ACTION ALERT PERFORMANCE REVIEW

Highlights in this month’s issue:

  • Four of our natural gas Action Alert BUYS remain in loss territory as does one of our energy service picks. They are cheap stocks and we added to some of these natural gas ideas over the last 30 days. In addition we started building a position in Trinidad Drilling when the stock retreated (Chart #1) as the company ended a mergers/acquisition process. Since then an unfriendly takeover bid was received from Ensign Energy Services (ESI-T). It was an egregiously low cash bid and is unlikely to gain traction. Either a higher cash bid over $2 or a cash and share offer by ESI will be needed to get TDG shareholders’ attention and support. The TDG stock now trades above the bid price as investors expect a higher bid by a white knight or some other maximization event. We would prefer them to stay independent as we see significant upside in the stock in the upcoming new Energy Bull Market. Our bull market cycle target is $7.00 per share, a long way from the current price of $1.84 (Chart #12).
  • Our best performer now on the Action Alert List is Birchcliff Energy (BIR-T) which is now up 30% since being recommended (Index up 11% in the time held).
  • We have lifted our coverage now to 31 companies with the addition this month of Vermilion Energy (VET-T) and Whitecap Resources (WCP-T). We are nearly at our full research coverage goals but may add a few more ideas if they have significant upside and cover areas where we do not currently have coverage. Ancillary industries that will benefit from a recovering energy economy in Western Canada are on our radar right now.
  • We expect to move 10+ companies from the Coverage List to the Action BUY list in the coming few months.

You can always find the most recent Action BUY List under REPORTS > Action Alert Lists.  (View Action Alert Policies.)

Chart #1

Trinidad Drilling Ltd. TDG-T Daily

SER August 2018: Company Lists & Q&A

Source: stockcharts.com – August 24, 2018

Chart #2

Trinidad Drilling Ltd. TDG-T

SER August 2018: Company Lists & Q&A

Source: stockcharts.com – August 24, 2018

Update on Cequence Energy (CQE-T) and their rights issue (details here).

Our views is that:

  • Cequence’s stock has declined recently due to the rights issue offering at such a cheap stock price (Chart #3).
  • We expect the vast majority of the rights will be taken up. The deadline is 4PM on September 10th.
  • We recommend subscribers who own the shares to take them up.
  • We are planning to take up all the rights we were issued.
  • On our lists we have adjusted our average cost to take into account the exercising of the rights.
  • The book value of the stock will fall if all rights are exercised from 61 cents per share to the 30-32 cents level depending on the final number of shares taken up, so don’t be concerned.
  • CQE will have the funds to drill up more Dunvegan oil wells which will restart growth but more importantly cash flow as the netbacks will rise substantially.
  • Our 1-year target remains $0.24 which leaves lots of upside ahead (Chart #4).
  • Cash flow in 2019 could rise to $22M or $0.06 per share or greater than Friday’s closing price. NUTS!
SER August 2018: Company Lists & Q&A
SER August 2018: Company Lists & Q&A

We recommend investors take up their rights. We plan to exercise all rights that we are entitled to.

Chart #3

Cequence Energy Ltd. CQE-T

SER August 2018: Company Lists & Q&A

Source: stockcharts.com – August 24, 2018

Chart #4

Cequence Energy Ltd. CQE-T

SER August 2018: Company Lists & Q&A

Source: stockcharts.com – August 24, 2018

Action Buy List

as of August 24, 2018

When Action Buy Alert IssuedCurrent Valuations% Change Since Alert
RECOMMENDED BUY LIST
SYMBOL
DATE
BUY PRICE
S&P/TSX INDEX
PRICE NOW
S&P/TSX NOW
STOCK PRICE
S&P/TSX INDEX
LARGE MARKET CAPITALIZATION >$1.0B
Birchcliff Energy Ltd.
BIR-T12/15/17$3.91181$5.0820129.9%11.3%
INTERMEDIATE MARKET CAPITALIZATION $400M – $1.0B
Surge Energy Inc.
SGY-T12/13/17$1.91186$2.3420122.5%8.3%
JUNIOR MARKET CAPITALIZATION $100M – $400M
Bonavista Energy Corp.
BNP-T12/15/17$1.78181$1.52201-14.6%11.3%
Crew Energy Inc.
CR-T12/13/17$3.41186$2.01201-41.1%8.3%
InPlay Oil Corp.
IPO-T12/15/17$1.44181$1.512014.9%11.3%
SDX Energy Inc.
SDX-V12/22/17$0.94189$1.0520111.7%6.6%
Trinidad Drilling Ltd.
TDG-T12/13/17$1.47186$1.8420125.2%8.3%
SMALL MARKET CAPITALIZATION < $100M
Bellatrix Exploration
BXE-T12/13/17$1.87186$1.29201-31.0%8.3%
Cequence Energy
CQE-T12/15/17$0.055**181$0.0552010.0%11.3%
Petrus Resources
PRQ-T12/15/17$1.47181$1.47201-27.9%11.3%
Western Energy Services
WRG-T12/22/17$1.16189$0.89201-23.3%6.6%

This Chart shows the conditions when the Action Alert was issued compared to the current date and the percentage of Change since the Action Alert was issued.

