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GTE.TO/GTE
Filled at $C 0.50, closed at 0.53. Will post some thoughts this weekend!
Canadian Oil Producer Trade
Couple quick things:
- haven’t sold a single net share out of trade
- trying to buy GTE.TO at $C 0.50 this morning. Market caught on and likely not going any lower
- Eric Nuttal on bnnblommberg market call at 12pm EST today so watch that full segment over weekend.
- my holdings for mostly Alberta-SK focused oil producers are CPG.TO, MEG.TO, BTE.TO, TOG.TO/WCP merger, and ERF.TO
- my Alberta oil royalty holding is FRU.TO
- my NGLs-Condensate holding is NVA.TO and has barely budged so is a buy still
- my two Brent international TSX listed holdings are VET.TO and GTE.TO. Vermillion VET.TO is a diversified producer and got creamed along with rest of Canadian oil sector despite recieving brent pricing and strong gas pricing on Netherlands’ Groningen gas field on which the country is very dependent.
WCP.TO buys TOG.TO
I owned only TOG.TO....now I’ll own WCP. WCP set to be a serial acquirer in Northern oilpatch. This is their second acquisition in last few months,
Link
GTE.TO/GTE - buying more
Bought more GTE on US exchanges at +20% on the day. Think there is a ton of upside here still.
I’m currently selling about $C 15k of Kelt KEL.TO after looking a bit closer. They are like 60-70% nat gas production by boes now and guiding for production to drop about 15% next year. They made a huge disposition and are sitting on a lot of cash so market is waiting on them to make a move so aren’t participating in current rally really.
Plan is to roll this into GTE.TO tomorrow but going to wait a day as GTE historically pretty volatile. Have some orders in at $C 0.47 now which is around the low of the day from an hour ago I caught on the US exchanges.
GTE.TO/GTE +30% this morning
Good news keeps on coming! Gran Tierra issued a PR showing they aren’t going bankrupt next year and production was recovering back to pre-Covid levels and market realized GTE hadn’t really participated in sector rally and bid it up over 30% from where I purchased yesterday at $C 0.40.
Total fluke on timing as I was mostly looking for chart lagards but nice to see all my trades working out...especially as I bought GTE on margin.
Huesos....
...just you and me on the board! My twitter feed is lit up with Canadians loving Trican TCW.TO and I believe Eric Nuttall started adding Precision Drilling only in last couple months (PD.TO \ PDS). TCW.TO chart in beauty uptrend.
I scanned all my oil producer charts last night and this morning and literally just put in an order for GTE.TO / GTE who has been left for dead by chart. A lot of debt and shut in a ton of production but has barely budged with recent sector move so adding this one to my shoot for fence speculative cos like Baytex.
Order at $C 0.40 and waiting for a fill on GTE.TO. Once a darling, now written off. I like!
I scanned presentation quick and then searched for BNN but no one has really mentioned this company or pumped it since rally really kicked in during last few months.
CPG.TO/CPG **read all three of my posts**
Speak of the devil! Looked at CPG’s PR from Friday and here is the MASSIVE leverage inherent in CPG at these WTI levels (spot WTI is $46 as I write this).
“approximately $35 million of funds flow sensitivity for every US$1/bbl change in WTI”
“Excess cash flow of approximately $150 to $300 million expected in 2021 at US$45/bbl to US$50/bbl WTI with a target reinvestment ratio of less than 75 percent”
So if WTI goes up $5 and stays there CPG’s funds flow goes up by $150mm. That is about $30mm of funds flow per $1 WTI compared to their first comment.
(Didn’t check but remember CPG reports in USD so all numbers above are in USD. Welcome to the daily Canadian currency sense check!)
Friday News Release
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.
I’ve minted a small fortune so far....
...haven’t posted in a while but if you remember from Nov/Dec 2019 I put on a big Canadian O&G producer trade I sold out of a month later. That set the stage for buying a lot of the Canadian oil producers once the Covid bottom was in. I bought mostly gold producers out of Covid bottom but then caught the early summer O&G high and then have bought a huge position in last couple months leading up to huge rally in last 3 weeks.
I followed Eric Nuttall on BNN Bloomberg (Canada’s financial network) all year and basically bought his top 10 holdings and top picks which have changed a bit over the last 6 months. The low decline Canadian producer where at their cheapest valuations pretty much ever even after the bottom.
