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Opinions Eric Nuttall
MEG Energy CorpMEG.TOHOLDFeb 23, 2016
Stock price when the opinion was issued
As of Nov 14, 2025. Market Open.
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Premium contentOur PAST TOP PICK with MEG has triggered its stop at $24. To remain disciplined, we recommend covering the position at this time. Combined with our previous recommendations, this will result in a net investment gain of 24%.
Pure play on heavy oil. Long-life, low-decline, very scalable assets. Production easily doubled due to size of resource. Highly leveraged to any upside in oil. Sightline to greater ROC of 50-75% via share buybacks. High quality. M&A candidate for Suncor. No dividend.
(Analysts’ price target is $30.92)
Dennis da SilvaStill sees meaningful upside. Expecting $80 oil going forward which is good for bottom line. At least 35 years of stay flat inventory. Expecting final debt target in Q1 2024. 100% of cash flow expected to be returned in 2024. Expecting a 6x multiple for a $37 share price. Will continue to own shares.
Eric NuttallPremium contentWill continue to owns shares.
Can't find better names.
Singular asset (oil).
Excellent balance sheet - almost 0 debt.
High oil prices good for business.
Trading at ~4x cash flow.
35 years of reserves.
Expecting ~$45-$50 share price.
Eric NuttallPremium contentBelieves energy space very strong.
Company buying back lots of shares.
Long life asset with lots of cash flow.
Tax pools also valuable.
Oil above $75 is very good for business.
Robert LauzonThesis hasn't changed. If you're bullish oil, he can't find a better name. The largest weighting in his fund at around 12%. 50% of free cashflow goes to shareholders, the rest goes to pay down debt. Solid name.
Eric Nuttall
Editor's Note; This should be added to the rest of today's (Monday) Market Call comments. Energy stocks have had similar patterns. You could gingerly step into energy since there should be an eventual breakout. MEG is going sideways and therefore falls into the typical energy pattern. It has an OK chart. Buy at the bottom of the range.
Premium contentShould meet final debt target by end of this year. After that, has committed 100% of free cashflow to shareholders and buying back stock. Remains incredibly bullish on it, more than a double from here.
Eric NuttallPremium contentGenerating $1.2b in free cash flow, despite lower energy prices, makes MEG a TOP PICK. It has been prudently using some cash reserves to retire debt and buy back shares. The company just received a credit rating upgrade. It trades at 1.5x book and supports a ROE of 14%. We recommend a stop-loss at $15, looking to achieve $26 -- upside potential of 26%. Yield 0%
(Analysts’ price target is $26.21)
Of all of the most overleveraged companies that have no cash flow today, this would be at the top of the list. Have a negative netback of around $5 a barrel, so literally they burn $5 for every barrel they produce, but there are technical reasons why they would not want to slow down production. They are relying on the midstream sale of a pipeline that should be closing by the end of Q2. There is also an enormous Short position in the stock. This is beyond his comfort level, but if you own, he wouldn’t sell, based on his view of oil.