Lightstream Resources (LTS.TO)

A beaten down stock, but good reserves in the ground. A good entry point.

Has owned in the past but sold it about two years ago as their debt was getting too high. She is not looking at getting back into this stock at this time.

This is possibly a Hold or maybe a Sell. Finished the year with middling to disappointing numbers. Other than continued execution of their projects, he can’t see any reason why you would necessarily need to be in this name.

One of the innovators in the oil patch. This is a team that introduced horizontal multistage fracing to the Bakken oil play in Saskatchewan. Later on, they helped in the Cardium oil play in Alberta. However, the concern is the debt leverage. Thinks the dividend is probably relatively secure.

(Market Call Minute.) Light oil in the Cardium area.

(Market Call Minute) Aggressive management team, a bit over zealous on their guidance.

This was a high quality oil name in Saskatchewan. Essentially a well-run company but they just got caught as this is a very high decline resource base that had a dividend stock on it which was probably a bad idea. Should probably cut the dividend to zero and have it is a growth vehicle. He would like to see a strategy in place for it to get into the low teens.

Has always been a cocktail of high decline rates and high debt. January production numbers were down 7%. Feels the dividend is unsustainable.

Most of the analysts consider this a Hold or Sell or a Market Underperform. Doesn’t like this stock. Have had their problems. Doesn’t think the dividend looks that sustainable.

His company rates this as a neutral with a $12 target. If you own, he would recommend switching to something else.

Used a lot of debt a couple of years ago to acquire certain assets and then spent a lot of money to ramp up production. Scaling back production because they found their decline rate got too high. Just spent $35 million in acquiring semi-controlling stakes in 2 companies and debt is still a little high at about 2.3X debt to cash flow. However valuation is getting pretty compelling at about 4.3X. Dividend is probably not wholly sustainable but management has never shown a willingness to cut in previous years.

They have a high decline rate in their production. About 25% goes away every year. They are spending a lot to maintain production flat. Including cap-x it is way over 100% distribution. 11% distribution.

(Market Call Minute.) High debt value and has a high yield so there might be a cut coming.

Cheap at 5.6X discounted adjusted cash flow but are in a bit of the downward spiral. Just cut their CapX markedly from about $900 million to about $675 million. That means they have lower production, which means less cash flow so their debt to cash flow is now at about 3.6, way past the danger zone. Peer average is about 2.5. Might have to cut dividends if prices don’t start to turn around.

Doesn’t see any strong catalysts going forward. Doesn’t see them discovering anything new in terms of resource.