No brainer positions are CPG.TO/CPG, MEG.TO, FRU.TO (Canadian oil royalty play), and VET.TO which is the Canada small cap international play. VET.TO was a no brainer when I bought as maybe 20-30% of revenues is strategic Netherdlands Groningen natural gas where spot prices doubled and VET.TO hadn’t moved.
WCP.TO is now the ‘blue chip’ pure play small cap oil producer in Canada that institutions can buy. Carbon neutral as they inject C02 into old field I thought WCP was too pricey and had moved too high but it has almost doubled again in last two weeks. Shoot!
So anyways - I didn’t buy WCP.TO as I thought these smalller cap Canada Oil producers would have much more upside: TOG.TO, KEL.TO, ERF.TO and BTE.TO.
I think it makes sense to still buy ERF.TO as it had and still has lowest debt out of most oil producers in Canada (and North America). They were like 0.3X debt:CF a few months ago.
My ‘swing for fence’ bet is BTE.TO which is a Canadian Heavy Oil Producer with Way too much debt. All the comp sets were showing BTE would have most upside on a move from WTI $40 to WTI $60 though. It could still triple from here (back over $C 2.00 from 0.70 now) if WTI goes from $50 to $60.
Those all above are majority (>60% production) oil producers and my only gassy holding is NVA.TO which has a ton of liquids/condensate production and Eric Nuttal really likes for the long run. Condensate pricing will go up as Canada Oil Sands productiom comes back with higher prices. I actually bought this last week as chart looks set for a nice run.
Don’t buy WCP.TO after the double but the next most logical parking spot for funds is CPG.TO which you can buy on the US exchanges as CPG. 120,00 bopd producer and is higher cost so actually has huge leverage here. Eric Nuttal mentioned this a few times over the year, but with WTI at $50 CPG’s cash flow maybe doubled compared to WTI $40 and CPG can easily double again here if WTI goes to $60.
All the Canadian producers are lower decline and valuations were at generational lows over the last 15 months that I never looked at US producers.
Eric’s top holdings are here. Don’t own his two big gas holdings Arc and 7 Generations.
https://www.ninepoint.com/funds/ninepoint-energy-fund/
Now I should go look at oil service stocks!
Sold my SGI.V on +20% move today.
50,000 shares, +85% in 1.5 months. Had to sell everything today on the big move as technically it hit big resistance and should trade down to flat for a few months.
Put in my order at 1.50 and waited. If you followed me it makes sense to sell today. Orders above 1.45 hopefully filled.
Thanks to Bobwins for putting this on our radar so many years ago.
First instinct is that Mandalay still has some big upside from here.
See chart below for reason I had to sell on a 20% move in a day. Would buy back in the next month if SGI had a nice consolidation.
SGI.V at 1.05 now...
...hope everyone bought in the 80s. All the small little (often crappy) gold producers have finally broken out now. Still own some of them. ORV.TO, SAM.TO and lots of tiny junior explorcos too. This is what gave me confidence to go big into SGI for a trade. I will hold if SGI actually starts turning around in H2-20.
SGI.V - picked up 50,000 shares...
..over last three trading sessions from 0.81 to 0.86. Largest single gold position now.
Now at 0.90. Feels like it is primed for a good run here. Remember in my last post (linked back) that they guided that Q1-2020 will be their worst quarter. Those buying understand this, but Market should wake up to this perhaps when Q2 reported and we should be a lot higher.
Don't wait too long to follow as it feels like it will be over $1.00 this week.
Some decent posts over on ceo.ca/SGI board. Here is one on from a technical guy on the RSI coil that has been developing and how the price usually slingshots up and out of these. This started happenind as soon as the high grade drill results were reported.
CEO Pic
SGI.V Back In Great Drilling
They should be able to bring it into production soon, Indian and Baltic Zone have a lot of development and are close to each other.
56 g/t over 15m
They hit a lot of these high grade intercepts, see slide 36 below. 15m still really nice though. Cheap but cheap for a reason. Other reason I bought is on slide 13 below where they say Q1-20 was worst quarter of the year.
June 20 Pres
Good posts as always Checkmate and Lone Clone
I've weathered the downturn very well selling most of miners for streamers and some mid caps near the bottom, then rotating into trailing producers and then finally, rotating into mid and small cap Canadian oil producers which is a trade I've been in and out of since December.
Went 75% into cash early last week after gold miners topped and on day all my oil producers went expotential.
No big winners bit sitting pretty after the crash.
