| TOP PICK | | Western Oil Sands Inc. | WTO-T | 38.450 | Being acquired by Marathon (MRO-N). He is buying it for the sum of the parts of the valuation. Basically what you are getting with the Marathon take out is cash and about 33% of stock. You also get a junior international exploreco, Western Zagros in Kurdistan, where there are significant light oil deposits. Market is not fully valuing this company. | 2007-10-05 | |
| TOP PICK | | Frontline Ltd | FRO-N | 50.630 | A Norwegian company. Largest tanker company in the world. This is especially important to the yield hungry investor who has been playing the royalty trusts. Has about a 15% yield. Only trades at about 4X PE. Tanker stocks cash flow a significant amount of money. Try to pick it up closer to the $42 range. | 2007-10-05 | |
| TOP PICK | | Cyries Energy Inc | CYS-T | 6.900 | Undervalued story. Junior gas focused company with 70% gas in Alberta. Probably one of the best management teams in the patch. Has come down significantly from its highs. You now get it below NAV. Clean balance sheet. Could be a takeout candidate. Buy a little bit now and if Alberta does not implement the royalty review, buy more. | 2007-10-05 | |
| BUY | | Tusk Energy | TSK-T | 1.380 | As dropped down way below its intrinsic value and could be a takeout. Low multiple at 2.5X cash flow. Expect it will be gone in a next 5 to 6 months at a nice premium. | 2007-10-05 | |
| DON'T BUY | | Diaz Resources Ltd | DZR-T | 0.400 | Did quite poorly over the last couple of years. Have assets in Wilcox County, Texas and it has been tough slugging. Spent a lot of time/capital drilling big, expensive wells. Difficult to get to and difficult to drill. Asset base in Canada is in southeastern Alberta, which has been in decline. | 2007-10-05 | |
| DON'T BUY | | Diaz Resources Ltd | DZR-T | 0.400 | Did quite poorly over the last couple of years. Have assets in Wilcox County, Texas and it has been tough slugging. Spent a lot of time/capital drilling big, expensive wells. Difficult to get to and difficult to drill. Asset base in Canada is in southeastern Alberta, which has been in decline. | 2007-10-05 | |
| SELL | | Petrominerales Ltd. | PMG-T | 17.270 | Have been in Colombia for quite some time and have had pretty significant discoveries in the Llanos Basin. Stock has been running lately because they are drilling the Corcel 2 well, which should be down probably in the next 2, 3 weeks. Getting expensive at these levels and he would suggest you take some profits. | 2007-10-05 | |
| SELL | | PetroChina | PTR-N | 190.830 | A subsidiary of the Chinese National Oil Company. Biggest and most profitable company in China. Very strong internationally. Essentially a duopoly in China and basically control the wholesale/retail market with Cinipaq. Stock is known to pull back hard, so would take some profits and buy back in the $150 range. | 2007-10-05 | |
| DON'T BUY | | Falcon Oil & Gas | FO-X | 0.680 | Would not be a buyer of this company. The Hungary deep gas has always played into cycles. Really deep, complicated stuff. There is a lot of stock outstanding on this company. | 2007-10-05 | |
| SELL | | Prime West Energy Trust | PWI.UN-T | 26.290 | Has been the subject of her recent takeover from Abu Dhabi’s Taqa. It is almost trading at the deal price. Holding it for the next couple of months will give you a limited distribution. There is a slight bit of deal risk because of Alberta’s royalty review. He suggests you take your profits and run. | 2007-10-05 | |
| SELL | | Penn West Energy Trust | PWT.UN-T | 30.550 | Would sell this one and get into Crescent Point (CPG.UN-T), which has a more sustainable model. | 2007-10-05 | |
| SELL | | Paramount Energy Trust | PMT.UN-T | 7.840 | Would not be an owner of this one right now. He would look at an affiliated company Paramount Resources (POU-T). It doesn't pay a distribution, but is probably one of the stronger energy names. | 2007-10-05 | |
| BUY | | Paramount Resources | POU-T | 17.690 | One of the stronger energy names in the oil patch. Produce about 18,000 barrels and have about $150 million in cash. In a weaker Canadian market, it is a safer place to be. | 2007-10-05 | |
| BUY | | Talisman Energy | TLM-T | 19.430 | Has been a value trap. Trades at about 4.4X cash flow compared to the average of about 5.9. International focused and with the recent royalty review in Alberta this could be a breakout year for them. Sold about $1 billion of Canadian assets and have been buying back stock. Have some new, exciting permits in Peru and Colombia. Diversification is tremendous. | 2007-10-05 | |
| BUY | | Crescent Point Energy Trust | CPG.UN-T | 21.450 | Assets mainly based in Saskatchewan. Bakken is a huge resource play. Have about 200,000 acres. Recently purchased Innova (IXL-T) for a pretty hefty price but it has made them the dominant player in this 1.6 billion-resource play. Trust model is quite sustainable. Low payout ratio. 11% yield. 86% light oil. | 2007-10-05 | |
