Post on 02-Oct-2021
BLACK GOLD WEBINAR
March 19, 2020
• Bear Market History Review
• Overview Of Energy Markets – Why We Issued Our Action Alert BUY
• Q & A – Overview Only
• The Good, The Bad And The Ugly Of Energy And Energy Service Companies
• Final Q & A
Please send in your Questions through the Chat window
JOSEF SCHACHTER PRESENTS
WEBINAR PROCESS1. All attendees’ microphones have been muted. Please send in your questions via the
Chat Window on the right side of your screen. You can also send me a message ifyou are having difficulties with the audio.
2. We have had a huge number of questions sent in and Josef has spent the last 48hours putting together the answers in a presentation format to cover most of thesequestions.
3. For that reason, tonight’s webinar will exceed the 90 minute format by an additional30 minutes to accommodate any additional questions that are not covered in hisprepared response.
4. This webinar is being recorded and will be posted online tomorrow in the earlyafternoon.
5. Securities Laws prevent us from providing individual advice to individual investors.
AGENDA FOR MARCH 19, 2020 WEBINAR
Bear Market History Review - Overview Of Energy Markets – Why We
Issued Our Action Alert BUY
(30 minutes)
Q & A – Overview Only (10 minutes)
The Good, The Bad And The Ugly Of Energy & Energy Service Companies
Second Q & A
Time
(35 minutes)
(15 minutes)
90 Minutes
Extended Q&A Record Number of Questions 30 Minutes
BEAR MARKET HISTORY REVIEW
Market Crashes Review
The Event Dow Jones When Crash Started
Dow Jones at Crash Bottom
Percent Decline Duration of Crash, Days Start to End
1929 352 199 - 43% 19
1987 2,528 1,116 - 36% 5
9-11 10,400 8,062 - 22% 14
2008 - 2009 10,833 7,774 - 29% 7
Feb 19, 2020 29,250 18,917 (March 18) - 35% 19
Source: SER
Source: stockcharts.com March 18, 2020
Market Crash 2020 – Dow Jones Industrials – The Trump Term
35%
Source: Wall Street Journal – Daily Shots Wednesday January 3, 2020
CNN Index At Extreme Greed – Contrarian Indicator
Source: money.cnn.com March 17, 2020
Market Now Running On Fear Not Greed
Source: stockcharts.com March 17, 2020
Market Crash 2020 – TSX – The Trump Term
37%
History Of Market Crashes
Source: Wall Street Journal Daily Shots March 13, 2020
Source: CNBC March 16, 2020
Biggest Dow Jones Down Days
Volatility Worst Since Great Depression -1929
Source: Wall Street Journal Daily Shots March 18, 2020
The Crash of 1929
48 % in
19 days
294.07
198.69
381.17
Source: Adapted from original hard copy and website news.goldseek.com
Source: stockcharts.com June 9, 1989
Dow Jones Industrial – Crash of 1987
Down 41 %
Crash – 5 days
Source: stockcharts.com February 8, 2002
9/11 Impact On Dow Jones Industrials
Crash – 14 days
Down 29 %
Source: stockcharts.com November 11, 2009
The Dow Jones Industrials Got Smacked Down 2008 Financial Crisis
Crash – 7 days
Down 45 %
Source: stockcharts.com February 27, 2009
US 3-Month Treasury Yield % - Financial Crisis 2008-2009
Source: stockcharts.com March 18, 2020
US 3-Month Treasury Yield % - Coronavirus 2020
Source: Wall Street Journal Daily Shots March 16, 2020
Potential Downside Levels For S&P500
S&P 500 200 Day Moving Average Needs One More Crackto fall below 20% and generate a BUY Signal
OVER BOUGHT SELL >75%
OVER SOLD by < 20%
Source: stockcharts.com March 6, 2020
% Of Stocks Above 200-Day Moving Average
Source: Wall Street Journal Daily Shots March 17, 2020
Source: stockcharts.com March 17, 2020
S&P 500 Percent of Stocks Above 200 Day Moving Average 2008-2009
Source: stockcharts.com March 18, 2020
S&P 500 Percent of Stocks Above 200 Day Moving Average 2020
Source: Wall Street Journal Daily Shots March 16, 2020
Extreme Bearishness Now Seen
Source: stockcharts.com March 17, 2020
$VIX Through History
High
Volatility
-
Markets
Fearful
Low
Volatility
-
Markets
Greedy
Source: stockcharts.com March 17, 2020
$VIX Financial Crisis 2008-2009
39 days
Source: stockcharts.com March 18, 2020
$VIX Financial Crisis During Coronavirus And Oil Price War 2020
31 days so far
New Cases Of Covid-19 Slowing In China
Source: Wall Street Journal – Daily Shots March 5, 2020
China Beginning To Recover Economically
Source: Wall Street Journal Daily Shots March 17, 2020
China Recovering Economically - Keys: Self Quarantining Still When Not Working And Temperature Testing Everyone Entering Workplaces And Transportation etc.