I have little inspiration left for gold sector after a big run. I'm looking at GORO, AR.TO, NGD.TO and OGC.TO to buy back in.
I'm really keen on canadian small and mid-cap oil producers becuase I don't think we'll see the negative sentiment that hit the oil sector when futures printed the negative $40 barrell WTI again for decades. I'm likely buying back even bigger positions in the sector over the next week at prices 15-20% below where I sold.
All my oil producers have these great defined channels. Upside still huge. World
Will not end because of Covid and we'll figure out how to turn around the 1/20
Cases that goes to hospitalization.
Will post something over on energy board soon.
SATF/SIM.V Conference Call Transcript
SA Transcript
Ernie44 Joke?
Did you listen to webcast? i just found the presentation on Edgar with the rejected $0.11 offer from the Malones.
Great webcast from Eric Nuttal.
I've been trading in and out of CPG.TO, ERF.TO, WCP.TO, MEG.TO, NVA.TO and TOG.TO.
LMK if you have any questions.
Planning on putting overnight long position on with most of these by the end of the week.
Webcast
If that doesn't work it can be found from front page of Ninepoint Partners LP.
It is about a month old from May 1
MND.TO was forgotten
But had a nice bull flag this week. Looked at buying some but didn’t. Still hold a bit just above $2.00 that has been underwater for years.
17, 18, 19 were a struggle for Mandalay but 2020 appears to be the year they turn it around. $C 184mm market cap now.
Here are Q1 results discussing the best quarter ever for Costerfield
https://www.mandalayresources.com/wp-content/uploads/2020/04/2020-04-13-MND_Press_Release_Q1_2020_Production_Sales_final.pdf
MND is guiding for 95-109 Au-eq oz in 2020. I have an older post here where CEO softly guides for production going to 120 in 21 and 130+ in 22 from combination of high grade Costerfield Youle vein and the Bjorkdal Aurora zone.
https://www.mandalayresources.com/wp-content/uploads/2020/05/2020-May-MND-IR-PPT_FINAL.pdf
See slide 12 above for size and future upside from Youle vein and slide 17 & 18 for how Aurora should lower costs at Bkordal over the next two years.
Apologies on iPad and can’t make the automated iHub URL links work above. I think there is 60% upside here even if gold flatlines over the next year because Mandalay has been forgotten. Blue Sky is that Costerfield is only 30km from the most famous High Grade mine in the world right now Fosterville. Slides in above presentation comparing sources of mineralization for both (hint: same!)
GORO and Covid 19
10 minutes of sleuthing.
Engligh translation of National Decress states that municipalities with low-to-no Covid-19 infections should open May 18.
Decree in English
Most of operations pretty remote up in mountains closet to El Gramal here. Still pretty accessible from la Ciudad de Oaxaca which I assume is the epicentre.
Oaxaca Mining Unit
Oaxaca State has a pretty low number of cases that but that is probably just testing as Veracruz is a hot spot (likely from tourism, plus more access to modern testing throughout province, not just in Oaxaca City I would guess in Oaxaca State)
Covid 19 by State May 10
GORO
Have a larger than comfortable position here because short term upside should be fantastic as soon as Mexico reopens mines. Gold miners have saved me in 2009 and out of the Covid bottom again in 2020. Market is forward looking and will look towards Isabella full ramp up here IMO
Other miner to buy this week is Oceanagold OGC.TO or OCANF. It always trails sector and just broke downtrend more or less in place since December 2018.
Alacer merged with SSR yesterday (have a near double now on Alacer out of covid bottom) and Gran Colombia merged with Guyana Goldfields (dog) and Gold X (former Sandspring).
Feels like lots of capital coming back into the sector like 2010 and 2011
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.
SIM.V/SYATF - notes from presentation today..
...Arlen at a US Microcap conference. Only incremental or important points to Siyata story:
- Recently two-way radio activations reached an all time low (didn’t catch more than that)
- Had never heard from Arlen before that Push-to-Talk is actually cheaper. Two way radio you still need to pay for bandwidth as an enterprise customer. Have to build your own towers, etc for you own network. It is simply not economic to build your own two-way radio network. Lower upfront costs (don’t need to invest in old two-way radio tower network), and lower opex as I guess you are piggybacking off existing cell tower infrastructure.
- They think the cell phone boosters will be a good market for the rest of the year. Seeing a flux of sales now from Covid 19. Also think that first responders will need boosters in rooms with low cell coverage in buildings for example.
