Anadarko Petroleum (APC) $ Hess Corp. (HES) $ SEVEN BIG ... a look at the Hess chart though and it...

David Pescod 780.932.5183 Debbie Lewis 780.499.3933 April 25, 2019

Anadarko Petroleum (APC) $Hess Corp. (HES) $

SEVEN BIG OIL TARGETS THAT MAY GO NEXT AFTER CHEVRON...

Well, that was the headline a few days ago in an article on Investopedia but it followed the vein of many other articles south of the border. Now that Chevron had made a huge t a k e o v e r f o r A n a d a r k o Petroleum worth $33 billion, what's next? That just became ever more serious as Occidental has now just upped the offer to $76 a share, making the shareholders ever more happy. But what's getting the write ups is who

could be next as the suggestion the oil and gas patch may be due for a shake up - may be time for more mega-mergers, make the companies ever more efficient hopefully and give shareholders something they want more of…dividends, and stock buy-backs.Anyway, we list the companies in the Investopedia article that they suggest are potential take-over targets:

Diamondback Energy (FANG): $13.29 billion;Concho Resources (CXO) : $22.94 billion;Noble Energy (NBO): $13.03

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billion;Pioneer Natural Resources (PXD): $29.58 billion;Parsley Energy (PE): $5.81 billion;Apache (APA): $13.96 billion;Hess (HES): $19.22 billion.

Considering the value of this current take-over is now over $35 billion, none of these targeted companies seem outrageously valued, do they? But what we find interesting is that the first five of the seven

companies are being suggested as take-over targets for their assets in the Permian Basin. Apache and Hess Corp. are mentioned because of their assets mainly in the Bakken. We ever so politely disagree as we are following Hess for a totally different reason...their offshore Guyana assets that just seem to get bigger all the time as yet another well is successful there, bringing the reserves owned with Exxon past the 5.5 billion barrel mark with lots more drilling to come and production now expected within the year. That's going to give Hess suddenly a lot more interest...we hope. Take a look at the Hess chart though and it just tells you how volatile it, and most oil and gas companies have been over the last 12 months.

InPlay Oil Corp. (IPO) $ Baytex Energy (BTE) $ Whitecap Resources (WCP) $

Continuing with our theme of the oil and gas business at this time, it was time to catch up with Doug Bartole, veteran oil patch guy, currently running junior Inplay Oil, a story that many analysts are keen on (and we are shareholders of). So Doug, if you were in Jason Kenney's shoes, what are some of the things you would be doing? Doug suggests that first of all, he needs to be more aggressive pointing to the pipeline situation we seem to be counting on only one pipeline at this time, when there are several other


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Hess Corp.




possibilities that should be pushed he suggests. Also in dealing with other governments such as British Columbia and Quebec, one should be using the carrot and stick approach emphasis being on the carrot, but let people be aware of the other side.Another suggestion for the oil patch he would make is the huge problem of abandoned and suspended wells. Instead of using government money Doug suggests, these wells with oil and the right prices, could be brought back on stream at very low costs, given there would be little footprint left and if there is such an incentive as lower or non-existent royalty rates, that would certainly be a better way of doing it than as we mentioned, spending government money.Okay Doug, so what do you expect for oil prices down the road? And has the crystal ball been working? First of all he says he is a huge fan of oil, just at the $65 American level. He points out that considering we have a $0.75 dollar (which might be going down lower) that works out to $75 to $79 Canadian, which is a good rate considering costs in the patch are significantly lower than the good old days. He also suggests

that with Venezuelan oil production dropping and the Saudi's and Russian's seem to be showing some sign of discipline, he wouldn't be surprised that a $65 level or even higher could work out well. The one thing he hopes for is more consistent prices.One thing Bartole does emphasize though is oil and that's what his company is mainly searching for. With the ultra cheap prices for Canadian natural gas these days, spot prices near $0.45 to $0.50 and prices months out in the $0.99 area, there's no money to be made in the natural gas business at this time. H a v i n g s a i d t h a t t h o u g h , h e d o e s emphasize again that t hey a re cu r ren t l y getting a very tasty oil price and he points to IPO's stock as many other Canadians are, trading at a significantly lower price to cash flow ratio than you would expect. We note that some analysts expect InPlay this year to churn out close to $0.60 a share in cash flow, meaning that it is currently trading at a dirt-cheap two times cash flow.


Will the new Premier be able to rally the oil patch?

InPlay Oil




Obviously part of that problem has been the interest, or should w e s a y l a c k o f i n t e r e s t , b y i n t e r n a t i o n a l i n v e s t o r s i n t h e Canadian oil patch. Between the politics of the country and l ack o f p i pe l i ne , somewhere between $50 and $70 billion has left the Canadian oil patch. How do you get that interest

b a c k ? B a r t o l e suggests that sooner or later, if the opportunities look too good, international investors will be back. But he does suggest if one Justin Trudeau were to get voted out of office, that would certainly lift spirits of the oil guys in Calgary, if not international investors as well.When we ask him our favourite question, could he give us an oil s t o c k o r t w o w e should be watching or heaven forbid, adding to positions, he goes wi th a s tory he 's mentioned in the past - W h i t e c a p R e s o u r c e s . . . a dividend payer. And t h e n g o e s w i t h s o m e t h i n g t h a t surprised us a little and Doug admi ts definitely has more torque...and risk...he suggests that after the CAPP Conference, it's felt that Baytex Energy will have $400 million in free cash flow and be able to start eating away at their often talked about high debt levels.


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Anadarko Petroleum (APC) $ Hess Corp. (HES) $ SEVEN BIG ... a look at the Hess chart though and it...

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