Source: Wall Street Journal Daily Shots March 19, 2020
Source: Wall Street Journal Daily Shots March 16, 2020
US Recession In 2020
OVERVIEW OF ENERGY MARKETSWHY WE ISSUED OUR ACTION ALERT BUY
World Demand For Crude – Balance Of Supply/Demand
Source: EIA Short Term Energy Report March 11, 2020
Source: Baker Hughes, March 2020
Target
Q3/20
Source: Wall Street Journal Daily Shots March 19, 2020
Source: Baytex Annual Report 2019
US Shale Production Falling
Source: EIA Productivity Report March 16, 2020
Oil Price War – Build In Inventories
Source: EIA Short Term Energy Report March 11, 2020
1
2
3
World Oil Consumption 1965 Onward
Volcker
Financial Crisis 2008-2009
Recession
Source: WTRG.com 2013
Long Term Demand - Sets Up Bull Case For US$100/b Crude Oil
Source: JPM Morgan Chase March 2020
Update: Canada Oil Patch Cuts Up to $2.5 Billion from Budgets Amid Rout
Source: Energy Now Media, March 17, 2020
Source: Energy Now Media, March 17, 2020
Source: David Stockman’s Contra Corner - March 12, 2020
Energy Industry Under Duress
Prior SER Crude Forecast – March 6, 2020
Source: SER forecasts – March 6, 2020
Q2 Q3 Q4Q1 Actual
Range to
date
Q1 Forecast Q2 Forecast Q3 Forecast Q4 Forecast
WTI
US $/B
85
80
75
70
65
60
55
50
45
40
35
SER 2020
WTI QUARTERLY CRUDE OIL FORECAST 2020
Q1
CORONAVIRUS PANDEMIC SITUATION
6764
52
827876
66
2020 yearaverage US$ 70/b
41.05
65.65
40
Revised Saudi / RussiaOil Price War
Source: SER forecasts – March 19, 2020
Q2 Q3 Q4Q1 Actual
Range to
date
Q1 Forecast Q2 Forecast Q3 Forecast Q4 Forecast
WTI
US $/B
85
80
75
70
65
60
55
50454035
30
25
20
15
45 45 45 60 70
SER 2020
WTI QUARTERLY CRUDE OIL FORECAST
Q1
Quarterly Average
6764
40
827876
66
20.12
65.65
20
2020 yearaverage US$ 55/b
Source: Energy Now Media, March 17, 2020
Average Price AECO $/MCF
2019 $1.62
2018 $1.53
2017 $2.25
2016 $2.21
2015 $2.70
2014 $4.48
Gold/Oil Ratio – Oil Cheap
Source: Wall Street Journal Daily Shots March 17, 2020
S&P Energy Bullish Percent Index – Monthly
Source: stockcharts.com February 14, 2020
Energy Market Cheap BUY
Energy Market Expensive SELL
S&P Energy Bullish Percent BUY Signal In 2014
Source: stockcharts.com March 12, 2015
5 days < 5%
Source: stockcharts.com December 31, 2018
S&P Energy Bullish Percent BUY Signal In 2018
15 days < 5%5 days 10 days
S&P Energy Bullish Percent BUY Signal In 2020
8 days so far < 5%
Source: stockcharts.com March 19, 2015
MARKET CONCLUSION
WTI Crude Oil – Monthly
Source: stockcharts.com March 18, 2020
OVER BOUGHT
OVER SOLD
OVER BOUGHT
?
