Portfolio Update: Escaping Volatility

I was out of Gear Energy, as you know, and MEG Energy. My timing was, for once, good. I took profits.

On the other hand my timing on Granite Oil wasn’t good.

GXO StockCharts.com August 19

Source: StockCharts.com

I sold Granite at a rock bottom price. It was frustrating as the stock was at C$3 per share a month ago. The stock continued falling last week. Granite could be an interesting buy in the future. For now it simply didn’t make sense to keep the stock.

I still think MEG is an interesting play on Canadian heavy oil, despite having sold half of my position. The stock showed some strength at the end of last week. There is a future for MEG shareholders, especially with an activist investor such as Highfields Capital.

I started to rebuild my position in Gear after the fall last week.

I also bought Corridor Resources. The New Brunswick election in September is coming in a month and it’s currently projected to be much more closer than what’s reflected in Corridor’s share price. All hope is not lost for shale gas in New Brunswick. Stay tuned for an updated article on Corridor.

I also bought more Raging River. My portfolio is also overweight Raging River. For the sake of good timings, this stock is one of them. Stock is at a 6-year low and I am off only by about 10%. Not so bad.

Disclosure: I am long CDH, GXE, MEG, RRX. Not for republication on Seeking Alpha.

Portfolio Update: MEG Energy And It’s New CEO

I am simply astonished by the choice of the Board of Directors of MEG Energy.

Derek Evans served as CEO of Pengrowth Energy from May 2009 until March 2018.

I extracted a weekly view of the stock price of Pengrowth from the time he became CEO of the company.

PGF TMX Money

Source: TMX Money

Shareholders never recovered.

MEG is still touting the prowess of Evans to streamline Pengrowth…

During his tenure, Mr. Evans streamlined the Company’s asset base from 35 properties to two growth assets, with over $9 billion of development opportunities.

MEG Energy Press Release, August 8, 2018

Evans did streamline the company. Although he streamlined Pengrowth from the many properties he himself acquired with debt.

To me this choice doesn’t make any sense at all. The market is also in disbelief as the stock fell 8% today.

The company has a great asset and egress out of Western Canada. It only needs a good leader shareholders can trust. It’s not the case currently. Really it’s more of the same.

I sold half of my position in MEG and I bought back Gear Energy. I am not cashing out my entire position only because I want to know what Highfields Capital Management will do. Highfields asked the Alberta Securities Commission permission to contact MEG shareholders directly.

The Filer wishes to communicate with the holders of Shares (the Shareholders) in advance of the Meeting to solicit such Shareholders’ proxies in respect of the business to be transacted at the Meeting. The Filer may wish to conduct the solicitations by public broadcast, speech or publication (the Public Solicitation) without sending a dissident’s proxy circular to each of the Shareholders.

Alberta Securities Commission Press Release, August 8, 2018

Highfields previously had a board seat. Daniel Farb resigned on July 24.

Disclosure: I am long MEG, GXE. Not for republication on Seeking Alpha.

Portfolio Update: Selling Gear Energy, Buying Peyto Exploration

I realized two new transactions in my portfolio today. It has been a long time since I traded.

I took profits by selling my position in Gear Energy. The stock currently looks weak in the short term.

GXE StockCharts.com July 26

Source: StockCharts.com

The WTI/WCS differential has been collapsing for the last couple of days… Yet again. This explains most of the weakness seen in Canadian energy stocks. I will nonetheless buy Gear again soon.

I bought a small position in Peyto and kept the rest of the proceeds in cash.

PEY StockCharts.com July 26

Source: StockCharts.com

Disclosure: I am long PEY. Not for republication on Seeking Alpha.

Portfolio Update: Sympathizing With Investors Enduring Pain

  • Despite mostly upbeat Q2 results, my stock picks aren’t moving higher.
  • Sentiment is still negative in the energy market, capping energy stocks gain.
  • Painted Pony and Point Loma are underperforming.
  • Prairie Provident and Granite Oil are my two favorite buys right now.

Click here to read the entire article on Seeking Alpha.

Portfolio Update: Adding To My Energy Holdings

Last Wednesday was a test for energy investors. Did you resist the urge of following the masses by selling your energy holdings?

I resisted. I added to my favorite energy holdings last Wednesday, which are Gear Energy, Point Loma Resources and Raging River Exploration. Those companies can survive low oil prices and then thrive once oil prices rise.

Here are my recent moves in the market.

First, I sold all the lithium explorers I bought last month: Critical Elements, Nemaska Lithium and Natan Resources, now Enforcer Gold. I was lucky to turn out a profit on this: Critical Elements skyrocketed 50% after investors learned the company had hired a communication firm for a year.

This experience would be cash neutral at best if it wasn’t for this gain. Just for example: Enforcer Gold switched its focus to gold exploration after I bought the stock for its lithium properties. All in all, this is another point to not speculate on the market.

Second, I sold TransGlobe Energy. It turns out the Canadian assets aren’t as transformative as I thought they would be. I first estimated netbacks at C$11.50 per barrel for total consideration of 6X 2017 FFO. Instead, netbacks were as low as C$6 per barrel in Q4, which implies an estimated price tag of over 10X 2017 FFO.

The Cardium light oil acreage should provide interesting returns according to past presentations from Angle Energy. Management will drill these lands only in late 2017. Therefore it will take some time before shareholders see something good from these assets.

I sold what was left of my position in MEG Energy for a sub-50% gain. WTI at sub-$50 won’t be enough for MEG to sell its pipeline at a good price. Hence share price appreciation will be limited in the short-term.

I added massively to my positions in Point Loma Resources, Gear Energy and Raging River Exploration using these gains.

I bought back Tidewater Midstream and Infrastructure on Friday after selling the stock two weeks ago. Support was limited below the 200-day moving average.

TWM StockCharts.com March 13

Source: StockCharts.com

Low AECO prices in Western Canada may delay growth projects by producers and lower flows in pipelines owned by TWM in the short-term.

I am now heavily positioned in the oil and gas sector with a strong presence in junior Canadian E&Ps with low leverage and high netbacks. Those companies can survive at $50 WTI and thrive at higher prices.

Disclosure: I am long GXE, PLX, RRX, TWM. Not for republication on Seeking Alpha.

Portfolio Update: Moving Chips To My Winners

I am now well positioned for 2017 after another series of move in my portfolio.

  • I added to my positions in Painted Pony Petroleum and in Gear Energy by selling part of my position in MEG Energy. I am preparing my portfolio for lower oil prices.
  • I opened a position in Tidewater Midstream & Infrastructure.
  • I bought back shares in TransGlobe Energy. TransGlobe’s Canadian transformation is a game changer to me. Plus the acquisition metrics are very good for TransGlobe shareholders.
  • I opened a position in Point Loma Resources.

I made a quick analysis for Point Loma Resources after hearing about the stock on Seeking Alpha. The stock is indeed trading at a very low 6.3X Year-End 2016 FFO. I estimate FFO of C$17.92 per barrel at year-end 2016. Furthermore, the company holds no debt except for convertible debentures and plans to grow production aggressively next year. In other words, the multiple should be higher.

Other interesting news for Canadian oil and gas producers: lower oil exports from Venezuela and possibly lower transport tariffs from TransCanada.

Lower heavy crude from Venezuela will benefit Canadian heavy oil and tighten the price differential of Canadian heavy oil versus WTI.

Finally, the new push for natural gas pipelines in the Northeastern US will force TransCanada to lower its transportation tariffs. Else it will face a severe decrease in its market share in Eastern Canada.

Disclosure: I am long GXE, MEG, PLX, PPY, TGL, TWM. Not for republication on Seeking Alpha.