Oil Stocks: David Cockfield
David Cockfield, senior VP, Leon Frazer & Associates
On Oil:
we’re just finishing shoulder season..gas has been firmer than I thought..oil we have OPEC cuts, looking at higher prices, market will follow..Saudis have a surplus, everybody else is pretty tight..Saudis already telling customers the cut..if demand take a little upward run, we might be tight 2-3 months from now..I see oil going to $70 as we head out of shoulder season, gas up over $8..hoping oil does not break about $70 as that has economic implications..
Oil Stocks Mergers + Acquisitions:
I think that just about anybody is in play..I’m not sure if Imperial will go back into fold but there are rumors..dependable, safe production..throw a lot of money at Russia, but look what happens..we’re in position to see some significant takeover activity..
Specific Oil Stocks Comments:
FREEHOLD ROYALTY TRUST (TSE:FRU.UN): more stable..it’s a different structure, collecting royalties rather than drilling..yield well over 10%..operating successfully for years..one of the smaller trusts..we like it
HARVEST ENERGY (NYSE:HTE TSE:HTE.UN): we do have some in the system, got through acquisition..I have not sold it, am concerned..balance sheet in better sheet..high payout ratio of 86%..not buying it but not selling it
PEYTO ENERGY (TSE:PEY.UN): pretty volatile..hybrid, payout ratio very low, rolled money back to more exploration, more drilling..I have not held Peyto, but guys have done great job..good following..if you want to take lower yield for more growth
PAST PICK: PENN WEST ENERGY (NYSE:PWE TSE:PWT.UN): higher yield but hit a low and broke back..higher yield but still growth potential.. one of our favorites..back into hold range..under $40 definitely a buy..5 million acres of undrilled land, lots of good horizons..
UTS ENERGY (TSE:UTS): owned it in accounts in previous quarters..going back before taking its big run..at $4 reasonable..company of potential..years before it begins..good oil sands properties..once you start to get $5-6, paying too much..speculative oil stock..
PAST PICK: PETRO-CANADA (NYSE:PCZ TSE:PCA): numbers came out..some of assets starting to kick in, costs under control..one of the better integrated oil stocks..the way the stock has acted, one quarter does not make a new trend yet
DUVERDAY OIL (TSE:DDV): I like this company, we do not own it..run into cost problems but good drilling prospects this winter..in good position to show some growth..I think if you own the stock hold on to it..
CANADIAN NATURAL RESOURCES (NYSE:CNQ TSE:CNQ): Canadian oil and gas market popular with hedge funds, lots of speculation..number of companies going through reorganization, added to the volatility..bullish on all major companies, takeover as much as anything..
CALVALLEY PETROLEUM (TSE:CVI.A): own it personally, in Yemen..really good block of land, just begun to scratch the surface..sold first oil, shipped by truck..ongoing production situation..run up recently, could be on some well results..I suspect it will be back up to $9..real producer..
TOP PICK ENCANA CORP (NYSE:ECA TSE:ECA): it’s gassy, they have cut back programs, quite sensible, still feel this is a stock that has been sold out..probably got some real upside, low $60s
TOP PICK TALISMAN ENERGY (NYSE:TLM TSE:TLM): I do not know if they are pretty themselves up..continue to acquire it..well-balanced..do not know why they are under $20..12 month target $25
On Oil:
we’re just finishing shoulder season..gas has been firmer than I thought..oil we have OPEC cuts, looking at higher prices, market will follow..Saudis have a surplus, everybody else is pretty tight..Saudis already telling customers the cut..if demand take a little upward run, we might be tight 2-3 months from now..I see oil going to $70 as we head out of shoulder season, gas up over $8..hoping oil does not break about $70 as that has economic implications..
Oil Stocks Mergers + Acquisitions:
I think that just about anybody is in play..I’m not sure if Imperial will go back into fold but there are rumors..dependable, safe production..throw a lot of money at Russia, but look what happens..we’re in position to see some significant takeover activity..
Specific Oil Stocks Comments:
FREEHOLD ROYALTY TRUST (TSE:FRU.UN): more stable..it’s a different structure, collecting royalties rather than drilling..yield well over 10%..operating successfully for years..one of the smaller trusts..we like it
HARVEST ENERGY (NYSE:HTE TSE:HTE.UN): we do have some in the system, got through acquisition..I have not sold it, am concerned..balance sheet in better sheet..high payout ratio of 86%..not buying it but not selling it
PEYTO ENERGY (TSE:PEY.UN): pretty volatile..hybrid, payout ratio very low, rolled money back to more exploration, more drilling..I have not held Peyto, but guys have done great job..good following..if you want to take lower yield for more growth
PAST PICK: PENN WEST ENERGY (NYSE:PWE TSE:PWT.UN): higher yield but hit a low and broke back..higher yield but still growth potential.. one of our favorites..back into hold range..under $40 definitely a buy..5 million acres of undrilled land, lots of good horizons..
UTS ENERGY (TSE:UTS): owned it in accounts in previous quarters..going back before taking its big run..at $4 reasonable..company of potential..years before it begins..good oil sands properties..once you start to get $5-6, paying too much..speculative oil stock..
PAST PICK: PETRO-CANADA (NYSE:PCZ TSE:PCA): numbers came out..some of assets starting to kick in, costs under control..one of the better integrated oil stocks..the way the stock has acted, one quarter does not make a new trend yet
DUVERDAY OIL (TSE:DDV): I like this company, we do not own it..run into cost problems but good drilling prospects this winter..in good position to show some growth..I think if you own the stock hold on to it..
CANADIAN NATURAL RESOURCES (NYSE:CNQ TSE:CNQ): Canadian oil and gas market popular with hedge funds, lots of speculation..number of companies going through reorganization, added to the volatility..bullish on all major companies, takeover as much as anything..
CALVALLEY PETROLEUM (TSE:CVI.A): own it personally, in Yemen..really good block of land, just begun to scratch the surface..sold first oil, shipped by truck..ongoing production situation..run up recently, could be on some well results..I suspect it will be back up to $9..real producer..
TOP PICK ENCANA CORP (NYSE:ECA TSE:ECA): it’s gassy, they have cut back programs, quite sensible, still feel this is a stock that has been sold out..probably got some real upside, low $60s
TOP PICK TALISMAN ENERGY (NYSE:TLM TSE:TLM): I do not know if they are pretty themselves up..continue to acquire it..well-balanced..do not know why they are under $20..12 month target $25
posted by Spelunca at 3:03 PM
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