looking at the junior energy plays

[selkirk]

most of the sr. oil and gas plays have moved up sharply and are no longer CHEAP, CHEAP, though they will stay have room to run, time to look at the jr. midcap plays.

seniors since jan like (cdn.$ though they also trade US) NXY (28-41), CNQ (64-105), ECA 64-94, TLM 18-24, and SU, and Devon, also dozens of others, so maybe jr. and midcaps.

DEE 3.24 (trades on Toronto only) is a good way to play rising natural gas prices (low 1.31 high 3.36), brought this stock up a few years back around 2.40 and it went above 3 quckly. then only to fall back down.

great story but it does have high amount of debt, if natural gas prices fall back down to 7-8, then say hello to 1.50. so natural gas prices will have to stay above 10 or misery.

TSK 2.97 talked about this one year back, around 2.50, it always seems cheap but for the most part does not move.
Tusk energy looks cheap.

will have more later, and try to update these, only a small amount as these are higher risk, though unlike most spec. they have cash flow.

overall building up my cash position over the last few weeks, this trend will continue over the summer, some by choice and also wrote covered calls that come due....

most of the calls on energy stocks wish I did not write, however the plays made a good return.
often sell covered calls on 50% of the position.

thanks
selkirk

 

[LOR]

Hi selkirk, I received this info on RYD. Do you follow this stock at all? If so, would you share your thoughts on RYD. The guy that gave me this info has been right on taget with other info he has shared. Thanks, Lor

I am an energy guy and I will make my fortune on RYD. Another strong day.
Ryland is more of a long term situation. They have 300000 acres in the most prospective Bakken/Lodgepole area of southern Saskatchewan.
However It could be strong in the short term as well. I look for $3.00 in September and 2 years from now I am thinking double digits.

As a rough guide every 1000bopd of production translates into 50 Million in market cap.
RYD currently has 150 million o/s and thus a m/c at roughly 305 Million. Their 2 successful wells are flowing at a total of roughly 500 bopd (off the record). I think by the end of the year they can get to 5-7000bopd with a 3 year goal of 50000bopd. So lo
fty but Findley and Lantz have done this before at Elm Coulee.
Watch out for NM as well. A new company that Findley will be involved in.

 

[selkirk]

LOR the good and bad about the stock :
Good
large land (in an area that is very good ) Bakken in S. Sask. is one of the areas where new production is coming from and you here it again and again.

bad
162 million shares outstanding, a little high, though they may grow into it.

no cash flow, though 500 is a start.

no sure what happened in August hit 4, then went down in the next few months....maybe poor drilling, jrs. did fall off in the fall.

at 2.20

would put this stock in the same category as Cdn. Superior, was asked about this stock a while back believe it was 3.30-3.50 now 4.25

preferred others at the time, however Cdn. Superior is drilling some large potential wells, if they hit then the stock will rise sharply if not then the stock falls back down 20-50%.

cdn. superior may also be worth a speculative investment though you could easily lose 30-50%...must realize the risk, that is over the prices of oil, and gas. may buy some of that since may go up before they announce results,.....

as for RYD it is overpriced at 500 bpd, though they are counting on a quick increase in production. not sure who follows it, brokerage.

if they can increase production to 3K-4K bpd then doulble the year after then strong potential..

however DEE and TSK already are producing 6000bpf, and have cash flow and should be trading at 4X this years cash flow.

so believe they are safer, would put RYD and cdn. superior in the same group.

also not sure if RYD will have to issue more equity...do not like companies with large shares outstanding...less of a run...

in general try to buy jr. with cash flow of 4X or less. as a general rule.

LOR if you do invest in the space, best to spread your invesments around....many times looking at say 3-4 companies, the one that like the best lagged and well hard to know who will get the best results...

management, increasning cash flow, and more drilling targets.....

thanks
selkirk

 

[LOR]

selkirk, Thank you your input, I appreciate it. Lor