Oil Stocks: David Cockfield, Leon Frazer & Associates
David Cockfield, senior VP, Leon Frazer & Associates
On Oil:
we still have forward pricing well ahead of spot price..I think from standpoint of energy sector I do not think anything changed from year ago..very snug on oil side..
On Oil Income Trusts:
I think you have to be reasonably selective..what you look at company with relatively low payouts, reasonable reserve of undeveloped land, strong balance sheet, not a lot of debt..you can have a situation like HARVEST ENERGY (NYSE:HTE TSE:HTE.UN) where a third of the trust is refinery, hard to make judgment on..I would hold and watch it closely..go with a PENNWEST ENERGY (NYSE:PWE TSE:PWT.UN), which was reasonably acceptable oil and gas company..somebody that can convert back to corporation
On Oil Stocks:
ENCANA CORP (NYSE:ECA TSE:ECA): hedges coming to and end, hopefully positive element..I think Encana people will continue to hedge, not a bad idea..cutbacks in production, CapEx..following fairly cautious course here..pullback has brought stock to reasonable buying range..trades at very reasonable multiple, on NAV..big oils trading at really reasonable price..earnings are still there..reasonably positive on price of gas, warm weather or not..by March probably would see gas prices rise..drawdowns in storage significant..reduced the overstored gas by 45%..a month from now we will be to 5 year average zone..a lot of drilling did not happen when gas went down to $6
FIRST CALGARY PETROLEUM (TSE:FCP): problem is they have really good discovery but trapped in North Africa without able to get gas out…fantastic resources, no cash, nobody stepping up..until something else comes to save them, stock will languish..avoid foreign jurisdictions..look at what the Russians are doing right now..or taxes go up
TALISMAN ENERGY (NYSE:TLM TSE:TLM): company has been restructuring and whole sector has been going sideways to down..definitely a buy, I continue to accumulate stock..one of best assets..spread around..they have some excellent properties, slimmed down, buying back shares..this is company that should see $25-30 within a year..
NEXEN (NYSE:NXY TSE:NXY): not my favorite but good quality assets, trading at reasonable multiples..trading sideways..good prospects, well-financed..as a hold yes..wait until it gets under $60
ARC ENERGY (TSE:AET.UN): off a lot less than other trusts because it is well-managed..payout reasonable, good replacing production..class act in the industry..if anybody is going to survive, they are..financial community loves them..quite capable of reverting back..be aware too that legislation is not carved in stone..
FALCON OIL AND GAS (CVE:FO): one of those companies that I tend to avoid..simply because its main focus is on Eastern Europe..seem to be making good progress, hard to tell what it will happen in those countries..Hungary little bit more Westernized..geologically they seem to have some very interesting properties..technologically mainly Russian, well-behind, wells drilled badly..left real opportunities not explored properly..there are some obvious advantages..do you want to chance on government..
CANADIAN OIL SANDS (TSE:COS.UN): never been one of my favorites because of yield..yield has come up with increased in payouts..payout has always been low..like to see it happen..prospects for trusts somewhat clouded, I would rather go with somebody in position to change back..if company came out with viable plan to transition from trust..all you are vying now is long-lived assets..
CANADIAN NATURAL RESOURCES (NYSE:CNQ TSE:CNQ): probably a buy..gone through the ringer a bit..like the oils in general
TOP PICK PETRO-CANADA (NYSE:PCZ TSE:PCA): something I talked about in the past..one of my favorites if McKenzie pipeline gone through..recently stock sold off, looking at their programs for 2007 for the first time I see production might be up, 15% at top end..North Sea coming on, Syncrude expanding..only 10X earnings, 6X cash flow..integrateds safer
TOP PICK CYRIES ENERGY (TSE:CYS): followed company since they came in to being..11,000 barrels, gassy, definitely a junior..good operator, had some operations with getting gas tied into pipeline..strong financial position, debt under control, high success rate, 3-4 rigs now..they are going to have a fine year..back to $18..I do own personally as well as in Leon Frazer..