- I asked a a question on 2020 sales and they have announced $8m of orders since Q4. It sounds like this $8m includes the large $3 to $5m government tender. 10-20% of $3-%4mm should be booked in Q1 and 80-90% booked in Q2 from $3 to $5 million in sales. (all those numbers are $CAD)
- No supply chain or logistics issues from Covid 19 so far. Commercial vehicle market will be on pause now unfortunately from Covid 19 as they are struggling.
This is what I am doing today.
Did relatively well in the sell off. I had quite a few gold miners that got wacked, but near the bottom I traded almost exclusively for SSL (Sanstorm), OR.TO (Osisko Royalties) and EQX.TO (Equionix) I also held quite a bit of these before the downturn. On both these positions I was back to par or 30-40% gains. Also got lucky as I was holding Semafo (SMF.TO) who Endeavour mining is acquiring. Announced this week.
So I traded all these positions today for these three stocks:
HMY Harmony - probably the +million ounce producer left with the most chart upside. Started at chart all day yesterday and didn't bit and market has bid it up 15-17% today but still a ton of upside left.
GORO - still sitting at the bottom of its chart! Strong buy! Bought a lot.
ASR.TO - Alacer. Out of the top-of-class single-mine miners on the TSX they simply have the most chart upside and a long reserve life still. Compare against KTN.V (K92) and you'll see more upside here. I also considered PRU.TO and TGZ.TO here, but they are technically intermediates with a portfolio of mines but are also arguable good byes.
Time will tell if these are trades or holds but value of gold has only gone up with the central banksters printing money for this crisis.
When the oil crisis is over the 'blue-chip' canadian oil producers will be the buy of the lifetime. Follow this over at the junior energy board. I'll revist the trade I put on (and took off) in January 2020. Trick here is to buy the lowest cost producers with lowest debt of course. No need to jump in here yet!
BSR.V Bluestone *New Pick, New Lundin Deal*
One of highest grade development projects in world, they are going to debt finance a huge chunk of otherwise small capex, lundin backed and current market cap is equal to free cash flow in year one of mine. Fully permitted and huge development spend done by Goldcorp. similar to K92!
HIghlights
- Goldcorp/Glamis invested over $230mm in project, acquired for $18mm and 1% NSR
- 3.5km of u/g development by GoldCop
- water treatment plant 'state of art for central america', office, settling ponds
- $60mm was invested in geothermal project to the east
- I've looked at this for work and Guatemala has a stable central bank, the best in Latin America, 1st world 1-2% like inflation. They don't print money. very busineess friendly.
- US $1500 Gold NPV is $392mm with a 1.6 year payback.
- Back in Denver (Sept 19) they were talking about a lot of project finance interest. There won't be full dilution here to finance the mine into production
- **most interesting** they got a pre-feasibility $30mm project financing package at LIBOR + 0.45%. No one else but a Lundin backed company can get that in the mining world!
- 940k oz of P&P reserves at 8.5 g/t
The only thing I can't figure out is --> Why did Goldcorp sell?
Here is the Sept 2019 Denver Presentation. Most important here is at 12:30 where they talk about the ability to upgrade inferred resources to indicated.
Denver Gold Presentation
This is the most important PR in the last couple months:
Jack Lundin + Debt
GGD.TO - Parral Tailings Humming + Los Ricos Prospect
GGD.TO GoGold finally has their Parral tailings project humming and has 5 consecutive quarters of growth after halving the tailing stack height from 10m to 5m.
Haven't looked at company in over a year but was is now enticing new shareholders is a 70M-100M Ag-eq oz open pit Los Ricos.
Sprott was a big buyer of a recent upsized $25mm financing and issued this report in tandem calling for SP target of CAD 1.10 vs. CAD 0.65 where GGD is trading today after a bit of a selloff from combination of the financing, ST Gold top and COVID-19 market selloff.
this is link from the GGD CEO Forum
If that link doesn't work you can go to around Jan 14 on the CEO forum:
https://ceo.ca/ggd
GGD.TO - Parral Tailing Humming + Los Ricos Prospect
GGD.TO GoGold finally has their Parral tailings project humming and has 5 consecutive quarters of growth after halving the tailing stack height from 10m to 5m.
Haven't looked at company in over a year but was is now enticing new shareholders is a 70M-100M Ag-eq oz open pit Los Ricos.
