Topic: How To Invest

Q: Hi Pat: What is your reading on Cardinal Energy on the Toronto Exchange?

Article Excerpt

A: Cardinal Energy, $9.12, symbol CJ on Toronto (Shares outstanding: 73.5 million; Market cap: $639.8 million; www.cardinalenergy.ca), produces oil and gas in Alberta. Cardinal’s output rose by 33.3% in the three months ended September 30, 2016, to an average 14,957 barrels of oil equivalent per day (87% oil and 13% gas) from 11,220 a year earlier. The jump came mostly from the company’s $129 million purchase of production sites in the Mitsue area of Alberta. That October 2015 acquisition added roughly 3,300 barrels per day of production. The rest of the increase came from drilling at the company’s Bantry property. Despite the higher production, lower oil and gas prices pushed cash flow per share down sharply, to $0.25 from $0.43 year earlier. On September 30, 2016, the company’s long-term debt stood at $69.2 million, or just 11% of the stock’s market cap. Cardinal trades at 6.0 times its forecast 2017 cash flow of $1.52 a share. The company will need higher oil and gas prices…