News 
Market Data 
Discover
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Some charts from Eric Nuttal...
...he posted on Twitter. Follow him for Canadian oil investing but note he is biased to upside of course. Maybe a month old but his is why I added to MEG.TO and BTE.TO as they had most upside.
Note: you can buy Baytex on the NYSE too as BTE.
Format not great as screenshots from my ipad while on Twitter but these last two posts are the posts of the year on this board!
Sorry for not letting everyone know my big trade but I have been absolutely buried in work since September.
Eric Nuttall & Canada O&G Again (@Tim Lamb)
It is a bit tricky to find since Bloomberg bought BNN but if you go to April 3rd Market Call you'll find Eric's segment:
Market Call
Two of his top picks, similar to when he was on last December are Crecent Point (CPG/CPG.TO) and MEG Energy (MEG).
Here are my notes! I'm thinking of swinging for the fence with some of Eric's top picks sometime in April as think we'll get another bottom before any coordinated global production cut. The comparison here is December 22, 2008, which was, prior to 2020, the biggest one-day increase in oil prices in history, but, if you look at a long term brent chart, there was a secondary bottom in early 2009
Source is 3/4 way down this page
Eric's Call:
- Demand drop of 25mbbl/day is largest in history by order of - magnitude.
- We're set in 2020 to have a strong year of oil pricing as offshore production was set to begin a terminal decline due to under investments and that is 1-in-4 global barrels produced.
- Every oil company in the world is bankrupt at this cost. Not sustainable.
- He thinks shut-ins and curtailments the market reacts with will “blow people’s mind’s”. My interpretation is that we won’t cut 25 mmbl/day (which is current demand shock) but we will cut a lot.
- Canada’s base decline rate is 24-25%. This is one of lowest and reason why Eric is 100% invested in Canadian producers now.
- TORC – doesn’t have a large enough hedge book for him to buy now, but will be fine.
- “The best have fallen as much as the junk” Only need to buy the quality
- Enerplus – has 50% of production hedged for 2020. 20% at $57. 22% at $11 premium to WTI. 0.2X Debt to cash flow at WTI $50 so balance sheet is rock solid here. See very meaningful upside.
- At start of 2020, Canadian stocks were already valued at some of cheapest multiples in history.
- Sounds like a US fund bought 20 million shares of XEG (ishares Canadian oil producers ETF). Eric’s names will do better though. He has a history of doing this.
- Whitecap has had a bunch of insider buying in last couple weeks per a caller.
- Caller on Suncor. Suncor is burning cash and should cut most of dividend. Has liquidity to get through next year and half. Thinks you can do way better on other names. Cash burn is $4.1Bn at WTI $30.
- Baytex is down at $0.40! He sold it on the way down. They are 48% hedged. They are only drawn 15% on their bank lines and they did a big refinancing right before Covid broke. No reason to own now. Can buy names with better balance sheets.
- Crescent Point Energy (I bought $5k worth today): Still a core holding. 10% of his fund in it this one stock. Rock solid balance sheet monetized assets late 2019. Hedged very aggressively at $60 WTI. 17-18% of oil hedged at $WTI 54. 38% gets a $10 premium to WTI. At WTI $25 oil they will only cash burn $100 million dollars That is Debt to cash flow of 3.7X at WTI $25. Have $2B of liquidity on credit line. They will survive.
- MEG Energy Top Pick – 2/3 of volumes to be shipped by rail in a couple months to gulf coast. 55$ hdge at $59 WTI. Would have generated $700mm of free cash. Top takeout Target in Canada. High Quality asset base.
- Nuvista NVA Top Pick – 34% hedged at $C 76/bbl. 24% of liquids stream gets a premium to WTI. They raised $600m in August 2018 and now market cap is $150mm! They can survive the storm and rerate should be “incredible”. This is Eric’s Biggest Position.
- Cenovus Top Pick – Cash burn at $30 oil is 1l1bn on 4Bn of liquidity. This is the only large cap Eric owns and it should be a multi bagger.
**Charts of Top CDN O&G Buys**
Here are my tracking charts for the top buys, in the same order as presented in my previous notes.
