Surge Energy Inc (SGY.TO)

(Market Call Minute) Did a good job replacing reserves. Very good.

Likes the company. They have been executing well. They are leveling off but he would not be selling. Has it as a sector outperform. If anything happens to oil and gas prices they won’t do well and are dependent on execution (drilling success).

Share price has lagged. Light and medium gravity oil. Thinks they will continue to acquire companies. Very sustainable dividend. Core holding for him.

Loves this story. One of his core positions across all of his client accounts. Management has a great track record of acquisitions recently. The dividend of 8% is unfair and feels it should trade at a 5% yield given the quality of management and given the track record they are displaying so far. Has the lowest total payout ratio of all companies he follows i.e., combining the dividend payout with the capital spending program, measured against cash flow. Has about a 92% payout so there is room on its cash flow to do more.

His company has this rated as a Sector Outperform with an $8 target. Likes the management. 8% yield.

Bought Renegade’s assets and paid a fair price of around 5.6X cash flow, less than $20 per 2p for an asset that declined at 18%, so they may have gotten a bit of a bargain. Did a $70 million financing and institutional demand was around $60 million, so pretty strong institutional demand for the name. Have been very active through acquisitions. He has been trading this at around 6.3X cash flow. Feels the dividend 8.2% is quite safe.

Has the right suite of assets with the right management group and has converted to a dividend paying Corp successfully. Have the type of assets that, most importantly, are going to produce a sustainable dividend. Valuation on this stock is relatively good compared to other dividend payers. Total payout ratio is under 100%.

(Top Pick Dec 10/12, Up 17.06%) He cut losses when they had a near death experience. Probably should not have. It screens extremely well now. Thinks energy would be a better bet at end of first quarter next year.

Had a lot of changes in the last year. Changed CEOs and made a lot of acquisitions. Basically a transformed company. Management team is well respected. Long life light oil properties including some water flood capabilities. Getting close to the point where she just wants to be able to understand all the acquisitions that they’ve made in the last year. Can see it at $7.50-$8. 7.8% dividend yield.

(A Top Pick Dec 10/12. Up 13.94%.) Thinks there is a fair bit more of upside. Very well-positioned. Lots of free cash flow. Great exploration and production success. Could see it easily being $9-$10 a share.

Likes that the management team is very aligned to investors. Have raised dividend three times even though they just introduced it. Thinks their guidance for this year is conservative.

Just announced another acquisition and a dividend increase. This is just the beginning for this enterprise. It is going to be a large company, by the time Paul Colburn is finished with it.

Trying to reinvent itself by turning itself into a dividend player. Not sure if this is a growth stock or a piggy bank now. This change has driven the advance for the last few months. If you own, he would be inclined to take some money off the table, but it is currently in an upward channel, so keep it as long as it is in that channel.

Bought this stock at around $5.05-$5.10 on a new CEO coming in who did a great job of turning the company around. Stock ran to $6.30 and he sold. He would re-establish a position at around $5.50 or so.

One of his favourite intermediate oil/gas names. Management bought an asset from Cenovus (CVE-T) and converted the company into a dividend paying company much like Whitecap. Will produce about 10,700 barrels per day with a very low decline rate. Very good for a dividend model because they will continue to spin out cash flows. Dividend ratio is only 30%.