Schachter continues, “The evidence for a new cycle includes:

rising demand for natural gas, a slowdown in new

production, the La Nina impact this winter, lucrative hedge

programs having run down, and some gas producers are

beginning to shut in high cost production (i.e. Encana).”

But then we must get to the meat of the matter. If you

believe that gas prices have bottomed and there is a future

for the fuel (we still can’t get over why natural gas isn’t

used more in the States by every taxi, every bus, etc., the

environmentally preferred fuel, there’s tons of it in the

States that could create hundreds of thousands of jobs...I

don’t get it). So anyway, time to pick a stock.

Of the two stocks that Schachter features in his latest

Maison Monthly, Delphi Energy has long been one of his favorite

stories and being a gassy story, that’s obviously a

way to look at it. As his top domestic pick Schachter

writes, “In addition to its core conventional targets, Delphi

has been active in acquiring and targeting play type that if

proven to be successful, would increase the asset base and

production over the longer term. These play types include

the Duvernay oil and gas shale play north of Bigstone, the

Second White Specks and Cardium in Bigstone, and the

high impact Nikanassin across its Wapiti/Gold Creek acreage.”

Delphi Energy

Has natural gas finally

turned, or a false start.

Schachter also points out that “DEE has a strong balance

sheet, partly due to its excellent hedging program.

Currently 53% of the natural gas production is hedged at an

average AECO price of $6.08/mcf, much above current market

prices. In addition, the increasing oil and liquids-rich

component of the company’s production increased realized

netbacks as well as the premium for its heating content

quality. Delphi has been focusing on light oil and high NGLcontent

properties to aggressively increase production and

to capture higher netbacks for these commodities. DEE’s

goal is to increase the oil and liquids percentage from the

20% currently to 25-30% in 2011. At Q2 the company managed

to increase oil and NGL production year-over-year by

86% to 1,612 boe/d.”

It looks like the company is going to be busy as

Schachter writes, “For the remainder of the year Delphi

plans on drilling 17 wells and have 5 rigs active.”

Schachter has a $4.00 target on the company as does

Kim Page of Wellington West. On Tuesday, Delphi had

their quarterly conference call and Wellington West Kim

Page writes, “Batting 1000 in Q3 within Core Deep Basin

Project Area: Reiterate Strong Buy Rating.”

Page highlights the third quarter operational success

where DEE drilled 12 wells at 100% success rate boosting

Q3 production to 8114 boe/d equivalent. Page also writes

that he has a $4.00 target and a strong buy rating, suggesting

“Potential resource additions from inventory of 350

locations could add roughly 105 mmboe in reserves.”