Crescent Point Energy (Top BNN Pick) CPG.TO
Tourmaline (Top BNN Pick) TOU.TO
Baytex (Top Pick) BTE.TO
MEG Energy MEG.TO
TORC Oil & Gas TOG.TO
Painted Pony PONY.TO
Whitecap WCP.TO
(Note - upon pasting this and looking at support line again I sold and am rotating into a more downtrodden name)
ARC Resources ARX.TO
(Blue Chip Natural Gas Name and has been bid up accordingly)
Birchcliff Energy BIR.TO
Peyto PEY.TO
The Junior Energy board is designed to highlight undervalued junior energy stocks. Commodity prices are going to be volatile and difficult to predict even though the fundamentals point towards higher prices. To help offset the volatility in prices, we are looking for strong increases in production and low price to cashflow or p/e ratios.
Uranium stocks are more difficult to handicap because there are so few producing companies and even fewer profitable companies. To help narrow the search, we will focus on near term producers that have defined deposits and have goals to produce uranium within the next three years.
Many energy stocks are listed in Canada. That is especially true of uranium explorers. However we will discuss any stock that can be traded in the US and Canada thru direct listing or a pink sheet alternative.
Bobwins
Favorite oil plays:
Sundance Energy Australia Limited SEA.ax/SDCJF.pk
S.O 276.7 M
Sundance has assembled 115,450 net acres in various shale oil plays in the US. Their holdings are focused in the Bakken and Niobrara. Company philosophy is to buy the land early and cheap and then sell to bigger JV partners who pay a majority of the cost of drilling. This reduces risk and costs to Sundance. During 2011, Sundance and it's partners will be drilling up to 114 Bakken wells. Sundance exited 2010 around 1,000boepd and is forecasting a 2,000boepd exit rate for 2011. The Niobrara is the next big opportunity for Sundance. They have sold land to Noble Energy with a 3.7% ORRI and JV'd a small parcel with Halliburton. Right now they have a higher working interest in the remaining Niobrara acreage but could sell down more to reduce risk. Sundance also has another early shale oil play in the Atoka, which is in Colorado. May be some exploration by others in the area in 2011. Pawnee is a new area in Kansas/Oklahoma that Sundance has just entered. Sundance has a nice land package in several areas. Their mgmt is excellent and has been grown the company in a low risk way by selling land and working interest to lower cash requirements. As production is increasing, cashflow will provide much of the funds needed to drill and acquire land, reducing the need to issue shares.
http://www.sundanceenergy.com.au/ http://www.sundanceenergy.com.au/2011/03.07.11-SEA%20March%20Roadshow%20Presentation.pdf
Mart Resources MMT.v/MAUXF.pk
S.O 335.5 M F.D. 342M
Mart Resources is a Canadian producer working exclusively in Nigeria. They have been developing what Nigeria considers a marginal field,Umusadege. Umusadege production has grown significantly over the past two years as Mart drilled UM-6 and 7 in 2010 and each tested multiple zones with test results over 10,000bpd each. Each is producing in the 3,000 to 5,000bpd range with several zones behind pipe. UM-8 is being drilled in July 2011 and should be completed and producing by late 2011. Gross production for the field should move over 10,000bpd. Recently Mart has suffered from takeaway pipeline capacity problems. They had an outage in December 2010 when the pipeline was damaged in an explosion. That caused a shutdown for several weeks. Mart still got the revenue from the pipeline company and had to make it up during Q1 2011. With the new wells coming online, Mart has tried to arrange for more capacity. They had a preliminary agreement to boost takeaway capacity to 20,000bpd gross from AGIP, the pipeline operator. Recently they were told the fee for pipeline losses would jump from 1 to 1.5% to over 11%. Mart refused to pay and AGIP has restricted capacity back to the original agreement of around 8500bpd. Mart is negotiating with Shell to build a second pipeline but is at least 1 year away from having a second option. There is likely room for negotiation with AGIP but this takeaway capacity is a crucial near term issue for Mart. In addition to several more development wells at Umudasege, Mart is actively trying to secure additional marginal fields that Nigeria is putting up for bid.