Sprott was a big buyer of a recent upsized $25mm financing and issued this report in tandem calling for SP target of CAD 1.10 vs. CAD 0.65 where GGD is trading today after a bit of a selloff from combination of the financing, ST Gold top and COVID-19 market selloff.
this is link from the GGD CEO Forum
If that link doesn't work you can go to around Jan 14 on the CEO forum:
https://ceo.ca/ggd
SGI.V - here is some DD
Denver webcast below for a starting point. Jump to 7:30. Late here and laptop batttery dying but will follow up with more next week.
Really, really cheap miner with stable future!
Webast - jump to 7:30
Here is the Q4-2019 Production Release that suggests they are turning things around, and, have a plan to start mixing in open pit material with the underground feed which is how they got the great production levels in 2017 and 2018. It appears the open feed a) is not in the 2020 80-90k Au oz guidance and b) is not in the 5 year underground plan for 75-90k oz/year @ AISC $1100 or less.
Q4-2019 production
It is important to watch the short Denver webcast above here as they spend 2019 in (underground) development mode and things will only start turning around in 2020
SGI.V - Bob are you buying again
Looks like worst is over for Superior and the long-term 5 year underground guidance ot 70-8k oz year at $1100 AISC may be a bit of a low ball production number to set expectations as guidance is 80-90k oz for 2020.
I think mixing in any open pit material or exploration success is the free upside here. See page 18 below on the Global project drill results.
In hindsight to 0.40s after the 5 year guidance release sell off was a steal.
As of Feb 19th per Page 8 SGI was trading at an USD EV of only $37mm per their presentation!
https://www.superior-gold.com/site/assets/files/2416/superior_gold_inc__-_bmo_february_2020_-_final.pdf
I will revisit this trade...
...too much work! I've sold out of everything now. No reason to hold any commodity-price exposed oil or gas producer for next few months with Covid-19 set to explode in several countries like it has China, Iran and S. Korea.
AECO Gas prices have not seen the sustained rebound everyone hoped for and have dropped down to CAD 1.50-1.75 area for last 30 days.
https://www.gasalberta.com/gas-market/market-prices
Sold out of CDN O&G producers
Will revisit trade again. Bottom was early November and top has been put in as sector has followed WTI prices down since new years. Will reenter trade but one chart of my holdings (BTE.TO) fell off cliff today on very low free cash flow guidance for 2020. Felt like my other holdings will follow suit. I have only two small holdings left and may exit them to try to give the trade another go when/if WTI puts a bottom in.
Canadian aECO gas holding steady around $2/GJ but gas stocks following oily producers down.
Article: $ flowing to Canadian O&G
**second of the weird duplicative posts below has my charts of top Canadian O&G picks**
Good article suggesting investors shunning the US shale model in favour of Canadian O&G.
I am literally hoping I am a month behind the bottom of a 5 year bear market.
Article
**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
**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
- Stock has bottomed for sure back in September (dr_airtime’s thoughts)
- Sold Midstream
- Doing buy backs
- Trading at 18% FCF yeirld for 2020 (this sounds like after the dividend)
- Trading at 2.7X EV/DACF. “Staggering” multiple per Eric.
- Can double just off multiple expansion.
- This is a go to name for institutions.
- $13 stock at 5X EV /DACF
- Operations in Southeast Sask so less exposed to depressed pricing from pipeline bottlenecks in Alberta
- Sold a property in Utah. Got a good price for the property.
- Team gets an A+ in 2019 per Eric. Should be rewarded
Tourmaline (Top BNN Pick) TOU.TO
- Normalized infrastructure for 9X EBITDA while trading at 3X EBITDA. Have $800mm in liquidiy now to have to acquisitions.
- Catalyst Rich .
- 10% FCF Yield for 2020 (sounds like after dividends)
- Mike Rose 6% of shares – 17mm shares. $240mm in value
- Buying because management is aligned with shareholders
- 3.3% yeild
- Pay a modest premium to liquidation value for the stock.
Baytex (Top Pick) BTE.TO
- +20% FCF Yield
- Underperformed Oil price by 60%, operationally no reason
- Plan is to use FCF to pay down debt
- 2021/2022 notes. Will roll in 2020 as high ye
- Trading at 1/3 of historical multiples
- Nice large Market Cap to attract institutions
- Has fallen off radar for people looking for oil beta
- 2.1X Debt/DACF, lower than Vermillion (top pick
- Eagle Ford is core play, results are better by 15-20% YoY.
