On election day when we don’t want to talk politics, we

check in with


Keith Schaefer, editor of the Oil and Gas Investments




to hear what has his interest in the junior oil

patch. He says investors should pay attention to last week’s

announcement by Renegade that they’re changing focus.

There’s a lesson there for the retail crowd.

“Last week


Renegade Petroleum announced they were buying

oil production, will start paying a dividend and become a mostly

income-oriented company. I think the market missed the significance

of the Renegade Petroleum transaction last week. This is

a heavily oil weighted junior that attracted a lot of research.

They threw up the white flag on growth last week, and transformed

into an income vehicle—and saved their shareholders in

the process. Even though they had to dilute—and didn’t improve

per share production or cash flow much at all—they did

the right thing here.

History is telling us that very few management teams in the

junior oil patch have the fiscal discipline to make resource

plays work for shareholders, and Renegade is only the latest


They’re developing a Viking play in western Canada, which is

small cost wells for small production wells. Their Souris play in

Saskatchewan is similar. Debt levels are OK.


So we ask Keith—given that little rant, what would be

his favourite pick right now? He says, “I like the






story more and more. Again, this is NOT a resource

play—which is hard to find, especially domestically.

They’re drilling in the Alberta foothills for oil. Nobody

else is looking there, as it’s known as a gassy area,

so they were able to get the ground cheap. They have yet

to miss on a well and they have a great shot at going from

3500 boe/d now to 5000 boe/d by the end of March. Even

at 50% gas, their current valuation is cheap. And look at

the chart. You want to own a stock chart that goes

up. When a chart isn’t going up on seemingly good

growth story, you need to sell it, sit on the sidelines and

figure out what the market knows that you don’t.”