Frac sand. Sees a very, very bullish underlying thesis, combined with a market that just isn’t seeing it, so stocks have sold off by 40%-70%. Of the frac sand companies, this one sold off the most because 1) they have more financial debt than the others and 2) there is a growing narrative that there will be growth in supply in Texas. As 75% of the cost of sand is transportation, there is a fear that supply growth in Texas will displace those deposits that are further away. He feels demand growth will exceed supply growth, so the market will remain tight. (See Top Picks.)

If you want to be in Canada, and want a very small cap and uber leverage to the oil price, this is a pretty good pick. They did a royalty deal on their oil sands project, which was nothing short of genius. Payments don’t start until oil exceed something like $70-$75. Their total cash/cost break-evens are around $44. If you are a believer in $65-$70 oil, this stock could really, really work. If you are a believer that we are stuck in a $50-$60 range for the next year, there are better areas to be in.

A fine company, but not one of his favourite US producers. It has a little more debt than the average company on consensus for next year, which would be higher than strip oil prices. Debt would be about 2.6X, while the average in the Permian is 1.2X. Well results have been improving steadily over the past couple of years, as they have been using more frac sand with better results. He has been warming up to the name.

Feels US names will outperform Canadian names, which have impediments such as socialist governments in Alberta and British Columbia, a prime minister that wants to shut down oil sands because of lack of pipeline to take away both oil and gas, and a Supreme Court that is not oil friendly. Management is great and the balance sheet is okay. They have deep inventory and fast payback, but fails to see how Canada in the aggregate will outperform the US names.

Hasn’t held this for about 2 years. If bullish on Canadian gas, this is not a bad name. They’ve suffered from an equity issuance they did earlier this year, where they diluted the shareholder base by about 58%. That was to get more drilling depth acreage, more contiguous where they can draw longer laterals. Trading inexpensively relative to its inventory depth, but there is a lack of a lot of pipeline, and thinks it will continue to sell at a disconnect. There are better names in the US.

(A Top Pick July 29/16. Down 32.42%.) Management has always been underappreciated. They’ve done a really good job in building an asset base, and most importantly, paying down debt. Have a fairly good 5-year growth plan.

(A Top Pick July 29/16. Down 42.97%.) If you believe in $55 oil, $9 would be a very reasonable price for the stock. The company just did an acquisition which was not very well received. Selling at really cheap levels.