Post by
rolfoto on Feb 15, 2006 5:10pm
Linder on FE - RoBTV FEB 14
>> Pat: Well, oil's at its lowest point so far this year and the tsx energy sector's getting dragged along for some of that ride. Is the big oil correction all feared here? Well, peter linder of deltaone energy will
>> Pat: All the chocolates and valentine day roses in calgary aren't going to be enough to cheer up energy investors today. Oil is at the lowest point so far this year and some of the energy stocks sliding as well. Let's check in with peter linder, he's the vice president of investments at deltaone energy fund in calgary. I guess, peter, my initial question is: This sell-off. Is the big one everybody was expecting? >> Peter linder: Well, it certainly seems that way. We've had a huge correction six days in a row. But, remember, this follows the very, very significant run-up in the sector a week ago monday. So, you know, i think the worst is just about to be over and maybe it's over after you and I finish this interview but we're certainly near the bottoM.
>> Pat: Who does this hurt? Obviously, the calgary business mind is getting hurt, but doesn't it apply to all canadians?
>> Peter linder: Well, it clearly hurts all investors in oil and gas stocks. But, again, this is a very -- I believe, very temporary, knee-jerk reaction that's going to be over in a matter of hours or days, and we'll be back on to a very healthy, growth environment for the industry. These -- these things seem to happen every three, four months and we're seeing it rights now. Most people expect the sector to really weaken off in the spring, and having had no winter this year, i guess spring came early. >> Pat: What will be the main driver of the recovery you're anticipating, peter?
>> Peter linder: The main driver will be stablization of oil prices, stablization in natural gas prices and the realization that fundamentally, nothing has changed in terms of very strong oil and natural gas price. All the factors that cause oil prices to stay in mid-60s are still around and same thing for natural gas at much higher levels. What really hurt the prices is the ridiculously mild winter we've had across north america. I would argue had we had a normal winter like last year, natural gas prices today would be double and oil would be in the high 60s right now. >> Pat: H'mm. Peter, you and i have talked a lot in the past and you have a bias towards the small corporations, but a lot of big names have come back down. Would you look at those as a buying opportunity?
>> Peter linder: Definitely, especially companies like canadian natural resources, talisman and encana. These guys are down, what, 20%, almost in, the past six days. I think the risk-reward buying them right here is phenomenal. Thedownside may be another dollar or two and the upside is back to where they were a week ago within a matter of months. They all short report very good '05 numbers starting tomorrow. The answer is, yes. >> Pat: You never fail to give us some interesting new names, though, peter. I've got a list of them here. I'll start with a find energy and leader energy services.
>> Peter linder: I mentioned find on this show many times. It's one of my biggest holdings in the fund. This stock was with, basically, $11 two weeks ago. Today I think it's around $8, $8.10, nothing really has changed. They've doubled their production from last year. They're going to generate cash flow between 210 and 2.50 a share, 60% weight towards natural gas. It's like a takeover candidate, very attractive company, a low debt, phenomenal drilling prospects, very strong technical team. So, again, that remains one of my favourite little juniors. The other one, the leader energy, it's a service company. This stock was $6.57 about two weeks ago. Where is it now? 4.50, 4.60? >> Pat: 4.60, you got it.
>> Peter linder: Thank you. Again, it's a ridiculously low value for a very strong junior service company.
>> Pat: How about vero.
>> Peter linder: Again, that's another real junior. That's a spinoff from true energy. Great drilling prospects. This stock was a lot high area week ago. But, you know, you take a basket of these juniors, a little bigger companies, series, pro-ex, rider, crew, all these names, they're down 30, 40% in the past month or so. Again, way overdone. >> Pat: But don't they have to find, at some point, peter, outside interest and say, because the sell-off has been so fast and sharp, people have got to be shaken by that. Don't they have to find new money to move into this?
>> Peter linder: Certainly. One big investor on last thursday dumping a loft these names at a huge discount and that got things going. What you're seeing now is a lot of retail investors being seriously spooked and selling. The volumes today and yesterday are very, very low indicating that the series investor is sitting on the sidelines waiting to swoop in and buy. I think we will see that very, very soon. What i want to leave your audience with is that stop selling these names, because they are phenomenal names and they will come back. As we get into a driving season, we're getting to the cooling season, we're getting into hurricane season this spring and summer, i strongly believe that we will have a nice recovery in the sector. Oil will be back towards 70, natural gas will be at least $10 5,000 cubic feet and we will look back at this valentine's day massacre and say to ourselves, we should have been buyinG.
>> Pat: Peter about that big seller selling a little while back, institutional, but was it domestic or foreign?
>> Peter linder: I don't know white was. It was a big institutional seller selling all these juniors at prices, i might add, higher than where they are today, but at a large discount. I think that spooked the market to some extent. I don't want to overstate that. Selling tends to beget selling. Oil's down to about $60 a barrel. Gas is just over $7 a thousand cubic feet. These are still very, very attractive prices and I want to also stress there's significant, I.E., Future prices are higher than they are today's prices. We're seeing the low of the year right now. >> Pat: Yeah, as you say, go buy a basket. I have two other charts. Series and pro-ex. Series, you mentioned, as part of the basket.
>> Peter linder: That's correct. I mean, this is a very, very strong -- an a-management team, predominantly natural gas. They not been affected by the mild weather in terms of the drilling programme. They're drilling record number of wells very, very successfully. This stock was $17, $18 a few months ago, around $13 right now, again, very inexpensive. They're going to report very, very good q4 numbers and a good winter programme as well. >> Pat: Peter, always a pleasure.
>> Peter linder: Thank you for having me.
>> Pat: Peter linder is the vice president of the investments,