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
Birchcliff Energy BIR.TO
Peyto PEY.TO
**Quick Summary of Top CDN O&G Buys**
This is a summary of Eric Nuttal’s 45 minute BNN Segment on Friday, somewhat rearranged so his best ideas are at the top (as well as names I have bought or am still buying today).
Key quotes on Canadian O&G sector:
“Midcap space is complete abandoned, I am buying quality names, with a lot of inventory, a rock solid Balance Sheet trading at 15-20% FRee Cash Flow (FCF) Yields”
“Best value in the world is Canadian Energy Stocks”
“Trading desks are seeing the energy tax loss selling bottoming 2 weeks ago” (explaining why O&G stocks have rallied)
“In Canada Energy sector is 18% of TSX, in US, it is 4.5% of S&P 500” (more likely that generalists in Canada will come into sector)
Crescent Point Energy (Top BNN Pick)
Eric’s Top Picks
Crescent Point Energy (Top BNN Pick) CPG.TO
- Stock has bottomed for sure back in September (dr_airtime’s thoughts)
- Sold Midstream
- Doing buy backs
- Trading at 18% FCF yeirld for 2020 (this sounds like after the dividend)
- Trading at 2.7X EV/DACF. “Staggering” multiple per Eric.
- Can double just off multiple expansion.
- This is a go to name for institutions.
- $13 stock at 5X EV /DACF
- Operations in Southeast Sask so less exposed to depressed pricing from pipeline bottlenecks in Alberta
- Sold a property in Utah. Got a good price for the property.
- Team gets an A+ in 2019 per Eric. Should be rewarded
Tourmaline (Top BNN Pick) TOU.TO
- Normalized infrastructure for 9X EBITDA while trading at 3X EBITDA. Have $800mm in liquidiy now to have to acquisitions.
- Catalyst Rich .
- 10% FCF Yield for 2020 (sounds like after dividends)
- Mike Rose 6% of shares – 17mm shares. $240mm in value
- Buying because management is aligned with shareholders
- 3.3% yeild
- Pay a modest premium to liquidation value for the stock.
Baytex (Top Pick) BTE.TO
- +20% FCF Yield
- Underperformed Oil price by 60%, operationally no reason
- Plan is to use FCF to pay down debt
- 2021/2022 notes. Will roll in 2020 as high ye
- Trading at 1/3 of historical multiples
- Nice large Market Cap to attract institutions
- Has fallen off radar for people looking for oil beta
- 2.1X Debt/DACF, lower than Vermillion (top pick
- Eagle Ford is core play, results are better by 15-20% YoY.
MEG Energy MEG.TO
- #1 M&A target in Canada
- Suncor is trading at a multiple and could used paper to acquire
- Imperial Oil getting really cash taxable in 20 and 21 and MEG has $8Bn of tax pools! Could make sense.
- Trading at a 29% FCF Yield for 2020!!!! @ %60 and 17.50 differential
- Highest quality pure play oil sand properties
- 4X Debt/DACF so higher but they can use huge FCF to reduce debt
- $9 gets MEG to 10% FCF yield but stock is at $7.50 now.
- Dr_airtime: thinks there is more short term upside in other names so buy them for now near historic sector lows.
TORC Oil & Gas TOG.TO
- Sub $1Bn Canadian Midcap
- Paying a 6.9% dividend yield sustainable to $48 WTI (USD)
- Debt/DACF is only 1X!!!!
- Trading at 3.7X EV/DACF
- Chart has barely moved.
Painted Pony PONY.TO
- Nuttal bullish on gas for first time in years for same reasons others have laid out (declining production, lowest storage all time now). AECO could potentially get squeezed to a premium
- A lot of companies have hedged away exposure.
- Painted Pony is mostly unhedged! This is the levered play. (Andre
- ARC, Tourmaline and Birchcliffe are what Nuttal would own
Whitecap WCP.TO
- For all stocks, the dividend is sustainable at $48-50 WTI (USD). At USD 58-60+
- Whitecap can pay dividend, have 10% FCF yield after that, and hold production flat.
- 6.6% yield
- Getting Proven and Probable reserves for free
- Trading below 1P (Producing) reserves
ARC Resources ARX.TO
- It may look like you have missed the rally when ARC is up 40% in a month but there is huge upside still.
