Portfolio Update: June 2012

Here?s the monthly update for the BTI portfolio for June of 2012. The HELOC portfolio is basically a non-registered account with money borrowed from my home equity line of credit. I will use the bank?s ?Performance? tool for the monthly results when possible because it takes into account deposits and withdrawals. On to the results:

heloc-snapshot-june12heloc-performance-june12

YTD Results from January 1 2012

TSX YTD performanceπŸ˜•-3.00%

BTI YTD performanceπŸ˜•-26.20%

Monthly Review

It?s not looking too good, from +11% in April to -26% in June. With all the talk of Europe imploding and the global economic slowdown, it seems only energy and materials got punished. This is what you end up with when you?re concentrated in one volatile sector!

It?s too bad I did not sell more of my stocks in Q1. So here?s a lesson learned, going forward,? I will sell all or most junior O&G companies indiscriminately before the end of March regardless of fundamentals in order to buy back during the summer. It?s better to miss profits rather than sit on losses because of market timing. For example, TriOil has an excellent balance sheet, 2 high netback oil resource plays and yet it got cut down 50%. The double discount plaguing Canadian producers is also having its effects on the share price of many stocks. You essentially need to go international (Brent) or to south of Cushing (WTI) if you wish to get better oil prices.

South of Cushing brings us to Eagle Energy Trust?s sustainability ratio which will be above 100% this year as they are still ramping up production following their acquisition. Falling WTI oil prices while having only 1,000 barrels hedged for 2012 is clearly having an impact on the stock. But the company remains in good financial shape (very low debt, DRIP proceeds) and would need to average 4,000 bopd in 2013 at $85 WTI for a 100% total payout ratio, that?s an increase of 11% above the 3,600 bopd average production for H2 which in my opinion is realistic.

Xtreme Drilling & Coil got hammered since they were removed from the Russell index, the investment case for XDC remains intact. The company is looking to spin its debt into some type of long term instrument and deliver its last 2 XDR drilling rigs. A lot of its 2012 and 2013 cash flow is contracted; the increase in revenue should start materializing in Q3 and Q4.

MQL?s production is above 3,000 boe/d, the company is doing an excellent job on execution and may surpass its 3,600 exit guidance way before the end of the year. HYX is establishing a new core area with more than 100 net light oil drilling locations. But again, between low ng prices and the double discount on oil, the juniors are getting massacred. While the market doesn?t care, some Asian NOCs seem to do and are happy to buy into one resource play after another.

Will this be the bottom for the year? Not necessarily, Europe has created a lot of uncertainty with its hooliganism negatively impacting confidence all over the world. However, if the latest measures end up being followed with more action the market may calm a bit, we could see improving economic sentiment boosted by lower oil prices. It?s going to be interesting watching what the full effect of the Iranian embargo will be on the price of oil.

Finally, something about the Asians spending billions of their own money in acquisitions tells me its only a matter of time before all the drama is behind us!

How?s your portfolio doing? Have you bought or sold any stocks lately?