he has actually added to recently. Oil is down about 1%, while this name is down 57%. Over that time period, they did an acquisition. The balance sheet has always been pretty good. Yielding 8.9%, which is sustainable.

oil/gas
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$4.690
Owned Owned
Yes

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COMMENT

You have oil generally flattish in Cdn$ terms, but because of the total apathy towards the space, there has been a selloff in a lot of names. He can see the attraction of this, because it is trading at a 5X inner pipe to cash flow using strip. It used to trade 8X or 9X. If you look at what the assets should be valued at, you basically have cash cows that is funding their user (?) basin where they are getting some pretty good results. If you blacked out the basin, well results relative to well costs looks pretty good. This is undervalued relative to where oil is. Due to the management discount on it, he struggles to see how it would outperform long-term. 

oil/gas

You have oil generally flattish in Cdn$ terms, but because of the total apathy towards the space, there has been a selloff in a lot of names. He can see the attraction of this, because it is trading at a 5X inner pipe to cash flow using strip. It used to trade 8X or 9X. If you look at what the assets should be valued at, you basically have cash cows that is funding their user (?) basin where they are getting some pretty good results. If you blacked out the basin, well results relative to well costs looks pretty good. This is undervalued relative to where oil is. Due to the management discount on it, he struggles to see how it would outperform long-term. 

oil/gas
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$9.630
Owned Owned
Unknown

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DON'T BUY
Crew Energy Inc.(CR-T) 

November 15, 2017

Not one of his favourite ways to gain exposure to gas. They have slightly higher average than their peer group to ECO pricing. You are basically getting no production for the next year because they shelved one of their main infrastructure projects.

oil/gas

Not one of his favourite ways to gain exposure to gas. They have slightly higher average than their peer group to ECO pricing. You are basically getting no production for the next year because they shelved one of their main infrastructure projects.

oil/gas
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$3.980
Owned Owned
No

Must be logged in to use chart
PAST TOP PICK

(A Top Pick Oct 7/16. Up 19%.) This was acquired by Trican.

oil/gas field services

(A Top Pick Oct 7/16. Up 19%.) This was acquired by Trican.

oil/gas field services
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$6.660
Owned Owned
No

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DON'T BUY
Granite Oil Corp(GXO-T) 

November 15, 2017

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.

oil/gas

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.

oil/gas
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$3.030
Owned Owned
No

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SELL
Husky Energy(HSE-T) 

November 15, 2017

Sell? The consensus is $17.50, an 8% upside, versus a large cap peer average of 15%. He doesn’t know what is exciting on the story, and would Sell and move on.

oil/gas

Sell? The consensus is $17.50, an 8% upside, versus a large cap peer average of 15%. He doesn’t know what is exciting on the story, and would Sell and move on.

oil/gas
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$15.880
Owned Owned
No

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COMMENT
Kelt Exploration(KEL-T) 

November 15, 2017

Has a management team he can’t speak highly enough about. They’ve created a tremendous amount of value. There is not a great enough rate of change to be able to justify it on a cash flow basis, you have to take more of an asset approach. They are still in the learning curve of delineating their acreage. Well results this year have been very good. Due to where they are drilling, they are getting more liquids and less natural gas. However, you are paying a bit of a premium relative to some of their peers. He finds other names a little more attractive.

oil/gas

Has a management team he can’t speak highly enough about. They’ve created a tremendous amount of value. There is not a great enough rate of change to be able to justify it on a cash flow basis, you have to take more of an asset approach. They are still in the learning curve of delineating their acreage. Well results this year have been very good. Due to where they are drilling, they are getting more liquids and less natural gas. However, you are paying a bit of a premium relative to some of their peers. He finds other names a little more attractive.

oil/gas
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$7.050
Owned Owned
No

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COMMENT
Precision Drilling(PD-T) 

