PRO'S 3 STARS

(Every week, Business Edge columnist Gyle Konotopetz profiles the top three stock picks of one of Canada’s most accomplished investment pros.)

FEATURED PRO: Peter Linder is the Calgary-based energy strategist with DeltaOne Capital Partners and manages the DeltaOne Energy Fund.

DeltaOne (www.deltaonecapital.com) is an asset management firm that manages hedge funds targeting the energy sector out of offices in Calgary and Toronto. Fund Form: The DeltaOne Energy Fund was the top-performing natural resources fund in Canada in the past year, with a one-year return of 64.9 per cent through Sept. 30.

Management Expense Ratio: Two per cent.

Linder’s Perspective: “A lot of people have gone negative on the oil and gas market but I still remain very positive. I think oil is going to stay around $30 US (per barrel) for the foreseeable future and I think natural gas prices will rebound strongly on the first sign of cold weather in the eastern part of North America.

“All we need is normal winter (temperatures) and we’ll see a nice recovery in the sector. A lot of analysts believe that the best is behind us and it’s time to take profits. I think it’s just a case of the sector going through some late summer and early fall doldrums before a recovery. We’re probably just a few weeks away from that recovery.”

Commodities Outlook: Linder forecasts 2004 average prices of $30 US per barrel for oil and $5.50 US NYMEX for natural gas.



FIRST STAR
* High Point Resources (HPR-TSXV)
* Recent Price: $1.66.
* 52-Week Range: $1.15-$1.95.
* Linder’s 12-Month Target: $2.75.
* Snapshot: High Point is an oil and gas company with its sights set on the deeper part of the Western Canadian Sedimentary Basin in western Alberta and B.C. on large land blocks and close to natural gas infrastructure.
* CEO: Glen Yeryk.
* Head Office: Calgary.
* Vital Stats: Revenue (last 12 mo.), $18.6 million; 5-Yr Revenue Growth, 182%; Profit/Loss (last 12 mo.),
$3.9 million Loss; Market Cap, $65.39 million; Shares Outstanding, 39.39 million.
* Linder’s View: “High Point is more than 90 per cent weighted towards natural gas and has a very good mix of low-impact and high-impact plays. It is very well managed, it is growing production 15 per cent to 20 per cent per quarter via the drill bit and has a major drilling program this winter. It is trading at just over three times next year’s cash flow per share.”
* Linder’s Risk Rating: Low (relative to oil and gas stocks).
* Web Watch: www.highpointres.com



SECOND STAR
* Milagro Energy (MIG-TSX)
* Recent Price: $1.40.
* 52-Week Range: $1.35-$1.45.
* Linder’s 12-Month Target: $2.
* Snapshot: Milagro is an emerging oil and gas company focused in Western Canadian reserves.
* CEO: Jeffrey Rekunyk.
* Head Office: Calgary.
* Vital Stats: Current Price/Earnings Ratio, 22.7; Revenue (last 12 mo.), $7.6 million; Profit (last 12 mo.), $1.1 million; Market Cap, $57.99 million; Shares Outstanding, 41.42 million.
* Linder’s View: “I like the fact that Milagro has a very low-risk drilling program and they’ve established a new core area that has all sorts of enormous drilling potential. The area hasn’t been identified yet but it’s in the western part of Alberta. The street still doesn’t know where it is but I know it’s a huge land position.”
* Linder’s Risk Rating: Low.
* Web Watch: www.milagroenergy.com



THIRD STAR
* Sentra Resources (SRA-TSX)
* Recent Price: $3.08.
* 52-Week Range: $2.75-$3.40.
* Snapshot: Sentra is a junior oil and gas company that acquired Toro Energy earlier this year. The company recently closed a private placement financing worth $6.3 million for its exploration program.
* CEO: Uldis Upitis.
* Head Office: Calgary.
* Linder’s 12-Month Target: $5.
* Linder’s View: “This company is run by the former chairman of Newport Petroleum (Uldis Upitis). It has an attractive mix of low-impact and high-impact plays. It’s a small producer with enormous drilling potential and offers good value, trading at less than four times next year’s cash flow per share.”
* Linder’s Risk Rating: Medium.
* Linder’s Edge Record: +21.4%. Best Pick: Brooklyn Energy (BN-TSX) +97.0%. Worst Pick: Bow Valley Energy (BVX-TSX) -48.3%. (Record does not include picks while Linder was with Research Capital).
* Disclosure: Linder is restricted from personally trading shares within the DeltaOne Energy Fund in which the featured stocks are held.