?OVER SOLD
OVER BOUGHT
OVER SOLD
OVER SOLD
OVER BOUGHT
?
?
Source: stockcharts.com March 18, 2020
S&P/TSX Energy Index – Monthly
SER Ownership Disclosure – March 18, 2020
QUESTIONS?
We will now answer questions regarding the Overview section
Up to 10 minutes
THE GOOD, THE BAD AND THE UGLY OF ENERGY AND ENERGY SERVICE COMPANIES
RISING DEBT LOADS
Market Cap: 73.0M share x $0.27 = $19.7M
Debt 27%
Book Value
$22.38/share
Forbearance
for Obsidian
Market Cap: 260.6M share x $0.155 = $40M
Debt 69% - $805M
Book Value
$4.41/share
Poker Game: Banks vs Unsecured Note Holders
The Problem
Market Cap: 144.9M share x $0.155 = $22.5M
Debt 166%
Book Value
$2.53/share
Market Cap: 163.1M share x $0.29 = $47.3M
Debt 108%
Book Value
$8.97/share
Market Cap: 164.9M share x $1.10 = $181M
Debt 65%
Book Value
$10.38/share
Market Cap: 156.3M share x $2.44 = $381M
Debt 78%
Book Value
$19.72/share
Market Cap: 92.5M share x $0.20 = $18.5M
Debt 85%
Book Value
$2.89/share
Market Cap: 85.4M share x $0.285 = $24M
Debt 63%
Book Value
$3.56/share
Declining Debt Loads
Market Cap: 529.4M share x $0.80 = $424M
Debt 51%
Book Value
$10.09/share
Source: Stockcharts.com, March 18, 2020
12-month Target $7.00
Market Cap: 156.2M share x $0.16 = $25M
Debt 38%
Book Value
$9.85/share
Debt
$348M$355M
THEY HAVE TIME!!
Source: Stockcharts.com, March 18, 2020
12-month Target $1.80
Market Cap: 24.5M share x $0.27 = $6.6M
Debt 140%
Book Value
$4.37/share
$150m $167M
Source: Stockcharts.com, March 18, 2020
12-month Target UNDER REVIEW
Market Cap: 275.9M share x $0.44 = $121M
Debt 93%
Book Value
$9.53/share
Source: Stockcharts.com, March 18, 2020
12-month Target $3.50
Winners Long Term
Market Cap: 265.9M share x $0.64 = $170M
Debt 36%
Book Value
$8.37/share
Source: Stockcharts.com, March 18, 2020
12-month Target $5.00
Market Cap: 1228.7M share x $2.19 = $2,691M
Debt 35%
Book Value
$15.62/share
Source: Stockcharts.com, March 18, 2020
Market Cap: 335.1M share x $0.23 = $77M
Debt 57%
Book Value
$2.00/share
$447M$385M
Source: Stockcharts.com, March 18, 2020
12-month Target $1.20
Market Cap: 271.0M share x $7.88 = $2,139M
Debt 20%
Book Value
$29.39/share
Source: Stockcharts.com, March 18, 2020
12-month Target $24.00
Market Cap: 271.5M share x $0.48 = $130M
Debt 6%
Book Value
$2.73/share
Source: Stockcharts.com, March 18, 2020
12-month Target $2.25
Market Cap: 409.6M share x $0.78 = $319M
Debt 40%
Book Value
$7.15/share
WCP: 0.78$
Revenue $M 815.7 622.3 635.3 1,031.2 1,525.3 1,418.5 1,550.0 3,000.0
Production
Oil & Liquids b/d 23,392 30,932 35,566 47,004 61,728 59,916 57,120 102,000
Natural Gas Mmcf/d 54.4 60.1 61.7 62.7 68.7 72.4 68.0 112.5
Total 6:1 32,458 40,953 45,841 57,450 74,415 71,050 68,000 120,000
Volume Growth 64% 26% 12% 25% 29% -5% -4% n/a
Per Million Shares 128 136 124 138 182 174 169 288
Gross Wells Drilled 169 125 104 227 261 193 125 330
Volumes Mix %
