Baytex Energy Corp (BTE.TO)

Raging River had good light oil assets but issues with decline rates. Baytex shareholders were comfortable with the debt, given the torque to heavy oil differentials. Mashed together, it has allowed the concerns over BTE-T debt levels to be abated and is opening doors for new opportunities.

The merged Raging River/Baytex company, at $80 oil and a five times multiple over cash flow is a $10 stock. The Eagleford and Viking assets create cash flow as they delineate a prolific heavy oil play in Peace River and massive exposure into the East Duverney play. Yield 0%. (Analysts’ price target is $6.31)

She thinks the price differentials for Canadian oil will continue to widen, so even if the balance sheet of this company has improved, she is not buying Canadian energy at this time. In addition, the market is coming to a seasonally weaker period, with refineries closing for maintenance (for example). So this is not a good time for new investment. Even if an investor expects prices to improve, this is seasonally the wrong time for the improvement to happen.

When this stock was $6 he was not a fan and still is not. The company will soon rise to 60% debt on the balance sheet. Baytex taking over Raging River does not seem to make sense to shareholders, in his opinion. He thinks they may be over paying and shareholders will not be in a controlling position. He also thinks operating costs are still too high.

He recently bought this. This was an undervalued company and heavily levered. They recently merged with Raging River, making it worth investing in now. It was beaten up along with other oil stocks, but he likes the story of this stock
now.

Is flatlining. Hold it. It needs a serious energy run to rise. It's a short-term trade at best.

He owned this company when they had a real good balance sheet. Debt load has gone up. He sold this when oil went bearish. It has continued to struggle and has not really looked at it since. Probably could go to a lower leveraged oil play and take on less risk.

A slowly slipping balance sheet, because its forecast earnings are only 6 cents per share. He doesn't expect a turn in the earnings to lift the stock.

The recent merger with Raging River has not been well accepted by the shareholders. It is trading at 3.3 times EBITDA at $70 oil. He sees almost 100% upside if reasonable metrics return on the valuation. It plays well into the view of tighter heavy oil differentials and WTI trading over $80 next year. Yield 0%. (Analysts’ price target is $6.12)

A heavy oil producer that still has leverage on the balance sheet. He would look elsewhere, unless you think WTI is going to $100.

A highly levered oil name. When the oil price moves, it moves with it. It is a pretty high debt name. You could probably make some money here. It is not a name the masses would want to own because of the volatility. It will be tough for it to get back to the previous highs. It will probably not be a positive in that they are merging with RRX-T, Raging River.

This is one of the companies that he follows to some degree. It is possible toward the end of the year he might hone in on it more closely. With all of these companies, take a look at debt load relative to revenues. He may buy it later in the year, depending on his firm's analysis

(A Top Pick August 3/2017, Up 12%) Still trading at a discount. If I can get 12% out of a bond, why would I buy equity? Less risky to own the bond than the stock. Buying the stock would need the price of oil to go up, guaranteed.

It is challenged like CPG-T in that there is excess capacity and not enough sales. He can't comment on the merger as he is not an M&A expert.

Merger is not popular with Raging River shareholders. However, Baytex shareholders are saying it is a wonderful deal. Have added a free cash flow machine in their Viking asset. This name has been beaten down by Raging River shareholders. The deal gets voted on mid August. At $70 oil he has a $7.00 target and at $80 oil he has a $10.00 target. That is 60% to 130% upside. (Analysts’ price target is $6.00)