Investment Q&A

Q: I see the rail stocks down a lot today along with Trinity. How much do you think lower oil prices will affect these stocks going forward. Will there likely be curtailed production from the oil field?
Thanks
Dave

Q: Hi Folks:
I was a fairly large stake holder in Oil Exco (oil) which I followed down to nothing (thanks largely to Bank of Scotland's failure). For quite some time I have ceased believing the commodity story, as I watched the old adage "nothing cures high prices like high prices" and human ingenuity at work. Consequently the only Canadian Energy company I now own is Vermilion (about 7% weight). Do you feel this company and other mid tiers have the financial power needed to survive and prosper with $50-$60 oil (or lower) as this price looks in the cards for some time, or should one move into a more stable sector. I am a long term holder of (CVX) Chevron (similar portfolio weighting). Thank you so much for your service....it is worth far more than you charge!!!
brian

Q: Peter, I am in Div. Paying oil and gas and will stay. Question, Canadian dollar down 20 percent, Oil down 30 percent. Can one assume, or what is the correlation between the two. It would seem Div. cuts are not as sure as they were if the Canadian dollar was a dollar? The low dollar should very much help exporting industries???? Thanks Ken

Q: Hello 5i team

I am surprised there isn't more discussion on PRW after a whopping 15% fall on Friday.

I realize the news on oil in general is not that great and PRWs quarter wasn't over the moon. But it wasn't that bad was it

Anything you can see that explains the big drop

Thanks for all you do

Gord

Q: Hi Peter and team, what are your thoughts on BDI? How much of an impact would drop in oil prices have on BDI and how would you interpret the recent decline of almost 15%.
Thanks,

Q: Hi I have positions in both PRW and CWC…and I want to drop one of them and take the loss. Which is safer to hold in case energy stays down for 10 months? which has greater upside when oil/gas recovers? Thanks. Helen

Q: Yet another query/ clarification. In your reply to Dan's question re oversold oil and gas stocks you listed some of my favourites such as PEY, SGY, WCP and TOU.
The first 3 pay decent dividends and I am looking at adding to my position. However in another O &G answer you mentioned the likelihood of a flood of dividend cuts in the fairly near future if oil prices do not rebound. Such dividend cuts would likely drive share prices down even more.
Would you consider the stocks above (not TOU - no dividend) to be less likely to reduce their dividend? Case in point: SGY is now showing an 11.8% yield - enough to make a wounded investor salivate! Could you justify doing some buying right now.

Thanks.

Q: I have been very happy with your recommendation on Surge Energy. My game plan was to make sure I had a long term hold of a stock in Oil especially as the projection of CAD is to continue lower. In fact it is a wonderful relationship between the price of oil and CAD. It would appear, as the price of oil falls, so does CAD, implying a cushion for Surge. Not only does the falling Can Dollar help, but a lower price of oil in a growing econmy like the USA would suggest greater consumption on the horizon. I do understand there is a suggestion that the USA has a surplus of oil but was that not contributed by the refineries being off line for a time. In 2010 USA consummed 19.18 Mill B/per day. In 2012 they were producing only 11.11 Mill B/per day. There is no question in my mind that I want to invest more in an oil company, the real question I have here is "Can Surge survive to capitalize, or should a long term investor in oil look to another company?"

Q: With the low oil prices and demand being what they are, will the rail companies see a slow down?

Q: For a high risk investor looking to bottom feed, would you agree with taking positions in small cap energy infrastructure and energy stocks such as CEU, PRW, SPE? Any other suggestions? I plan to put a 25% trailing stop on them if they slide further to protect the principal.

Q: Hello Peter, Could you give me your thoughts on Freehold compared to Pairiesky? Do you prefer one over the other? Is the decline in their price due to the panic selling or is due to oil price decline?

Q: I fortuitously sold Suncor back in June but am now wanting to buy back into oil and gas in my wife's TFSA account. I have badger (bad) and Superior Propane (spb) in another rsp account but this would be more of a direct investment in the beleagured oil and gas industry. I have 10 000 dollars of room to invest with a long term window and was wondering which two of sgy,su,spe,or su you would recommend. Do I go back into the rock solid dependable Suncor or seek more growth with the likes of a Surge or Spartan or ???? Thanks

Q: Do you think a lot of these companies will be adjusting their 2015 budget ? These dividends such as TBE at 15 percent and 1.20 price would seem much at risk.

Q: Greeting, Peter & Co.
I fund and administer RDSPs for three young girls on the autism spectrum. Although I still have a 10 year time horizon I fortunately have no energy exposure in these portfolios. I am considering a small position in High Arctic Energy (HWO) as well as a position in a, yet to be determined, large cap energy company. My rationale is:
HWO has operations in Papua New Guinea (PNG) (74%) and Alberta (26%). Although HWO is not a typical Canadian energy services company its 6 month share price decline is identical to that of Calfrac and slightly less than some of the other Canadian companies in this sector. The PNG operations include services and equipment rentals to natural gas companies that provide natural gas to a new LNG plant that has very long-term supply contracts. The Alberta operations, in my opinion, containing more risk than PNG, are similar to those of other Canadian energy service companies.
HWO had a good Q3 and the balance sheet is solid. There is enough cash on hand to cover the CAPEX for the additional rigs that will be delivered in 2015. The dividend was recently increased by 10% to 5.3% at the current share price of $3.73 leaving a very low payout ratio.
Please advise me of any errors in my numbers or logic and your assessment of HWO.
With great appreciation for your most valuable service.
Ed

Q: I hold ALA, IPL, TRP, ENB, KEY, EMA & FTS. They are done with oil. I am thinking of selling some or all (in light of oil) and purchasing Blue Chip US Equities. Your thoughts would be appreciated.

Thank you as always.

Q: Looking at the OPEC correction is there an underlying reason why PD took such a severe pounding knowing that their business model is sustainable. I bought in to-day and am quite comfortable with it. I feel sometimes that these big days are more panic driven or is it the shorts trying to kill the small guys.I guess I'm looking for logic in a big marketplace. Thanks Doug

Q: I am not overly exposed in this area. Given todays drop can you recommend one or two stocks that have been oversold?

Q: As a holder of a full position in BTE I have no intentions of jumping of the cliff.
There are two things I would like to see BTE do
1 Declare their dividends by quarter.
2 If they feel the dividend is not sustainable cut it now and get it over with.
I feel BTE is a good company with a top management team and a above average asset base EG cost at Auroa are under $50 and their hedging is as good as any .
Could I have your comments on my assessment.
Stan

Q: Could you tell me what percent of WSP's work is usually oilfield related? And more specifically, is there a chance that some of the projects they have planned for may be cancelled due to low oil prices?

Q: I hold Baytex, Crescent Point and Surge. I went to each website for information. Baytex is hedged 24% in 2015 and has a Debt/FFO of 1.9 although their significant debt is not due until 2021. CPG = 37% hedged and 1.1 debt. Surge = 24% hedged and 1.4 debt.

I am a retired dividend investor. Regarding dividend protection, I suspect BTE is the most at risk. Do you agree?

What about shuffling the deck...sell BTE and allocate some of the proceeds to CPG and SGY?

To diversify within the oil & gas sector, which dividend paying natural gas stock would you recommend?

Thanks,
Steve