Eric Nuttall is a portfolio manager with Sprott Asset Management. His focus is oil and gas stocks.
Torc Oil & Gas
Most recent purchase was January 10 at $10.35
Spending less than 1-times cash flow, TORC is set to grow production by 10% and pay a dividend equivalent to a 5.3% yield. Exploration results if positive in the next 2 months could lead to an increase to guidance and a dividend increase later in 2014.
Most recent purchase was December 21, 2013 at $0.49
A bet on the team, this is their third iteration after successfully building and selling two oil companies. Expect this team to use their currency to exploit the over-saturated divestiture market and be able to make several highly accretive deals in 2014. This is a stock to own for a few years.
Most recent purchase was December 17, 2013 at $11.33
Cardinal IPO’d in December so remains under the radar screen of many dividend funds and trades at a discount valuation of 5.4 times EV/CF. Spending 82% of their cash flow they should grow production by 9% and pay a dividend equivalent to a 5.5% yield. Look for a meaningful dividend increase and/or increase to their production growth rate after a few quarters of drilling.
Past Picks: January 9, 2013
Crescent Point Energy
Then: $37.55; Now: $39.63; Total return: +13.33%
Then: $8.84; Now: $12.12; Total return: +45.07%
Then: $33.27; Now: $37.25; Total return: +14.41%
Total return average: +24.27%
Misplaced fear of the world oil market becoming flooded has created a headwind for global oil stocks, however in 2014 Canadian oil stocks may finally have their day in the sun as they benefit from a shrinking differential to WTI, improving access to U.S. markets, and a weakening loonie. For the first time in many quarters adjusted for currency Canadian oil is now more valuable than US oil…the market so far has failed to reflect this dynamic.Report Typo/Error
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