On Oil:
we still have forward pricing well ahead of spot price..I think from standpoint of energy sector I do not think anything changed from year ago..very snug on oil side..
On Oil Income Trusts:
I think you have to be reasonably selective..what you look at company with relatively low payouts, reasonable reserve of undeveloped land, strong balance sheet, not a lot of debt..you can have a situation like HARVEST ENERGY (NYSE:HTE TSE:HTE.UN) where a third of the trust is refinery, hard to make judgment on..I would hold and watch it closely..go with a PENNWEST ENERGY (NYSE:PWE TSE:PWT.UN), which was reasonably acceptable oil and gas company..somebody that can convert back to corporation
On Oil Stocks:
ENCANA CORP (NYSE:ECA TSE:ECA): hedges coming to and end, hopefully positive element..I think Encana people will continue to hedge, not a bad idea..cutbacks in production, CapEx..following fairly cautious course here..pullback has brought stock to reasonable buying range..trades at very reasonable multiple, on NAV..big oils trading at really reasonable price..earnings are still there..reasonably positive on price of gas, warm weather or not..by March probably would see gas prices rise..drawdowns in storage significant..reduced the overstored gas by 45%..a month from now we will be to 5 year average zone..a lot of drilling did not happen when gas went down to $6
FIRST CALGARY PETROLEUM (TSE:FCP): problem is they have really good discovery but trapped in North Africa without able to get gas out…fantastic resources, no cash, nobody stepping up..until something else comes to save them, stock will languish..avoid foreign jurisdictions..look at what the Russians are doing right now..or taxes go up
TALISMAN ENERGY (NYSE:TLM TSE:TLM): company has been restructuring and whole sector has been going sideways to down..definitely a buy, I continue to accumulate stock..one of best assets..spread around..they have some excellent properties, slimmed down, buying back shares..this is company that should see $25-30 within a year..
NEXEN (NYSE:NXY TSE:NXY): not my favorite but good quality assets, trading at reasonable multiples..trading sideways..good prospects, well-financed..as a hold yes..wait until it gets under $60
ARC ENERGY (TSE:AET.UN): off a lot less than other trusts because it is well-managed..payout reasonable, good replacing production..class act in the industry..if anybody is going to survive, they are..financial community loves them..quite capable of reverting back..be aware too that legislation is not carved in stone..
FALCON OIL AND GAS (CVE:FO): one of those companies that I tend to avoid..simply because its main focus is on Eastern Europe..seem to be making good progress, hard to tell what it will happen in those countries..Hungary little bit more Westernized..geologically they seem to have some very interesting properties..technologically mainly Russian, well-behind, wells drilled badly..left real opportunities not explored properly..there are some obvious advantages..do you want to chance on government..
CANADIAN OIL SANDS (TSE:COS.UN): never been one of my favorites because of yield..yield has come up with increased in payouts..payout has always been low..like to see it happen..prospects for trusts somewhat clouded, I would rather go with somebody in position to change back..if company came out with viable plan to transition from trust..all you are vying now is long-lived assets..
CANADIAN NATURAL RESOURCES (NYSE:CNQ TSE:CNQ): probably a buy..gone through the ringer a bit..like the oils in general
TOP PICK PETRO-CANADA (NYSE:PCZ TSE:PCA): something I talked about in the past..one of my favorites if McKenzie pipeline gone through..recently stock sold off, looking at their programs for 2007 for the first time I see production might be up, 15% at top end..North Sea coming on, Syncrude expanding..only 10X earnings, 6X cash flow..integrateds safer
TOP PICK CYRIES ENERGY (TSE:CYS): followed company since they came in to being..11,000 barrels, gassy, definitely a junior..good operator, had some operations with getting gas tied into pipeline..strong financial position, debt under control, high success rate, 3-4 rigs now..they are going to have a fine year..back to $18..I do own personally as well as in Leon Frazer..
posted by Spelunca at 1:30 AM
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