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Huge disappointment, not operationally but on the share price. Typifies an out-of-favour stock: Canadian mid-cap with hair on it. Last quarter had no hair, beat expectations, paid down debt, generated lots of free cash, bought back stock. Deep value, mispriced, too cheap to sell. He's waiting, but patience is being tested.
Tricky. Natural gas stocks have been on a tear the last few days, super hot, on fire. Extension of the Trump presidency. Certain investors are feeling FOMO if they don't own energy. Valuations are still compelling.
Thematically, he's bullish gas. Still exposed to weather, and though it's been warm up till now, there's a cold forecast. Gas can be volatile, so these names can be more volatile than oil. This name has lagged, and that could unwind. Doesn't love the variable dividend; instead, should be buying back stock. Good company, lots of inventory. But tactical timing is tricky.
Almost no interconnection. Main uses for oil are not for power generation. Natural gas and, long-term, nuclear tie into AI. The buildout of AI and data centres is real.
In the US, power demand was flat for 14 years; this is the first year with an incline. If demand in the US is expected to grow by 25% by 2040, where will the power come from? What about nuclear? Well, it makes a lot of sense, but you'd have to build 126 reactors, and that will be over decades. Wind and solar sources are not practical. That leaves natural gas.
Many people see nat gas as a bridge. But we're not bridging to anything; natural gas is going to carry the baseload for many years to come. That's why people are getting more bullish on it.
Remember to buy a sector when it looks terrible, not when it's up 80-90% ;)
Still likes it but not as much, as drilling is weaker than thought. Selloff in oil, drop in rig count. More efficient drilling ultimately means less work. Continues to de-lever. Everyone's excited about natural gas. Massive exposure to nat gas in Canada, which has better dynamics than US. About a 3.7% weight for him.
Huge disappointment, and management owns its mistakes. He's met with management and is comfortable with the status, but other investors are just done. Given current prices of oil and gas, trades at 13% free cashflow yield. Quality not impaired, but it will take time. He bought more shares.
One of his worst calls in 2024 backing this instead of SU. Downstream challenges continue. Negative EBITDA in a quarter matters. Sentiment is really bad toward these guys. Quality inventory. He sold for a tax loss, plans to come back when confident that downstream issues (refining, which is a low-margin business) are fixed.
He's bullish on nat gas, with the proviso that it depends on the weather (always the Achilles heel). Lots of positives: AI, data centres, US doubling LNG export capacity between now and 2030. Really good acquisition recently -- a natural fit, bringing down costs, hedged price of nat gas.
Trades at material discount to US peers. Several decades of inventory. Not as torquey as other names. Yield is 7.8%, happy to earn in his income fund and write calls on it.
It takes discipline to not take profits too early and let your winners ride if the thesis is still playing out. The investor did well to do that, not many can.
Believes his firm is still the second-largest shareholder. Continues to drill exceedingly great wells. Perception of an inventory challenge, but he doesn't agree. Likes the newish CEO a lot. Low growth, but lots of free cashflow. Speculation that POU will buy it out, but he never owns on M&A spec.
What the investor is really asking is whether anyone will ever care again about small-cap energy stocks? It sounds defeatist, but he's going to say no. Too many barriers to the small caps being relevant to the large institutions. They'll be feedstock for mid- or large-caps.
He owns a company that's getting 300-400% returns on its wells, yet no one cares. Stock's down 15-20%. His funds' relative performance this year has been less than he wanted because he had too much in even mid-cap exposure. When sentiment is challenged, all the focus remains on the large caps. Ongoing apathy.
Small-cap oil sands. He owns about 2M shares. Has done pretty well. After a tussle, Adam Waterous purchased 43% two days ago. What happens now? Waterous wants his own board installed, foreshadows a takeover for more shares. He anticipates he'll get the 50% of votes required, the Board will leave, and Eric will sell his shares at $10.90 early next year.
Pretty healthy yield of 6.9%, which is why most investors own it. Good exposure to economic wells in the Duvernay. You need a catalyst for investors to see your company in a different light. Daring to dream that oil gets to $80 in a year and a bit, share price should be ~$15.25.
Thinks it can work at $70 oil. Generates 10% FCF yield at $70 oil. Reached final debt targets, so all free cashflow should return to shareholders mostly in form of buybacks. Over the next 5 years, compounding effect should expand FCF yield from 10% to 20%. If oil goes to $80, you go from 14% FCF to 55%. Inventory depth would allow them to achieve this. Yield is 1.5%.
Update next week should allow for short covering or for $$ to come back into the name. Trades at material discount to peers.
Has become the go-to Canadian natural gas name, and for good reason. Attachie will add to its growth, and incremental FCF will result. Most FCF is being returned to shareholders. Several decades of inventory. Very conservative management and board. Very strong balance sheet.
Long-term exposure to rising natural gas prices. He's also bullish on its production of condensate. Yield is 2.5%.
On his radar, but liquidity in the stock is very poor. Float is too small to buy a large chunk of shares. Likes its focus on the Montney and the oil sands (a national treasure). Loves long-dated assets and their quality. Meaningful leverage to rising oil.