Energy - smartinvestment.ca

[coach247]

Twin Butte came out with negative news today that drove the stock down to its lows of the year:

http://www.brandonsun.com/busi.....html?thx=y

The key point for me was that the dividend payout will not be affected. TBE pays 2 cents a month in dividends, which puts the yield above 10% in the current price range. I dumped my MVW today (at a loss) to raise money to start buying TBE. I think its a great chance to add a quality growth stock on what amounts to a short term impact on the cash flow in 2013, and still earn above average yield.

As more guidance is issued on the nature and duration of the production shortfall there may be more downside, but I would say that odds of serious bargain hunting moving the stock higher compensate for that. Within a 12 month time frame it will probably be resolved and the stock may be back to all-time highs by then, and I dont mind collecting a nice payout while I wait. I will back up the truck if this one dips further.

cheers!
mike
_________________
Im just like one of those alcoholic energy drinks, only without the energy...

[coach247]

The update reported a couple weeks ago is more bullish than had been originally presented but it appears the damage is done as the stock continues to trade in a very low range.

http://www.nasdaq.com/article/.....y-cm222107

I am holding for the dividend and I still think there is some upside on the recovery. The financials are coming out on March 21st and perhaps the stock will stay in the same range until after this is more information presented.

cheers!
mike
_________________
Im just like one of those alcoholic energy drinks, only without the energy...

[coach247]

Another disappointment reported by TBE today and the stock has been hit for about 20% setting a new 52 wk low.

[coach247]

Trading back above the $2 level now for the first time in 2 months, but I still think this company has room to recover further. The yield remains in the range of 10% which is attractive enough, but the inventory of drilling targets and ownership of prime chunks of established oil basins should keep TBE on the value list. The company curtailed its capital budget as a response to the lower cash flow reported due to production issues reported earlier this year, so the growth rate will be slower but I think the lows are now in.

I took profits on my extra shares and continue to hold a core position. I believe TBE is a takeover candidate and am very happy to get paid to wait with a nice dividend every month.

cheers!
mike
_________________
Im just like one of those alcoholic energy drinks, only without the energy...

[langenburg]

Hey Coach. Whats your feelings on TBE right now ?? Do you still own your core position ??

[coach247]

Hi Langenburg!

Sorry for the slow reply I didn't see your post earlier. I still think TBE is a good company for my PF and have held a core position now for several years. I have also traded the dips that seem to impact this company when struck by periodic operating issues. The performance over the last 3 months has been brutal but its still a good story with good growth prospects IMO. Today the stock retested the 2013 low of $1.70 which proved to be a very good entry point last time around. I doubled up today with another 2000 shares @ $1.71 for a trade. I am thinking the company will continue to generate strong cash flow and move ahead with the summer/fall drilling program. They still have hundreds of drilling targets in the current land inventory so there is no shortage of production upside as they continue with the growth plan, and considering that most of the output is in oil, $100 a barrel is not a bad level for establishing a strong profit for each well they complete.

Much of the poor performance was related to seasonal issues, and the decision to reduce the dividend a couple of years ago may seem pretty smart now in hindsight as it has enabled the company to remain in good financial shape on the balance sheet. Meanwhile getting paid a yield of more than 10% at the current share price is worth holding on and I expect the stock will recover back above the $2 price range in a few months or less, so then I will take some profits and ride my core position again.

cheers!
mike
_________________
Im just like one of those alcoholic energy drinks, only without the energy...

[rogerklam]

I am watching the debentures.
http://www.newswire.ca/en/stor.....e-offering
The Debentures will bear interest at a rate of 6.25% per annum, payable semi-annually in arrears on the last day of June and December in each year commencing on June 30, 2014, and will mature on December 31, 2018 (the "Maturity Date"). The Debentures will be convertible at the holder's option into common shares of Twin Butte ("Common Shares") at any time prior to the earlier of the Maturity Date and the date fixed for redemption at a conversion price of $3.05 per Common Share (the "Conversion Price"), subject to adjustment in certain circumstances. The Debentures will not be redeemable before December 31, 2016. On or after December 31, 2016 but prior to December 31, 2017, the Debentures will be redeemable at Twin Butte's option at par plus accrued and unpaid interest, provided that the weighted average trading price of the Common Shares on the Toronto Stock Exchange during the 20 consecutive trading days ending on the fifth trading day preceding the date on which notice of redemption is given is not less than 125% of the Conversion Price. On or after December 31, 2017 but prior to the Maturity Date, the Debentures will be redeemable at Twin Butte's option at par plus accrued and unpaid interest. Twin Butte shall provide not more than 60 nor less than 30 days' prior notice of redemption.