Oil Stocks: John Stephenson, senior VP and portfolio manager, First Asset Investment Management (Part I)
John Stephenson, senior VP and portfolio manager, First Asset Investment Management on North American large cap oil stocks
On Oil:
what we're seeing right now is pullback on commodities story, particularly natural gas..mild summer, predicting mild winter..hedge fund blow-up..you could enter natural gas stocks now, but might need to wait a year to get paid..unlikely prospects of extremely cold winter..I think you'll see it higher, but I don't think it'll happen right now..lighten up on gas names, especially juniors..I think interest rates will move down..utilities attractive..I don't see oil falling down to $30..my view is oil is global commodity..China and India rise in oil consumption from 30 and 31 to 3rd and 6th..
On Oil Stocks:
CANADIAN NATURAL RESOURCES (NYSE:CNQ TSE:CNQ): reputation of the company is good, but regarded as a trading stock, might explain the high beta..maybe a reasonably good entry point..while I do oil sands is sustainable, people thought it was a license to print money..when oil came off 25%, some of the energy went out..I think it's a hold..pick it up later down the road when visibility clearer..
BONAVISTA PETROLEUM (TSE:BNP.UN): one of the better trusts..if you hold it, continue to hold it..a lot of the problems of oil and gas trusts are due to the gas..if you hold it, continue, it's not one that I see as a real problem..be careful of high payout ones, short reserve life..
CANADIAN OIL SANDS (TSE:COS.UN): one of the lowest yields, 4.2%..of the whole trust universe, trading below NAV..screaming buy, comfortable adding position..
FIRST CALGARY PETROLEUM (TSE:FCP): difference between reserves in the ground and production..trouble monetizing..takes $1-1.5 billion to develop..wait for them to prove production..skeptical..
OPTI CANADA (TSE:OPC): certainly OPTI could be a target..major players moving into oil sands..traditional basins declining..no major new finds..could see this and UTS (TSE:UTS) being taken over..alot of this already baked into the price..always favor established operations like SUNCOR (NYSE:SU TSE:SU)
PAST PICK SUNCOR (NYSE:SU TSE:SU): I think this stock can go north of $100..best operating history of any of established oil sands players..substantial production growth..reserve life is around 85 years..risks include cost escalation..seller's market for labor..commodity risk
PAST PICK PROEX ENERGY (TSE:PXE): as commodity drops, prospects get curtailed..it's still a name you can hold and do well..
PAST PICK FIND ENERGY (now TSE:SHN.UN): acquired..
On Oil:
what we're seeing right now is pullback on commodities story, particularly natural gas..mild summer, predicting mild winter..hedge fund blow-up..you could enter natural gas stocks now, but might need to wait a year to get paid..unlikely prospects of extremely cold winter..I think you'll see it higher, but I don't think it'll happen right now..lighten up on gas names, especially juniors..I think interest rates will move down..utilities attractive..I don't see oil falling down to $30..my view is oil is global commodity..China and India rise in oil consumption from 30 and 31 to 3rd and 6th..
On Oil Stocks:
CANADIAN NATURAL RESOURCES (NYSE:CNQ TSE:CNQ): reputation of the company is good, but regarded as a trading stock, might explain the high beta..maybe a reasonably good entry point..while I do oil sands is sustainable, people thought it was a license to print money..when oil came off 25%, some of the energy went out..I think it's a hold..pick it up later down the road when visibility clearer..
BONAVISTA PETROLEUM (TSE:BNP.UN): one of the better trusts..if you hold it, continue to hold it..a lot of the problems of oil and gas trusts are due to the gas..if you hold it, continue, it's not one that I see as a real problem..be careful of high payout ones, short reserve life..
CANADIAN OIL SANDS (TSE:COS.UN): one of the lowest yields, 4.2%..of the whole trust universe, trading below NAV..screaming buy, comfortable adding position..
FIRST CALGARY PETROLEUM (TSE:FCP): difference between reserves in the ground and production..trouble monetizing..takes $1-1.5 billion to develop..wait for them to prove production..skeptical..
OPTI CANADA (TSE:OPC): certainly OPTI could be a target..major players moving into oil sands..traditional basins declining..no major new finds..could see this and UTS (TSE:UTS) being taken over..alot of this already baked into the price..always favor established operations like SUNCOR (NYSE:SU TSE:SU)
PAST PICK SUNCOR (NYSE:SU TSE:SU): I think this stock can go north of $100..best operating history of any of established oil sands players..substantial production growth..reserve life is around 85 years..risks include cost escalation..seller's market for labor..commodity risk
PAST PICK PROEX ENERGY (TSE:PXE): as commodity drops, prospects get curtailed..it's still a name you can hold and do well..
PAST PICK FIND ENERGY (now TSE:SHN.UN): acquired..
posted by Spelunca at 7:04 PM
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