Cardinal Energy Ltd (CJ.TO)

Feels the dividend is safe, because they have never had a payout ratio that was getting anywhere close to their cash flow level. The company is ready, poised and able to expand, based on internal capital spending and acquisitions. A good place to be. Dividend yield of 4.17%.

About 80% of their oil is medium gravity, so they get a discount to Edmonton light. If you are a believer like he is, that oil prices will gravitate to around $60 next year, you get really good product leverage without the financial leverage. They have some drilling catalysts coming up, where they are going after 2 different properties. They bought a great little asset from Penn West (PWT-T) and are going to use modern technology in a field that hasn’t had any of this application ever before. There could be virgin reservoir pressure. This company still trades at a discount because of stupid lingering concerns because of an environment liability, but they have been improving it. He is looking for a $15 share price.

Had owned this when oil prices were a little higher, but moved out when prices declined. He prefers larger companies now. This one doesn’t screen super well from either a fundamental or technical standpoint. Also, prefers natural gas names more at this time.

(Market Call Minute.) Has not traded as well as everybody else because their oil is little bit heavier and costs are higher. That has created a lot of selling whenever prices have gone down, but the optionality is huge. Solid company, solid management and a solid balance sheet.

He likes this, because it is still trading at a discount multiple, relative to some of its peers. It has a stronger than average balance sheet, lower than average decline rate, better than average properties and the ability at a higher oil price. 80% of their oil gets sold at a discount to light oil, because it is medium gravity and the product leverage to a rise in the oil price is that much more magnified. He could see this at $15 in 2 years.

Spartan Energy (SPE-T) or Cardinal Energy (CJ)? Not a bad company, but he prefers Spartan.

(Market Call Minute.) 4.5% dividend yield and is very stable. Hasn’t proven out their growth by acquisition strategy versus Crescent Point (CPG-T). He is watching this.

This is a really good mix of defence and offense. It has a really good balance sheet and low decline rates. Every year they don’t have to grow many wells to keep production flat. Operating costs are little bit higher, at about $20 a barrel, so they don’t make a ton of money with oil at $40 a barrel, but they don’t really need to. If you have a 5-year view on oil that it gets back to $50-$60, then the risk/reward is very good here.

Good sensitivity to oil without the financial leverage. Decline rates are low.

Whitecap (WCP-T), Crescent Point (CPG-T) or Cardinal Energy (CJ-T)? A really great company and doing a really great job. Low cost oil. Very focused plays. However, if you beat it up and you really have oil sit at $15, it gets in trouble. It looks like they want to build a big company, but are really paying up for things.

This IPO’d in 2013, and had the strategy right out of the gate. They were looking to have an oil focused company with a very low decline rate, have a balance sheet with very little debt and be very acquisitive. He likes what they are doing. Dividend yield of about 4.5%.

He likes this. A really good company with great management. The balance sheet is excellent. Thinks they are going to have $16 million draw on $100 million line of credit by the end of the year. They have about 125-130 well program going right now. There are tons of torque in this name.

(A Top Pick March 3/15. Down 24.74%.) Just raised $60 million. This is more of a medium gravity oil producer, so the margins are not quite the same. They manage that through low cost and a very low decline rate of about 12%.

This has been lagging the group even though it has a great balance sheet. This company was a rock star in the oil bull days because of management, low decline rate, clean balance sheet and 80% of their production is medium gravity oil. He is looking for 50% upside from today’s share price. Dividend yield of 4.35%.

(A Top Pick June 12/15. Down 36.56%.) With oil prices below $50, it is very challenging. Have done really well with hedging last year, this year and next year, so are quite well protected. However, they do need to see higher oil prices in order to do well.