Analysts with Paradigm Capital selected a quartet of oil and natural gas
companies and one energy services company to highlight in the firm's recently
released Top Quarterly Picks Q3/16 report.
Analyst Ken Lin chose to spotlight Kelt
Exploration Ltd. (KEL:TSE), a Canada-based company with natural gas
operations in Alberta and British Columbia, and Pine Cliff
Energy Ltd. (PNE:TSX.V), with energy assets in Alberta and Saskatchewan,
and mineral assets in Canada and the U.S.
Analyst Ian Macqueen highlighted Parex
Resources Inc. (PXT:TSX.V) and Seven
Generations Energy Ltd. (VII:TSX). Parex is an explorer with what the
company calls a "significant land base of 2.10 million gross acres"
in Colombia. Seven Generations is focused on its Kakwa River project, a
"large-scale, liquids-rich Montney natural gas property" located in
Alberta, according to the company website.
Kelt is "less exposed to AECO [Hub pricing] than other natural gas
names," Lin notes. In addition, the company is trading below its net
asset value (NAV), which presents investors with "an attractive entry
point given the company's high historical premium to NAV and massive resource
potential."
Pine Cliff, while "highly sensitive to AECO," has yet to follow
on a recent AECO rally, thus also offering a "compelling entry
point," for investors, according to Lin.
Macqueen is modeling 81% year-over-year growth for Seven Generations in
2016, "to 109 mboe/d based on 65 new wells." Given that the company
is "drilling better wells more affordably and commodity prices are
improving," Macqueen believes the company's "hypergrowth profile
will continue."
Parex, with "$80 million ($80M) in positive working capital and an
undrawn $200M line," is prepared to "[expose] itself to ~110 MMbbl
of resources," Macqueen notes, adding "success at Aguas Blancas
could more than triple its inventory."
Analyst Jason Tucker added a pick in the Canadian energy services sector: Secure
Energy Services Inc. (SES:TSX), which provides processing, recovery,
disposal, drilling and production services in Canada and the U.S. Tucker
notes that higher oil prices should "positively impact both Secure's PRD
(Processing, Recovery and Disposal) and DPS (Drilling and Production
Services) divisions." In addition, Tucker expects a "positive
impact" into 2017 and 2018 from sales of production and enhanced oil
recovery (EOR) chemicals, which is slated to begin in Q3/16.
Disclosure:
1) Tracy Salcedo compiled this article for Streetwise Reports LLC and
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Additional
Disclosures for this Content
Disclosures from Paradigm Capital Quarterly Top
Picks, July 5, 2016:
About Paradigm Capital Inc.
Paradigm Capital Inc. (PCI) is a research-driven, independent,
institutional equity investment dealer focused on sectors and companies that
have attractive long-term secular growth prospects. PCI’s research is
available on our website at www.paradigmcap.com.
The analysts (and associates) certify that the views expressed in this
report accurately reflect their personal views about the subject securities
or issuers. No part of their compensation was, is, or will be, directly or
indirectly, related to the specific recommendations expressed in this
research report.
Please refer to the list below for the relevant disclosures:
Kelt Exploration Ltd. 3
Pine Cliff Energy Ltd. 2, 3
Parex Resources Inc. 2, 3
Secure Energy Services Inc. 2, 3
Seven Generations Energy Ltd. 3
1. The analyst has an ownership position in the subject company.
2. Paradigm Capital Inc. has assumed an underwriting liability for, and/or
provided financial advice for consideration to the subject companies during
the past 12 months.
3. Paradigm Capital Inc. expects to receive or intends to seek compensation
for investment banking services from the subject companies in the next 3
months.
4. Paradigm Capital Inc. has greater than a 1% ownership position in the
subject company.
5. The analyst has a family relationship with an Officer/Director of subject
company.