Mart is an undervalued producer. The Nigerian location is a negative as well as the dependence on Umusadege field for all their production. However the production could grow to as much as 30,000bpd gross in 2012 so the company has near term upside. Mart is selling for around 2X fwd cashflow. However the pipeline issue could delay achieving the projected cashflow.
http://www.martresources.com/
Latest presentation from 2011 AGM:http://www.martresources.com/wp-content/uploads/2010/06/21/events/Mart-Resources-corporate-presentation_June24_updated-2.pdf
Saratoga Resources SROE.ob
S.O. 19.7 million
Saratoga Resources is a US based driller with significant acreage in the shallow Gulf of Mexico. Their acreage is in areas governed by the State of Louisiana versus the deeper Gulf waters governed by the Federal authorities. Saratoga got into cashflow problems and went into Chapter 11 bankruptcy to protect it's assets. The lenders wanted to dilute common shareholders out of the picture and take over the assets. Mgmt are big common shareholders and resisted the proposals and worked thru the court system. Two years later, Saratoga has paid off all vendors and has finally refinanced the old lenders. This should free them up to get better financing and aggressively drill out their near term prospects. Current production is around 2,850bpd with plans to increase production to 4,000bpd by the end of Q3.
Saratoga has a PV10 value of 1.3 billion using total resources and 438million using total reserves and 12/31/10 strip pricing. The current market cap is around 100million. Very undervalued versus resources. Cash has not been available for Saratoga to aggressively drill. The situation is improving with a recent financing giving Saratoga an expanded capex budget to pursue what they say is hundreds of drilling opportunities. They are focusing on oil heavy prospects but the majority of their reserves are gas. Saratoga has several deep Gulf prospects that they are seeking to JV. The recent refinance of their long term debt should allow them to negotiate from a stronger position. Many would be partners have been concerned about Saratoga's ability to finance their end of the deal.
http://www.saratogaresources.net/
Favorite gas play:
Favorite Oil Sand Plays:
Oil Sand Charts: http://investorshub.com/boards/read_msg.asp?message_id=21045182
PETROBANK ENERGY AND RESOURCES PBG.to PBEGF.PK
http://www.petrobank.com/
S.O. ~76million
F.D. ~89million(8.9million convertible+4 million options)
Southern Pacific Resources Corp. STP.v STPJF.PK
http://www.shpacific.com/
S.O. 41M
F.D. 55M
STP has 80% interest in 25 contiguous sections of oil sands.
If STP can deliver the increased new 43-101 resource estimate at 300-500 million barrels in early June, with only 55M shares fully diluted, it will be one of the cheapest oil sand resource companies in Canada.
Alberta Oil Sands(Platform Resource) AOS.v AOSDF.PK
http://www.platformresources.com/
S.O. 39.0 M
F.D. 42.5 M
PFM owns 40 sections (25,600) Acres of lease in Athabasca oil sands area in northeast Alberta. 23 sections have estimated an undiscovered resource of 1.15 billion barrel of initial bitumen
in place (IBIP). The other 17 sections are not explored.
Patch International PTCH.OB
http://www.patchenergy.com/s/Home.asp
F.D. 33.4M
PTCH own 75%-80% interests of oil sand leases, after spending the exploration capital.
Ft. McMurray Oil Sands Area
The Ft. McMurray Oil Sands Area oil sands leases consist of Dover/Ells (32 gross sections, 25.6 net sections) and Firebag (18 gross sections, 13.5 net sections).
PTCH claims to have 1.5 billion bbls bitumen in place (gross)
Muskwa Oil Sands Area
In townships 85/86 and ranges 24/25w4 the Corporation has 10 gross sections (7.5 net) of oil sands leases in the Muskwa area.
NORTH PEACE ENERGY (NPE.V NPCEF.PK)
http://www.northpec.com/
S.O. 26.3 M
F.D. 34.3 M
Approx 60,000 net (86,000 gross) acres of prospective oil sands leases in north central alberta
Initial results confirm the estimated discovered resource in the order of 2 to 3.1 billion barrels.
AI
