(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, formerly the energy analyst with Research Capital, was recently hired as the Calgary-based senior advisor for the DeltaOne Energy Hedge Fund, which is being launched this month by DeltaOne Capital Partners. DeltaOne (www.deltaonecapital.com) manages the Energy and DeltaOne Volatility hedge funds from Calgary and Toronto offices with a focus on North American equities.

Linder’s Perspective: “I remain very bullish on North American natural gas prices as we head into winter. I think we’ll see a $4 US NYMEX (MCF) natural gas price again this year and, if we see a fairly early/cold start to the winter, we could see a $5 price this year (recently $3.25 US NYMEX). Demand is increasing slowly, but supply in North American production (of natural gas) will fall off in the next 12 to 18 months.

“I continue to favour natural gas-weighted producers, because oil prices (recently $28.92 US per barrel) are next to impossible to predict and because any runup in oil prices due to a military action will likely not translate to much higher prices for oil stocks. However, if (a U.S. conflict with Iraq) spills over into Saudi Arabia and if it starts to affect their (oil production), we could see $50 oil prices (US per barrel).”



FIRST STAR
* Gauntlet Energy (GAU-TSX)
* Recent Price: $5.65.
* 12-Month Range: $2.83-$10.93.
* Linder’s 12-Month Target Price: $12.
* Snapshot: Gauntlet is an oil and gas company weighted almost 100 per cent towards natural gas with all operations in Alberta.
* CEO: Laurie Sibbald.
* Head Office: Calgary (12 employees).
* Vital Stats: Current Price/Earnings Ratio, 26.0; Revenue (last 12 mos), $28.2 million; 5-Yr Revenue Growth, 78.2%; Profit (last 12 mos), $3.8 million; Market Cap, $111.49 million; Shares Outstanding, 17.2 million.
* Linder’s Comment: “Following two extremely
successful winter drilling programs, they’re going to have by far the most active and aggressive winter drilling program in the upcoming winter. I like the fact that they are almost 100-per-cent weighted towards natural gas. I think they’ll continue to deliver 25- to 50-per-cent production growth this year and next year. They have a relatively small number of shares outstanding and the company remains a takeover target. If they duplicate the success of the last two winters, this stock could be up to $15 by next winter (2003-2004).”
* Linder’s Risk Rating: Medium.



SECOND STAR
* Ketch Energy (KCH-TSX)
* Recent Price: $5.20.
* 12-Month Range: $2.95-$5.75.
* Linder’s Target (when the merger with Acclaim Energy Trust is completed): $6.
* Snapshot: Ketch is an energy company weighted towards natural gas with no heavy oil exposure and is in the process of being acquired by the Acclaim Energy Trust. When the deal is completed, Acclaim will become the seventh largest conventional oil and gas trust in Canada based on production and market cap.
* CEO: Grant Fagerheim.
* Head Office: Calgary (19 employees).
* Vital Stats: Current Price/Earnings Ratio, 31.9; Revenue (last 12 mos), $114.5 million; 5-Yr Revenue Growth, 80.2%; Profit (last 12 mos), $6.1 million; Market Cap, $217.45
million; Shares Outstanding, 41.8 million.
* Linder’s Comment: “Ketch is a nice, safe oil and gas stock because it’s being acquired by Acclaim. I believe that in a matter of two or three months, this stock will be equivalent to about $6, which would be about a 20-per-cent rise from here. Acclaim right now is weighted in heavy oil, but once the merger is complete, it will be natural gas weighted – about 60-per-cent gas weighted.”
* Linder’s Risk Rating: Low.
* Web watch: www.ketchenergy.com



THIRD STAR
* Canadian Natural Resources (CNQ-TSX)
* Recent Price: $51.20.
* 12-Month Range: $35.90-$54.54.
* 12-Month Target: $75.
* Snapshot: CNQ is a senior oil and gas company with operations focused in Western Canada, the North Sea offshore and West Africa. It bolstered its gas weighting in July with the acquisition of Rio Alto Exploration.
* CEO: John Langille.
* Head Office: Calgary (1,186 employees).
* Vital Stats: Current Price/Earnings Ratio, 12.4; Revenue (last 12 mos), $3.4 billion; 5-Yr Revenue Growth, 38.5%; Profit (last 12 mos), $538.7 million; 5-Yr Profit Growth, 47%; Market Cap, $6.27 billion; Shares Outstanding, 122.5 million; Dividend Yield, 0.9%.
* Linder’s Comment: “It has become gas-weighted with the acquisition of Rio Alto. The company has very visible production growth for the next 10 years and it has
excellent short-, medium- and long-term projects, both in natural gas, oil, international oil projects and tar sands projects. It is trading at a very low multiple of under three times this year’s estimated cash flow per share. It offers value and growth and is a very well-managed company.”
* Risk Rating: Medium.
* Web watch: www.cnrl.com
* Linder’s Edge Record (with June 6 picks): -13% (Bonavista +2%, Gauntlet -40%, Ketch -2%).
* Disclosure: Linder personally holds positions in all three of the featured companies.