Gordon Currie, Blackmont Capital’s new man on the energy beat, lined up five intermediate oil and gas producers and issued fresh recommendations. The verdict? Not so exciting. Four “sector performs” (read: hold), and one “sector outperform” (translation: buy).
Celtic Exploration Ltd., Compton Petroleum Corp. (CMZ), Crew Energy Inc. (OTCPK:CWEGF), Highline Oil and Gas all fell into Mr. Currie’s Hold category. NuVista Energy Ltd. (OTC:NUVSF) received the lone gold star.
So what’s the problem? Mr. Currie, in his first report since joining Blackmont after Wolverton Capital Markets imploded, argues the natural gas bubble (optimists are hoping will pop) will continue to haunt producers.
These companies are toiling in the mature western Canadian sedimentary basin, which has been well worked over after 60 years of exploration. They do have Montney shale gas holdings, so that’s a plus.
And so what makes NuVista so special? Mr. Currie wrote in a recent report:
Although NuVista is also natural gas-levered, it has a low cost structure, which has allowed the company to achieve superior recycle rates and to generate earnings where others have not.