Nuvista Energy Ltd (NVA.TO)

There is a rumour that Paramount has acquired a 9% holding in Nuvista. Paramount is outspending their cash flow and announced, if required, they may look to sell off assets and this could Nuvista. Both companies share prices have been pushed sharply lower as a result.

VII-T vs CR-T? He would stay away from CR-T due to its debt level. VII-T has a good management team, but its slow down in growth highlighted their 50% decline rates in existing assets. This causes too much of their cash flow to still be required for maintenance. He would prefer NVA-T, which trades at a lower multiple of cash flow, has a better balance sheet, and lower decline rates on production.

This one depends on your view on gas. He would put this up there with the half-dozen Montney focused names. Has been very impressed with the ongoing improvement of well results. Definitely top tier.

(Top Pick Feb 05’15, Down 12.90%) He got about an 8% yield. It has performed quite well, year over year. They have most of their assets in Saskatchewan and the Canadian pension plan is a partner. It should be the end of the axe swinging.

They have been having some great success in the field. They are a growing concern. They hit a sweet spot. Their net backs are approaching $15. Debt is no longer a concern. They also had some great hedges in place.

Drilling some really interesting wells where the economics is really the condensate. This is really a play on oil prices coming back. When you look at the valuation versus a pure oil stock, it is trading at about a 2X lower multiple. Good value. Good management. Well hedged for 2015.

Likes that they hedged out a lot of their gas and condensate production for the next year. Great asset and no debt problem. A lot of other companies would strategically like to own this asset.

The Montney is certainly attractive. It has been an area of focus for many energy companies. Ultimately what is attractive, is an LNG solution at some point. His only concern on this company is that it is a gas weighted name. There is really no catalyst for gas other than the seasonality. It has been a weak, weak time in general. He sees both gas and oil trading sideways for the next year.

(Market Call Minute.) Great company but too expensive as a stock. He would sell this one to buy Tourmaline (TOU-T).