- Truly assets are “Top Tier” per Eric Nuttal
- 1.2X Debt/DACF low debt great balance sheet
- Eric had names trading at 25% or 30% FCF yield
- ARC has top tier assets
- Great mgmt and alignment
- 7.5% DVD yield is sustainable
- Optionality on developing “attache” or “apache” asset.
Birchcliff Energy BIR.TO
- Eric bought 18% lower than it trades today
- 60% exposure to AECO, 80,000 boepd producer in Q30-19
- 4% dividend
- FCF Yeild of 12% (after dividend) 16% before.
- Would like to see higher inside ownership.
- Market Cap CAD 654mm, but debt of CAD 644mm and TTM Debt/Funds Flow for 2019 tracknig for 1.9X
- Lots of chart upside though
- Mostly Natural Gas so exposure to higher AECO price
Peyto PEY.TO
- Levered natural gas
- Eric bought at 2.75
- Eric thinks there are better names.
- If you are really bullish on AECO this is a good way to play it.
- Dr_airtime owns. Question from caller at end of call so short reponse from Eric.
Stocks Eric isn’t so bullish on.
KELT (KEL.TO)
- CEO owns $60mm of stock
- Will look to monetize in 2020
- Core asset at “Enga” getting 6 months payouts
- Value of asset to put up to sale, could match Market Cap of company today
- Eric not that keen on them. Too small I think. Buy mid-caps.
Vermillion VET.TO
- 13% yield right now, plus a huge short interest. Short interest 14%!
- Market thinks sustaining capital is higher than what mgmt. is guiding
- Scotia has dividend sustainability at WTI USD $52/bbl. Many think higher.
- Eric doesn’t like because CEO compensation is high (52% raise and underperformed index)
- Eric doesn’t own any stocks where there isn’t alignment with management compensation. He doesn’t own Vermillion
Athabasca Oil ATH.TO
- Highest leverage if you believe in $60+ oil
- Eric couldn’t buy any stock at $0.50
- Buyers and Sellers strike on stock now.
- Proxy Statement to
- 20% FCF Yeild
- BS is good
- Debt maturing that they have to roll
- One of the best if you are a bull on oil
- Dr_airtime’s notes: I just skimmed last press release and it reads like they are in trouble. Stay away.
Surge Energy SGY.TO
- Eric has no position
- Comfortable with other names
- Buy TORC or Whitecap instead.
Cenovus Energy
- Cenovus
- 250,000 bbls of incremental takeaway is added
- Crude by Rail is expanding. May hit 550,000 boped by end of 2019
- For a large Cap, C
- 13% Free Cash Flow yield, delveragind
- Debt will get below $5Bn in 2020
- Dislocation in value and window is narrowing so Eric thinks Cenovus is on the aquisition radar (i.e. Suncor)
Cardinal Energy
- Perception that they have high abandonment liability
- He would rather own other names
Crew Energy
- Market Cap too low for most
- Balacne sheet more levered than most are comfy with
- Don’t buy, buy others
Suncor
- I wouldn’t own Suncor. “Worst bear market in history anyone has ever seen”
- Suncor hasn’t really gone down. Go to the midcap space
I am pounding the table here.
Huge opportunity to buy Canadian mid-cap O&G stocks now. No risk with Juniors or anything. I am 15 minutes through this 45 minute session with Eric Nuttal (whiz kid of Canadian Energy investing) and he reiterates that in early November the whole sector sold off to all-time lows on a FCF Yield or dividend yield basis.
Will post full notes later.
Is anyone even following this?????
(Linke should generate a 45 minutes segment with Eric)
Eric on BNN
Canadian Oil & Gas Bottomed Early!
Bottom was in before tax loss selling lows. A lot of this was the new pipeline takeaway/injection regulation for the main Alberta gas gathering system (NovaGas) putting the bottom for Alberta Gas (AECO) at the start of November.
I've been looking for a month. These aren't microcaps but these are the names I have bought in the last 3 trading days. There may be a US listing for Husky. Combination of personal research, reading analyst report comps and presentations, and Keith Schaefer's O&G Newsletter for idea generation.
**Didn't post charts but they are all at 3 year lows. Canadian O&G is one of most hatest sectors in North American Stock Market...even worse than US O&G. Most stocks bottomed in early November because of the low put in for AECO gas prices then (see my previous post)**
Husky HSE.TO - 5% yield. Integrated heavy oil producer and refiner. Has big US refining segment that insulates it from low $CAD oil pricing (offset by higher margins at US refineris). Net Debt to TTM FFO at 30-Sep-19 was only 1.1X. FCF of CAD 500M in 2020 funds the CAD 500M dividend so capex is financed by debt, but FCF explodes to CAD 1.5Bn in 2021. I don't think you'll buy that 2021 FCF cheaper than now.
