Nuvista Energy Ltd (NVA.TO)

(A Top Pick Aug 30/19, Down 58%) It's been lagging in the past months. He has been adding to it. They have drilled high quality wells in the property they acquired from Cenovus. There is a good potential to increase free cashflow in the next couple years.

A three-year time horizon It's a liquids-rich natural gas story, moving more into the Montney. Nice production increase of 19% in Q1. The balance sheet and debt are an issue because of the oil price plunge during the pandemic. This could fall below 70 cents if WTI falls $10 which he expects. He also expects a tightening of the natural gas market in western Canada because of the lack of drilling plus increased demand from Transalta as it goes from coal to nat gas. There are lots of good reasons to own this for the next few years, but in the meantime, buy on pullbacks. This will do well if you have a long-term horizon.

Trading volumes? The lower the share price, you have to trade more for a given trading position size. He thinks this will be a $4 stock down the road. Volatility in oil prices has caused investors to digest the market developments. He thinks oil prices will consolidate around here for a while. He likes management and the asset quality. They are immunized against weak cash flow. Well results in the last quarter were awesome, telling him the Cenovus assets they acquired are now validated.

Natrual gas prices? The 2021 strip price for AECO is over $2. That will work for strong balance sheet producers like TOU, NVA (60% natural gas), and ARX.