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COMMENT
Market Outlook The market has had a tough go over the past five years. He thinks, there has been a back room agreement between the Saudis and Trump to keep oil prices lows. A surge in OPEC supply and Trump issuing Iranian waivers have been examples of this. He thinks demand growth is understated, growing at 1.4 million barrels per day, combined with supply cuts in OPEC, other countries and now Alberta will help balance the market. There are a hand-full of companies benefiting from wide differentials, and thinks one oil trader earned a $9 million bonus for helping keep differentials wide. These companies are integrated companies that hold refining assets and strong trading desks.
Eric NuttallUnknown
BUY
He has been a buyer of this in recent weeks -- along with senior management. The tax loss selling going on right now is the greatest in years. He thinks this will end soon and there should be a bounce back up in the stock price. If you are bullish on oil prices, this has at least a 50% upside potential.
Eric NuttallOwned
oilgas
BUY
Management just released their guidance and indicated they are generating positive cash flows and indicating over 85% of their production is not impacted by wide differentials. Management has always delivered. The stock trades at 4.5 times cash flow, where it historically traded at 8 times. He thinks you could make 40-50% on this. Yield 6%.
oilgas
WATCH
Is the dividend safe? He has not owned this for years, due to the high premium it trades at because of the dividend. It still trades at a premium. He struggles to understand how they can pay the dividend without taking on debt. Another 6 months of low oil prices could jeopardize the dividend. Yield 9%
oilgas
COMMENT
Do you like the MEG - HSE merger? He has been a supporter of tightening heavy differentials. He no longer holds MEG-T and regets it -- because it really is a high torque heavy oil company. The street does not think HSE-T will have to increase the bid to buy them. If you hold MEG-T you are essentially holding HSE-T now. He thinks there are better companies to invest in to maximize your exposure to heavy oil improving.
oilgas
COMMENT
Do you like the MEG - HSE merger? He has been a supporter of tightening heavy differentials. He no longer holds MEG-T and regets it -- because it really is a high torque heavy oil company. The street does not think HSE-T will have to increase the bid to buy them. If you hold MEG-T you are essentially holding HSE-T now. He thinks there are better companies to invest in to maximize your exposure to heavy oil improving.
oilgas
PAST TOP PICK
(A Top Pick Jan 05/18, Down 69%) He sold out of this when it became apparent oil prices were not going to finish above $70 per barrel by year end. He sold this at $4.25. They announced last week a divestiture making them debt free and it trades below book value. They have bought back 10% of their shares. When the outlook for spending improves it will be back on his radar.
oilgas field services
PAST TOP PICK
(A Top Pick Jan 05/18, Down 82%) He sold out of this when it became apparent oil prices were not going to finish above $70 per barrel by year end. A pure pressure-pumper play. With a lack of interest in the service sector, he got out above $10. He does not like their pricing structure and does not support management's aggressive pricing strategy.
Energy
PAST TOP PICK
(A Top Pick Jan 05/18, Down 86%) He sold out of this when it became apparent oil prices were not going to finish above $70 per barrel by year end. He sold out around $6.50. Demand for frac-sand is down and their is greater competition in the US. Spending plans have declined in Canada as well. He is not holding this right now.
Energy
COMMENT
Your mutual fund? His Energy fund that he manages is ticker NPP006. It is one of the few remaining mutual funds for energy with 65%/35% split US versus Canada. It is actively managed looking at heavy differentials. It has $130 million in assets.
Eric NuttallOwned
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