Oil & Liquids 72% 76% 78% 82% 85% 84% 84% 85%
Natural Gas 28% 24% 22% 18% 15% 16% 16% 15%
Financials
Operating Netback ($/boe) 44.95 36.11 26.46 27.47 29.33 30.34 32.00 44.00
Cash Flow/Share $2.08 $1.69 $1.13 $1.37 $1.69 $1.64 $1.47 $4.08
Price/Cash Flow 0.38 x 0.46 x 0.69 x 0.57 x 0.46 x 0.48 x 0.53 x 0.19 x
Net Capital Expenditure $M 1,604.4 1,040.7 660.5 1,296.0 518.0 407.0 210.0 1,400
Cash Flow $M 486.8 482.7 384.7 508.6 704.4 675.0 600.0 1,700
Book Value/Share $10.00 $8.34 $8.50 $7.97 $7.89 $7.13 $7.18
Cap Expenditure/Cash Flow 3.3 x 2.2 x 1.7 x 2.5 x 0.7 x 0.6 x 0.4 x 0.8 x
Dividends $M 169.6 212.9 116.5 104.9 133.0 140.0 70.0
Dividends $ per share 0.73 0.75 0.35 0.28 0.32 0.342 0.171
Dividend/Cash flow payout 35% 44% 30% 21% 19% 21% 20%
Commodity Prices Actual Actual Actual Actual Actual Actual SER Est. SER Est.
US$ WTI $92.92 $48.80 $43.46 $50.80 $64.70 $57.03 $55.00 $100.00
C$ AECO $4.48 $2.70 $2.21 $2.25 $1.53 $1.62 $2.00 $4.00
Forecast
2025
Actual Actual Actual Actual Actual Actual Forecast
Whitecap Resources Inc. Annual Financials
Bull Market
PeakMarch 18, 20202014 2015 2016 2017 2018 2019 2020
Source: Stockcharts.com, March 18, 2020
12-month Target $7.00
SUBSCRIBER ISSUES
What Are The Safest Energy Dividend Paying Companies
Source: Data March 18, 2020
Company Stock Price Dividend Yield
Canacol Energy CNE-T $2.81 $0.20 7.2%
Imperial Oil IMO-T $10.92 $0.88 8.1%
Suncor Energy SU-T $15.41 $1.68 10.9%
Tourmaline Oil TOU-T $7.56 $0.48 6.3%
INFRASTRUCTURE IDEAS
What Are The Safest Energy Infrastructure Companies
Source: Data March 18, 2020
Company Stock Price Dividend Yield
Enbridge Inc. ENB-T $34.64 $3.24 9.4%
Pembina Pipeline PPL-T $18.61 $2.52 13.5%
TC Energy TRP-T $50.45 $3.24 6.4%
COLOMBIA ENERGY STOCKS
What Are The Best Colombian Energy Stocks
We chose one each from the oil and natural gas sectors:
• Canacol for natural gas
• Gran Tierra for oil
There are two others to consider:
• Frontera Energy
• Parex Resources (very strong balance sheet – but historically expensive)
We chose the ones we cover as we see them as cheap, have lots of growth
upside and most importantly access to management. For the other two it is not
easy access. All these stocks have been hit hard during the crash in oil prices
BEST CANADIAN NATURAL GAS STOCKS
What Are The Best And Safest Canadian Natural Gas Stocks
We like the following ideas that we cover:
• Birchcliff Energy
• Tourmaline Oil
There is one other to consider that we do not officially cover:
• Arc Resources
QUESTIONS?
We will now answer questions regarding
any items of interest to our subscribers
Up to 45 minutes
CONCLUSION:
Thank you for attending our first quarterly Black Gold Webinar of 2020!
If you enjoy your subscription,
please refer our website to people that you know
who would benefit from our energy & energy services research product.
Josef Schachter
www.SchachterEnergyReport.ca