some of our favourite junior oil stocks: whitecap ... · cenovus energy (cve) $13.16 +0.09 cardinal...

David Pescod 780.932.5183 Debbie Lewis 780.499.3933 April 16, 2019

Some of our Favourite Junior Oil Stocks:

Whitecap Resources (WCP) $5.55 -0.12TORC Oil and Gas. (TOG) $5.03 -0.10Vermilion Energy (VET) $35.31 +0.09

Some of Keith Schaefer’s Favourite Stories:

Cenovus Energy (CVE) $13.16 +0.09Cardinal Energy (CJ) $3.40 -0.01Crescent Point Energy (CPG) $5.41 -0.23

The last few months has seen a little bit of joy return to the oil and gas patch, but many have already forgotten just how bad it was back in November and December. Portfolios of oil and gas stocks were being literally destroyed and of course if you were in the game of analyzing and trying to pick a few oil and gas stocks, that wasn't a lot of joy.Keith Schaefer was not having a lot of giggles, but it's interesting to see his new take on Canadian oil stocks. As he writes in his latest issue of Oil and Gas Investments Bulletin, "I can't believe I'm saying this – but I think Canadian oil stocks could outperform US oil stocks this year. The charts look great, and it looks like we're

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Commentary on these charts are by Keith Schaefer

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coming out of maximum pessimism in the oil patch. That's where BIG GAINS are made.The Market is starting to price in three factors:

1. The heavy oil story in Canada – heavy oil prices bottomed at US$10/b in late 2018, and now they are over US$50! Nobody thought that would happen so quick.2. Regime change in Alberta and Ottawa – the left wing New Democratic Party wil l almost certainly get defeated in this Tuesday's election. And the federal election in October is now a toss-up – only 6 weeks ago I would have bet you a steak dinner that Prime Minister Justin Trudeau would get re-elected with a majority(However, if there is an upset in

the Alberta election on Tuesday and the opposition UCP – United Conservative Party – doesn't win a majority, you can throw all those good looking charts in the garbage.)3. Natural gas prices will stay low, and maybe even go lower in 2019...In Schaefer's new piece he writes, "Several Canadian oil producers now have Free Cash Flow ratios that would make them world leaders in almost ANY industry – and the Market is now willing to see through the political clouds and take a chance here at ridiculously valuations – I mean two and three times cash flow.(Note that very few of the intermediate and even larger US independent producers generate Free Cash Flow.)A huge free cash flow yield means a company can buy back LOTS of outstanding shares in two or three years. Valuations like that self-correct quite quickly."As far as fundamentals for the oil and gas patch, Schaefer writes, "Production declines in Venezuela and Mexico should drive the Canadian heavy oil story for months; probably several quarters and quite possibly for years...If you believe – as I do – that the Saudis can't actually produce more than 10.5 million bopd for any real length of time, then the heavy oil story has


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Y E A R S a n d t h e s e stocks could hit 2014 levels" (referring to Cenovus, Cardinal and Crescent Point).We should remember his point about the e lec t ion in A lbe r ta though as again he notes, "if the United Conserva t ive Par ty doesn't win a majority, throw all those good looking charts out."The Notley regime has proven abundantly that they love having ever m o r e g o v e r n m e n t employees and don't seem to be working too hard to make sure the e n e r g y s e c t o r h a s someone backing it.

To take a look/see at Keith’s full recent letter, click here: oilandgas-investments.com.

Which gets us to one chaps thoughts...One financial advisor-type that we learned to listen to has some interesting comments on the coming Alberta election. He already has his own money and 60% to 70% of his clients money invested in the United States and that has served them rather well, having assets on that side of the border. But he suggests if Notley wins, he will immediately suggest to clients to simply just get out of Canada as he believes that if Notley can win after what's happened in Alberta, that just tells him that Trudeau can also be re-elected as Prime Minister.As far as he's concerned, those two have the ability to not only destroy economies, but possibly wreck a country!


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Aphria Inc. (APHA) $8.69 +0.09CannTrust Holdings (TRST) $9.11 -0.08

For those of us of a certain age, we can remember the era between 1999 and 2001 when we had the dot com bubble. Everything that said it was an IT stock, soared and very few questions were asked about whether the t e c h n o l o g y w o r k e d o r produced anything of value. It seemed automatic...tell the story, list the stock, and watch a billion dollars in value be created. Only a few years later to watch it totally disappear and so many stocks did actually disappear. And NASDAQ, where so many of them had their home, dropped 70%. Peop le seemed to be forgetting that marijuana or pot farming or growing pop is...farming. And farming is not that profitable - simply ask any farmer about that. As we have suggested, it's just a matter of a few years before tons of pot farms in Mex ico appear, where

labour is cheap, where you don't have to build expensive buildings with heating facilities and high labour costs. Yesterday a tad of reality hits one pot stock as Aphria announces their latest financials...or should we say, lack of financials. As the BNN Bloomberg reporter David George Cosh writes, " Aphria aimed to address several key issues after it released its third-quarter results on Monday.The Leamington, Ont.-based cannabis company settled its hostile takeover battle with Green Growth Brands Inc., took a one-time $50-million impairment charge relating to its Latin American operations that attracted short sellers' scrutiny in December, and acknowledged the supply shortages and packaging constraints that led it to a net loss of $108.2 million."Is this money-losing company really worth $3 billion? Aphria dot com…Meanwhile CannTrust, another pot player announced their earnings (or should we say lack of earnings) a few weeks ago and the chart tells you they weren’t good at all.


Aphria

CannTrust

Is this our new target on Aphria…for those of us who don’t believe the pot stories?

Is this our new target?




TIME TO RAISE THE RETIREMENT BENEFIT AGE IN CANADA?

Globe and Mail columnist Rob Carrick has certainly raised a heck of a storm by writing a column featuring some work by the Canadian Institute of Actuaries that suggests because of an aging population and concerns about the country's financial condition, it's time to raise the "standard age for starting retirement benefits to 67". Needless to say, there's a whole bunch of people that would rather receive their benefits earlier.The CIA report points out that women at 65 still had a life expectancy of 22.5 more

years in 2016 while the men of the same age could expect 19.9 more years, compared to years ago when people lived shorter life spans.The actuaries Carrick writes, "look at our aging population and worry that:1. Retirees will need more savings than previous generations because they will

live longer, because company pensions have become more scarce and because saving is made more difficult by low interest rates.

2. The economy will have to contend with slower growth and labour shortages as members of the baby-boom generation move from the work force into retirement.

3. Government finances will be strained by declining tax revenue as the population ages coupled with higher payouts for health care.”

So the question is: Could you accept such a new policy even though you know you would be

waiting for benefits at an older age? Yes or No






Deb’s Ditty: I’ve reached the age where I can’t

function without my glasses. Especially if they’re empty.



some of our favourite junior oil stocks: whitecap ... · cenovus energy (cve) $13.16 +0.09 cardinal...

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