Oil Stocks: Robert J. Toole (II)
Robert J. Toole, managing director, Creststreet Asset Management
GALLEON ENERGY (TSE:GO.A): has been one of the more successful exploration companies in this sector..as is typical of discovery, a lot of value is capitalized very quickly and then things can go sideways..it is higher risk given exploration profile but we like it because of proven success..it is a prolific discovery, very large well..we would be holding on at these levels or possibly even adding to position
ADVANTAGE ENERGY (TSE:AVN.UN): we would sell sooner rather than later, payout ratio >160% considering cash flow and CapEx..trades at high end of yield range because of concerns..we would suggest switch out of ADVANTAGE to more conservative ratio, like a PROGRESS ENERGY (TSE:PGX) or FOCUS ENERGY (TSE:FET.UN)
PEYTO (TSE:PEY.UN): I think you should sell your PEYTO..just about the highest payout ratio out there..has reached its growth limit in our view, they are going to have to do something..lately reducing CapEx but at the end of the day we believe it will result in declining production
NAL OIL & GAS (TSE:NAE.UN): at these levels probably in fairly good position..it is off 32% since trust announcement but what really puts base underneath unit price is that it is trading just under NAV..we are more comfortable with NAL than a lot of other names
VAULT ENERGY (TSE:VNG.UN): interesting situation..small trust, generally regarded as an orphan..would expect to be early consolidation candidate..paying distribution that represents >20% yield but one of the lower payout ratios at 110%..if you own it, stay in it, there is a chance of VAULT being consolidated..
VERO ENERGY (TSE:VRO): small company that was spun out of TRUE ENERGY..natural gas focus, concerned about relatively high debt levels during low commodity price levels..if look for natural gas exposure, would recommend others
TOP PICK CREW ENERGY (TSE:CR): very strong natural gas exposure, you want to be getting involved in companies now while gas prices are low and benefiting from recovery..strong track record, growing through drilling success and acquisitions..if you look at share price of CREW, one of the worst performers because premium because of management during bullish times
TOP PICK TRISTAR (TSE:TOG): 75% oil-weighted..demonstrated track record, both drill bit and proven acquisitions..strong balance sheet, can withstand period of low prices, relatively small, ~4000boe/day, nice part of curve..
PAST PICK, TOP PICK PROSPEX (TSE:PSX): soft natural gas prices from October till recently..PROSPEX has had solid underlying growth, offset soft prices..we feel PROSPEX continue to grow, will benefit from rebounding price..strong portfolio of medium-risk natural gas properties, also some high-impact deep drilling targets, does create a bit more volatility but if you see through volatility long-term, stock has some strong fundamental growth..in a rising commodity price environment could double within 3 to 6 months
GALLEON ENERGY (TSE:GO.A): has been one of the more successful exploration companies in this sector..as is typical of discovery, a lot of value is capitalized very quickly and then things can go sideways..it is higher risk given exploration profile but we like it because of proven success..it is a prolific discovery, very large well..we would be holding on at these levels or possibly even adding to position
ADVANTAGE ENERGY (TSE:AVN.UN): we would sell sooner rather than later, payout ratio >160% considering cash flow and CapEx..trades at high end of yield range because of concerns..we would suggest switch out of ADVANTAGE to more conservative ratio, like a PROGRESS ENERGY (TSE:PGX) or FOCUS ENERGY (TSE:FET.UN)
PEYTO (TSE:PEY.UN): I think you should sell your PEYTO..just about the highest payout ratio out there..has reached its growth limit in our view, they are going to have to do something..lately reducing CapEx but at the end of the day we believe it will result in declining production
NAL OIL & GAS (TSE:NAE.UN): at these levels probably in fairly good position..it is off 32% since trust announcement but what really puts base underneath unit price is that it is trading just under NAV..we are more comfortable with NAL than a lot of other names
VAULT ENERGY (TSE:VNG.UN): interesting situation..small trust, generally regarded as an orphan..would expect to be early consolidation candidate..paying distribution that represents >20% yield but one of the lower payout ratios at 110%..if you own it, stay in it, there is a chance of VAULT being consolidated..
VERO ENERGY (TSE:VRO): small company that was spun out of TRUE ENERGY..natural gas focus, concerned about relatively high debt levels during low commodity price levels..if look for natural gas exposure, would recommend others
TOP PICK CREW ENERGY (TSE:CR): very strong natural gas exposure, you want to be getting involved in companies now while gas prices are low and benefiting from recovery..strong track record, growing through drilling success and acquisitions..if you look at share price of CREW, one of the worst performers because premium because of management during bullish times
TOP PICK TRISTAR (TSE:TOG): 75% oil-weighted..demonstrated track record, both drill bit and proven acquisitions..strong balance sheet, can withstand period of low prices, relatively small, ~4000boe/day, nice part of curve..
PAST PICK, TOP PICK PROSPEX (TSE:PSX): soft natural gas prices from October till recently..PROSPEX has had solid underlying growth, offset soft prices..we feel PROSPEX continue to grow, will benefit from rebounding price..strong portfolio of medium-risk natural gas properties, also some high-impact deep drilling targets, does create a bit more volatility but if you see through volatility long-term, stock has some strong fundamental growth..in a rising commodity price environment could double within 3 to 6 months
posted by Spelunca at 4:34 PM
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