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General Market Comment. He sees several bullish indicators for energy. There are many geopolitical uncertainties along with good fundamentals. The Iranian nuclear deal is complicated as to how it will actually impact barrels on the market. It may take 200-500,000 barrels per day off the market. He thinks oil is heading to over $80 US next year. Demand is strong and supply is not growing quickly enough. The number of big supply projects falls after next year both in the OECD, non-OECD and OPEC countries and this supply shortfall will persist for several years. Demand does not really get impacted until prices rise above $70. If you are bullish on oil, there is 50-100% of upside in the Canadian energy sector – don’t get too cute trying to pick the bottom.

US money flows into energy. He has had the right fundamental outlook – oil prices improving to over $60. However, energy stocks performed so purely against indices for so long that it made it a small percentage of index value and appeared too complex to large investors. Now that the Permian is facing similar pipeline constraints as Canada, the Canadian stocks are looking very cheap in comparison.

Canada Pension Plan is rumoured to have backed the management proposal against the proxy battle. However, the company has lingering frustration about historical investment decisions. He thinks there will eventually be some significant change within management.

This is one of the most liquid services company in Canada, which gives it a slight advantage in the space. Their recent quarterly earnings were on line. They have the best technology and this is leading to higher daily rents – double from the lows. Free cash flow is solid and this will help drop debt levels.

Their market cap is below a level to entice large investors. Money is coming into the sector from the US, but this is not a highly ranked one. It is trading at only 3 times cash flow based on $70 oil – normally it trades at 5-6 times.

This offers the highest torque of any energy stock to rising oil prices, so he likes owning this one. The one knock is that they have been a one trick pony in the Viking area with a decline rate of 40%. They acquired a lot of cheap acreage in the Duvernay region to help diversify. The question is, is the new play going to do well? The CEO has $120 million of his own money in this and the balance sheet is squeaky clean. He could see a 78% upside in value from here.

This offers the highest torque of any energy stock to rising oil prices, so he likes owning this one. The one knock is that they have been a one trick pony in the Viking area with a decline rate of 40%. They acquired a lot of cheap acreage in the Duvernay region to help diversify. The question is, is the new play going to do well? The CEO has $120 million of his own money in this and the balance sheet is squeaky clean. He could see a 78% upside in value from here.

This is a good way to benefit from Shell’s decision to go ahead with LNG at Kitimat. He would caution this is a short term trade as the real benefit will not likely come until 2023. A short term speculative buy.

This is one of the go to names for beta to oil. It only trades 4.1 times EBITDA and has over 130% of upside if WTI goes to $80. Their Eagleford results have been good, but not enough to move the needle. If you are bullish on oil, this is definitely a name to go with.

The perception of weak natural gas pricing has held this stock back. If they report weak Q1 earnings, it may not be until the fall that they will be able to prove themselves. He thinks there is better opportunity trading E&P companies. In the services sector he has picked other horses.

The financial leverage is too high and there is declining production per share. He would not own this. There are better names with a lot less risk.

He has said to buy it for the yield as he does not expect a high capital appreciation. Its yield has retreated to about 8%. It is trading 3.6 times EBITDA at $70 oil and could return to $10 per share. They have only moderate leverage towards higher discounted oil prices, unfortunately they have too little liquidity to attract large investors. Yield 8%.

He would not own this stock. They have too much operational risk. Their funding is dependent on asset sales and management is vague on where future value is going to come from.

They missed yet again on their guidance and senior management has been departing the company. They have achieved a lot, but have consistently over-promised and under-delivered.

This is a great way to play new LNG development. If you own it, ride it into the Shell decision to go ahead with LNG. With the right asset sale they could dramatically improve their debt-cash flow metrics, so that could make him more bullish eventually.