**Disclosure: After exercise of rights

Action Sell List

as of August 24, 2018

When Action Sell IssuedWhen Purchased% Change Since April 20, 2018
COMPANY NAMESYMBOLDATEALERT SELL PRICES&P/TSX INDEXDATEALERT BUY PRICES&P/TSX INDEXSTOCK PRICES&P/TSX INDEX
GAINS HARVESTED
Aveda Transportation
AVE-V04/17/18$0.9519012/22/17$0.45189111%0.5%
LOSSES TRIGGERED

This Chart shows the conditions when the Action Sell Alert was issued compared to the Action Buy Dates, and the percentage of Change since the Alert was issued.

SER Ownership Disclosure

as of August 24, 2018

TimingPurchase PricePurchases
ACTION ALERT NAMES
SYMBOL
ACTION ALERT ISSUED
STOCK PURCHASED
ACTION ALERT PRICE
PURCHASE PRICENEW OVER LAST 30 DAYS
LARGE MARKET CAPITALIZATION >$1.0B
Birchcliff Energy Ltd.
BIR-T12/15/1701/05/18$3.91$3.94
INTERMEDIATE MARKET CAPITALIZATION $400M – $1.0B
JUNIOR MARKET CAPITALIZATION $100M – $400M
Bonavista Energy Corp.
BNP-T12/15/1701/05/18$1.78$1.89yes
Crew Energy Inc.
CR-T12/13/1701/05/18$3.41$2.88yes
SDX Energy Inc.
SDX-V12/22/1701/05/18$0.94$0.90yes
Trinidad Drilling Ltd.
TDG-T12/13/1708/01/18$1.47$1.46new
SMALL MARKET CAPITALIZATION < $100M
Bellatrix Exploration
BXE-T12/13/1701/05/18$1.87$2.10yes
Cequence Energy
CQE-T12/22/1702/26/18$0.055*$0.06yes
Petrus Resources
PRQ-T12/13/1702/26/18$1.47$1.21

This chart discloses the purchase dates and prices of any stocks on the SER Coverage List that have been purchased or sold by Josef Schachter or his immediate family members.

**Disclosure: After exercise of rights

UPDATED COVERAGE LIST

When an Action BUY Alert is issued for a company, we add the Alert Buy Price to the Coverage List, add the company name to the Alert BUY List, and remove the Attractive Purchase and Table Pounding Buy levels from the Coverage List.

The Coverage List has also  shows which names were added to my personal portfolio or by my immediate family.

