Mason Granger.
Mason Granger is portfolio manager at Sentry Investments. His focus is on oil and gas stocks.
Top picks:
Canyon Services Group Inc.
Canyon is the fourth-largest pressure pumper in Canada and plays a central role in the development of unconventional reservoirs in Western Canada. We believe that current softness in the industry has stabilized. Canyon's high quality fleet and pristine balance sheet should see it well-positioned to capitalize on accelerating Montney and Duvernay development by super-majors.
Bankers Petroleum Ltd.
Bankers is a Calgary-based oil and gas company with development and exploration assets in Albania. The company currently producers a little over 18,000 barrels a day of heavy oil for both the Albanian and export markets. We believe that with its large development asset base and growing heavy oil demand globally, Bankers is in an excellent position to continue to grow production and cash flow on a per share basis.
Bellatrix Exploration Ltd.
We like Bellatrix as an organic growth story with a very reasonable valuation and the returns its core plays are among the most attractive in the basin. The company has to date provided best-in-class drilling results in its plays. Bellatrix has also been very active in seeking joint-venture partners in order to accelerate the realization of shareholder value from its asset base.
Past Picks: June 25, 2012
ARC Resources
Then: $19.69
Now: $24.70
Total return: +40.88 per cent
Vermilion Energy
Then: $41.76
Now: $55.90
Total return: +40.90 per cent
Bellatrix Exploration
Then: $2.70
Now: $6.81
Total return: +155.22 per cent
Total return average: +79.00 per cent
Market outlook:
We believe that share prices will rise through to the end of 2013 as uncertainty in infrastructure constraints and differentials recedes. North American oil had been subject to deep price discounts that reflected limited pipeline capacity; Keystone XL approval is very important but there are a large number of alternatives (including increasing rail transit) and refineries have been adding heavy oil capacity as well. These discounts have narrowed substantially in recent months yet this improvement has not been reflected in the share prices of many producers. We believe that global oil prices are well supported at $100 (U.S.) a barrel, and that the amount of spare capacity in the system is relatively small when compared to the amount of production that is at risk from the disruptive forces of geopolitics. Natural gas has also weakened into the summer months as U.S. production has remained stubbornly high, a significant amount of gas-fired power generation has switched back to coal. In addition, Canadian producers priced relative to the AECO benchmark have also suffered a widening differential to U.S. natural gas benchmarks that may persist for some time.