November 15, 2017

Very bullish on the surface sector in general, but less so towards drillers. Trends over the past couple of years have been getting more efficient. While it’s benefited the pressure pumpers, it works against the drillers because it is taking fewer days to drill a well. Overall demand for rigs has been falling. There is still too much equipment available. 

oil/gas field services

Very bullish on the surface sector in general, but less so towards drillers. Trends over the past couple of years have been getting more efficient. While it’s benefited the pressure pumpers, it works against the drillers because it is taking fewer days to drill a well. Overall demand for rigs has been falling. There is still too much equipment available. 

oil/gas field services
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$3.510
Owned Owned
No

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TOP PICK

A provider of sand, but thinks of them more as a logistics company. That’s their competitive edge. Very strong barriers to entry. They are fully integrated from the mine right to the well site. Looking at the frac sand dynamics in Canada, Canadian companies are lower down in the learning curve in their adoption of using more and more sand on a per well basis. The dynamic for sand, where you have got our sand market probably growing by 50% a year, this company has 60% market in Canada. (Analysts’ price target is $14.)

Energy

A provider of sand, but thinks of them more as a logistics company. That’s their competitive edge. Very strong barriers to entry. They are fully integrated from the mine right to the well site. Looking at the frac sand dynamics in Canada, Canadian companies are lower down in the learning curve in their adoption of using more and more sand on a per well basis. The dynamic for sand, where you have got our sand market probably growing by 50% a year, this company has 60% market in Canada. (Analysts’ price target is $14.)

Energy
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$9.580
Owned Owned
Yes

Must be logged in to use chart
COMMENT
U. S. Silica Holdings(SLCA-N) 

November 15, 2017

EPS has gone from negative to positive, but the stock is still lagging. The market concern isn’t around today, but about next year. The demand for frac sand is growing hyperbolically because there has generally been a strong relationship between using more proppants on a well that you frac and getting better results. Texas has not been an area of sand production, and due to transportation being 65%-70% of the overall sand costs, there is a financial motivation to try to find local sand sources. The concern has been that there will be too much supply being built in Texas, that will crush the price of 100 mesh and will trickle down reducing the price to $40.70. He is very bullish on frac sand but has taken his weight down because of the bogeyman of too much supply for the next couple of quarters, so they may lag. (See Top Picks.)

EPS has gone from negative to positive, but the stock is still lagging. The market concern isn’t around today, but about next year. The demand for frac sand is growing hyperbolically because there has generally been a strong relationship between using more proppants on a well that you frac and getting better results. Texas has not been an area of sand production, and due to transportation being 65%-70% of the overall sand costs, there is a financial motivation to try to find local sand sources. The concern has been that there will be too much supply being built in Texas, that will crush the price of 100 mesh and will trickle down reducing the price to $40.70. He is very bullish on frac sand but has taken his weight down because of the bogeyman of too much supply for the next couple of quarters, so they may lag. (See Top Picks.)

0
Eric Nuttall

Senior Portfolio Manager, Ninepoint Partners...

PricePrice
$32.810
Owned Owned
Unknown

Must be logged in to use chart
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6 Comments

petersirie

December 17th 2012 at 3:46pm

Keep up the quality commentary please. I have really appreciated your insight.

boblewellyn@yah

March 16th 2013 at 4:50pm

There is a report that Petrobakken has started a gas injection program that has substantially increased their production and reserves. Stock closed at $9.50 on Friday, March 15, 2013, probably because of this report.

car2nz

April 10th 2014 at 12:12pm

When Eric says BUY...You should be SELLING ...When he says Sell...You should be BUYING. He is consistently WRONG! It's amazing!

BeauRegard

April 21st 2014 at 12:36pm

Not the sharpest knife in the drawer!

CH-Investments

April 26th 2014 at 7:04am

Not a fan of all his picks but some of them have great potential to generate a large profit. Have found a number of decent picks here and have done my own analysis which has made me operate at a decent profit.

3clicks

June 1st 2016 at 6:35am

I like Eric for his overall market commentaries. But gotta be cautious with his picks although BTE was a great advice.


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