COVERAGE LIST

Energy & Energy Service Companies • Price as of August 24, 2018

COMPANIES
SYMBOL
STOCK PRICE
SHARES M O/S
MARKET CAP $M
ALERT BUY LEVEL
ATTRACTIVE PURCHASE
TABLE-POUND BUY
RECENT BOOK VALUE
12 MO TARGET
MARKET PEAK
INSIDER*
LARGE MARKET CAPITALIZATION >$1.0B
Birchcliff Energy Ltd.
BIR-T$5.08265.9$1,351$3.91$6.42$9.00$15.00SER August 2018: Company Lists & Q&A
Crescent Point
CPG-T$8.47549.0$4,650< $9.00< $8.00$16.32$16.00$34.00
Diamond Offshore (US$)
DO-N$17.365137.2$2,382< $11.00< $10.25US$27.30$18.00$40.00
Ensco PLC
ESV-N$6.78301.2$2,042< $4.30< $4.00US$18.60$11.00$40.00
Gran Tierra Energy Inc.
GTE-T$4.35391.3$1,690< $3.40< $3.00US$2.50$5.50$12.00
Precision Drilling Corp.
PD-T$5.19293.2$1,522< $3.50< $3.20$6.01$7.00$14.00
Tamarack Valley Energy Ltd.
TVE-T$5.05228.6$1,154< $3.25< $3.00$3.41$6.00$14.00
Tourmaline Oil
TOU-T$21.80271.1$5,910< $20.50< $19.50$27.13$34.00$60.00
Transocean (USD)
RIG-N$11.79391.2$4,612< $9.00< $8.00US$28.70$16.00$50.00
Trican Well Service
TCW-T$3.08346.6$1,068< $3.40< $3.00$3.29$6.00$12.00
Vermilion Energy
VET-T$41.82152.4$6,373< $42.00< $39.00$17.39$50.00$70.00
Whitecap Resources
WCP-T$8.69417.5$3,628< $8.25< $7.75$7.79$12.00$20.00
INTERMEDIATE MARKET CAPITALIZATION $400M – $1.0B
Canacol Energy
CNE-T$4.14177.8$734< $4.10< $3.80US$1.42$8.00$18.00
Painted Pony Energy
PONY-T$2.95161.0$475< $2.10< $2.00$6.47$6.00$15.00
Pengrowth Energy Corp.
PGF-T$0.93556.1$517< $0.85< $0.80$1.35$2.00$4.50
STEP Energy Services
STEP-T$7.9667.1$534< $9.25< $8.25$6.74$15.00$30.00
Surge Energy Inc.
SGY-T$2.34233.1$545$1.91$3.24$3.70$8.50
Trinidad Drilling Ltd.
TDG-T$1.84269.5$496$1.47$4.61$3.00$7.00SER August 2018: Company Lists & Q&A
JUNIOR MARKET CAPITALIZATION $100M – 400M
Blackbird Energy Inc,
BBI-V$0.355748.0$266< $0.38< $0.35$0.22$0.72$2.00
Bonavista Energy Corp.
BNP-T$1.52257.0$391$1.78$5.78$7.00$20.00SER August 2018: Company Lists & Q&A
Crew Energy Inc.
CR-T$2.01148.9$299$3.41$5.74$7.00$22.00SER August 2018: Company Lists & Q&A
InPlay Oil Corp.
IPO-T$1.5167.9$103$1.44$2.83$3.60$6.00
Questerre Energy
QEC-T$0.43389.0$167< $0.50< $0.45$0.45$1.20$4.00
SDX Energy Inc.
SDX-V$1.05204.5$215$0.94US$0.56$2.00$5.00SER August 2018: Company Lists & Q&A
SMALL MARKET CAPITALIZATION < $100M
Bellatrix Exploration
BXE-T$1.2949.4$64$1.87$12.11$7.00$20.00SER August 2018: Company Lists & Q&A
Cequence Energy
CQE-T$0.055245.5$14$0.055**$0.61$0.24$0.70SER August 2018: Company Lists & Q&A
Essential Energy
ESN-T$0.53141.9$75< $0.56< $0.50$1.17$1.20$5.00
Petrus Resources
PRQ-T$1.0649.5$52$1.47$2.93$2.40$6.00SER August 2018: Company Lists & Q&A
Razor Energy
RZE-V$2.9515.8$47< $2.30< $2.10$1.13$3.50$12.00
Touchstone Exploration Inc.
TXP-T$0.31583.1$26< $0.25< $0.20$0.31$0.50$2.00
Western Energy Services
WRG-T$0.8992.2$82$1.16$4.15$2.00$8.00

*Disclosure: Ownership by JIS or immediate family member
No new positions either Buy or Sell can be undertaken by anyone at SER until 5 days after an Action Alert has been sent out

**Disclosure: After exercise of rights

Q&A WITH JOSEF SCHACHTER

In this section we will cover questions that have been sent to us by subscribers and that are topical or which have come in from a number of subscribers. No questions this issue! Please send your questions to info@schachterenergyreports.ca and we will cover a few of them in each issue of the SER.

DISCLOSURE POLICY

The Schachter Energy Report is an investment research publication focused on the Canadian Energy Sector and published by Schachter Energy Research Services Inc. (“Schachter Energy Research”) based in Calgary, Alberta. The investment research is not intended to provide specific tailored investment advice to any subscriber and is not to be used for commercial resale.

The founder and principal contributor to the Schachter Energy Report is Josef Schachter.  He has been conducting investment research for 40 years.  The companies covered by Josef Schachter do not pay him for publishing research, nor does he receive stock grants or options from those companies.

Josef Schachter’s research is focused of benefiting subscribers by giving them independent and objective investment research to assist subscribers in making informed investment decisions with the help of their investment advisors.

Directors and employees of Schachter Energy Research, and their immediate families, and service providers with access to company information contained in the Schachter Energy Report prior to publishing, have contractually agreed to:

  • refrain from purchasing or selling shares in any company profiled in our Coverage List until five business days after the publication of the Schachter Energy Report which discloses this company information; and
  • refrain from purchasing or selling shares of any company mentioned in an Action Alert until five business days after that Action Alert is issued by email. An Action Alert will be sent by email when any covered company reaches a Schachter Energy Report Price Target. This is to allow our subscribers first chance to act on the research contained in our report.

Directors and employees of Schachter Energy Research and their immediate families may, from time to time, have a financial or other interest in companies profiled in the Schachter Energy Report and such interests will disclosed in the applicable Schachter Energy Report. Any contractual relationship between a director or employee of Schachter Energy Research and a company profiled in the Schachter Energy Report will also be disclosed.

It is a violation of law to reproduce or distribute all or part of our reports to anyone (including but not limited to others in the same company or group) by any means, including but not limited to photocopying, printing, faxing, scanning, emailing and website posting without the prior written consent of Schachter Energy Research.