AAV.TO Advantage Oil & Gas - low cost gas producer (CAD 1.10/MCF) b/c they own 400 MMCF of gas processing capacity. Liquids rich Motney. Trading at 4.0X 2020 EV/DACF and 3.0X 2021 EV/DACF. Liquids is growing from 7% of production to >20% by 2021 which should double netback. Rest of production gas. 2020 Net Debt/DACF is 1.6X which is manageable. Currently produce around 45,000 boepd of gas. Story here is liquids growth from liquids rich Montey. No dividend.
TOU.TO - Tourmaline Oil. Gas growth story. Set to grow to Canada's largest gas producer for first time in 2020. Big producer. 300,000 boped in 2019 and 61,000 of that was higher netback liquids. ~4% dividend yield (CAD 0.48 annual divvy, paid quarterly)). **Bonus spin out of royalty and processing properties you will receive in early 2020. Like when Viper Energy Partners VNOM was spun out of Diamondback**. 1.4X Net Debt to TTM FFO at SEp-30-19. Like AAV.TO above they are going to grown liquids production, but more in the near term. Guiding for +20% liquids production growth in 2020. Trading around 4.0X 2020 EV/DACF now like a lot of the Canadian sector. I like Tourmaline the most as market isn't pricing in the likely free distribution of the new royalty company Topaz in 2020.
Topaz Energy Formed
WCP.TO - Whitecap Resources. Summary is: 72,000 boped in 2020 @ 85% oil; 1.5X 2020 Debt/FFO; 4.4X 2020 EV/FFO @ WTI USD 75/bbl; juicy 7.7% yield. Short summary launched here today. Couldn't find them on any comp sheet so all those numbers taken from presentation below.
SA Article from today
Whitecap Dec Presentation
PEY.TO - Peyto. Once the darling gas producer of the TSX, now fallen 90% from grace. Bigger gas producer at 85,000 boepd 2020. ~4.2X 2020 EV/DACF and still slated to grow production in 2020 and 2021. Has some of highest debt unfortunately (which is why it has fallen so far). GMP First Energy has Peyto at 3.1X 2020 EV/FFO. That being said, Peyto is one of the lowest cost producers because they own all their gas processing infrastructure.
I own these 5 only very recently but have been watching and researching for a month. A few overbought in the short term so there may be one last window to buy lower between now and December 27th.
TBX.V Website
Here it is. Google couldn't find and not in any news releases or prospectus but the Doctor tracked down (via the ceo.ca #tbx board)
Grade is King!!!!
TBX.V
Traded my $0.65 cost base down to $0.58 in a day!
A ton of action by knowledgeable Canadian retailers so far. Still no website I can find so current action all from newsletter promotional campaigns.
Going to try to trade position down even further to $0.50 IPO range.
I'll confirm there is no wide public presentation out. Company has obviously given a presentation and story to a lot of promoters and IPO participants.
TBX.V a.k.a. K92 2.0
Bought a starter position at $0.65 today vs. $0.50 IPO a few days ago. Founder of K92 involved. Top Notch geologists.
Dream Team of geologists given free reign to take their time to find the highest grade gold project in the Americas to explore. No website yet, I bought on advice of Keith Schaefer who runs O&G Investment Bulletin and says is one of best projects he has ever seen. Keith was in the Gold financing space before that newsletter.
No website yet. There is a 43-101 exploration-stage report on SEDAR done in parallel with the IPO I scanned. Otherwise promotional machine out in full force here.
Good summary here (paid promotions) on Turmalina Breccia Pipes.
https://www.valuethemarkets.com/2019/12/02/turmalina-metals-tsx-vtbx-discovering-exceptional-high-grade-gold-mines-in-the-most-extraordinary-places/
This is their first press release done on morning of IPO so of course a good one. 37m @ 6.31 g/t from 34M plus 122 g/t AG and 0.88% Cu.
https://www.newswire.ca/news-releases/turmalina-metals-corp-to-commence-trading-on-tsx-venture-exchange-and-reports-high-grade-gold-silver-copper-assays-from-initial-drilling-835030651.html