Twin Butte Energy (TBE.TO)

This is probably the space where a lot of the growth is going to come from in the next number of years. There is a massive trading range and we are at the lower end of that range. But this sector has done reasonably well in the last year or so, but this stock has not, so you have to question it. It is near support right here.

Trend line since 2011 is down. The trend is your friend, but this stock is not your friend.

(A Top Pick Aug 1/13. Up 5.23%.) This enjoyed a great run as the year unfolded, until a point in time when they came to the market with some production complications on a few of their fields. Continues to like the story because of their light oil acquisition of Blackshire. Very healthy dividend yield of over 11%, which he feels is still secure. He is going to continue to hold this for a while, but wouldn’t be adding to it.

Experienced some operational issues 6-9 months ago, so she sold her holdings. Many management changes happened, and there may be many more coming. Trying to transition from vertical wells to horizontal wells. Any time a company has some transitional changes, it doesn’t fit into her rulebook. Not looking to own this.

Has had a pullback, but management is saying the dividend is okay. Had some issues with production rates, but he thinks they are solvable. Feels it is a good time to add to his position, which he did.

Wouldn’t be buying this. Chart shows a big drop from April. You would expect some recovery from this, but it hasn’t happened. It is now creating a new low, and there isn’t a lot of support on it. It’s a very ominous sign when you have a support level being dropped, especially after a big drop. The volume level was very high on the big down day.

A contentious company. Recently had disappointment in production. Compensation system is designed to produce sustainable distributions for shareholders. If there is ever a hiccup, they will pull back on CapX and watch the balance sheet very carefully. Made a significant acquisition giving them 2 different zones that they are concentrated in. The 2^nd zone has much lower decline rates and a little higher net back. Thinks these diversifications help the company’s sustainability of the dividend. Long-term hold.

Big drop in May caused by a prime asset on an acquisition blowing up on them. After a couple of missteps like this he made a decision to exit. The dividend may have to be cut.

They cut their guidance by 5%. Declines in an old well were higher than expected. It has become un-investable until they show they know what is going on. A yield goes over 10% for a reason. Prefers CPG-T.

(A Top Pick May 17/13. Down 11.91%.) Has had a few issues and has been a little more dramatic than what he likes to see. Had some production issues with one of their big assets, which caused a big selloff. Recently had a strategy change in moving from vertical to more horizontal drilling. Still thinks the valuation is good. Dividend has been approved through the end of the year, which is positive. 10% yield.

Had some operational issues in the last few weeks, so shares tumbled 15%-20%. Management has assured him that the dividend is safe. This gives you close to a 10% yield. Produces medium to heavy crude. He likes the prospects for heavy oil over the next 6 months as more refineries, pipeline and rail capacity open up to move the oil to markets. Differentials in Canadian heavy oil are currently reasonable. Expects this will gradually grind its way back to the $2-$2.10 range over the next 6 months. With the dividend, this is an attractive rate of return.

(A Top Pick March 21/13. Down 12.82%.) Sold his holdings in February at $2.31. They’ve stumbled several times. He is generally lightening his holdings of producers and concentrating more on infrastructure.

Season is his first screening. Then he looks at fundamentals and technicals. For TBE we just finished the seasonals. It broke down. Wait for it to base at $1.60 before getting in.

This company has come through in terms of cash flow and sustaining the dividend. Yield is quite high at 8% and thinks it is sustainable. Management was in the penalty box, but have done a good job. If they continue to come out with the cash growth quarter after quarter and sustaining the dividend, the multiple should start to expand. Fairly cheap. Likes the story and may add to his portfolio. (See Top Picks.)

It is a small cap stock and there is a greater risk of miss-steps. As the company evolves, difficulties with1 or 2 or 5 wells will not affect quarterly results. A recent acquisition made their payout more sustainable. He likes the prospects of the company going forward.