COMMENT
Oil. Expect there will be demand/destruction when gasoline in the US gets above $4. Currently at around $3.60 so there is a little ways to go. Thinks there is probably about a $15-$20 premium baked into the price of oil so a lot of hike in oil prices relates to geopolitical events and what is going on in Iran.
COMMENT
Does the $427 million sale of their non-core assets make the stock more attractive? Absolutely. Entire makeup of the company has changed dramatically over the last year. Increased their bank line and did a $900 million term debt offering, which took away the overhang of their convertible debenture.
HOLD
Likes to think of this as a capital destroyer. If you invested 5 years ago, you’ve lost 95% of your money. Has very distressed shallow gas assets in the Edmonton Sands play but they do have some fairly decent Cardium acreage and are slowly trying to migrate the portfolio development over to the oil side. Expect there will be a positive sale over the next few months.
DON'T BUY
Recently issued a press release in terms of their year end reserves. Looked at operating net backs and the findings/development costs and the recycle ratio of about 1.1X did not make a significant value maker. There are better places to be.
HOLD
Exclusively focused in the North Sea and the company is projecting 20,000 barrels a day by the end of 2013. There is an offer out for this one and he thinks they are soliciting bids from other parties. Expect the company will be sold in the range of $3.25-$3.50.
BUY
Looking at this one closely because he sees a lot of growth in the tank business. Expect that by the end of 2012 they will have 400 tanks in service and about 75% directed towards oil activity and he can see continued legs in the business. Also have a very large and growing footprint in the US. Over time he can see competition but can still see an expected rate of growth going forward.
DON'T BUY
Has been paring back exposure to energy infrastructure in favour of more growth oriented E&P names. Feels dividend is stable on this one but wouldn't expect dividend increases over time. An uncertainty here is the re-contracting business on Alliance that is going to take place in 2015.
COMMENT
Doesn't like the fundamentals of gas. Feels gas is going to stay range bound in the $2.50-$3 range. In spite of this, this company has great cost structure, fantastic balance sheet and good management.
COMMENT
He feels that if the stock gets over $60, it will be fully valued. You are paying for the producing assets as well as a lot for the un-drilled, un-booked inventory that they have. However, over an extended period of time, this company stands out as one of the best allocators of capital.
BUY
This one has been a top pick out his for a long time and remains one of his favourite names because of the oil focus, the asset base and what the company is doing.
BUY
Canadian Natural Resources (CNQ-T) or Suncor (SU-T)? He is traditionally underweight large index names. His sweet spot is intermediates and small-caps. However this one would be the exception.
COMMENT
Canadian Natural Resources (CNQ-T) or Suncor (SU-T)? He is traditionally underweight large index names. His sweet spot is intermediates and small-caps however this would be a candidate for addition.
TOP PICK
Have about 10,500 barrels a day of production. Very low decline rate. Real anchor of production is the Valhalla/Montney oil pool where they have recovered about 12% of the oil to date which has a very low decline profile. Ultimately should be able to recover up to 40% of the oil. Also acquired Compass, a Kindersley area company of Saskatchewan. Good success in drilling up Pembina/Cardium.
TOP PICK
Significant and mostly contiguous land position in the Swan Hills play in Alberta. Very heated, light oil play that is getting a lot of attention in the market. Of the 130 sectors they have, probably 100 are light oil.
TOP PICK
Oil weighted towards the Brent crude pricing, which is in the $125 plus range. About 60% of their production gets that higher price. Has an excellent suite of opportunities in Canada. Their drilling in the Pembina/Cardium is amongst the best. Their initial production rate is about 300 barrels a day and is very economic.