December 22, 2014

Penn West Petroleum Ltd (PWT)

 

 

 

Penn West Petroleum Ltd. (PWT) is a Canadian oil company that specializes in the production and exploration of light oil properties in Canada.  They are based in Calgary, Alberta and have established a sizeable stable of holdings that includes over six million acres across western Canada.  They are now one of the largest conventional oil and natural gas companies in North America.  Penn West’s commitment to providing long-term value to shareholders through maximizing the efficiency of operations along with strategic purchases of long-life oil properties, mirrors that of many of their competitors.  They site their diversified portfolio, specialized technical teams, advanced 3-D seismic technology, a strong balance sheet, and experienced management team, among the strengths that set them apart.

 

Penn West (PWT) has extensive holdings of multiple types of profitable hydrocarbons.  Currently, roughly 53% of total production is allocated to light oil, 10% to heavy oil products, and 37% is natural gas-related.  In each of these key sectors Penn West has some of deepest pools and most profitable “sweet spots’ on record.  These properties are located across the sedimentary basin of western Canada in British Columbia, Alberta, southern Saskatchewan, and southwest Manitoba.  Some of these pools were not recoverable in the past, but due to recent advances in extraction methods, these properties have suddenly become much more valuable.  The waterflood programing technology that has become popular in the field is quickly developing and improving profits on a consistent basis.  Other extraction improvements such as the use of carbon dioxide have also catapulted Penn West (PWT) forward in recent years.  Penn West believes that this focus on improving extraction efficiency is key in their quest to maximize returns to shareholders and they intend to make it a long-term strategic goal.

 

One of the unique aspects of the Penn West (PWT) model is their emphasis on aboriginal relations.  I believe this could play a major role in their ability to maximize their extraction potential in the future, and it is also advantageous for the country as a whole.  Siting such important areas as relationship building, education opportunities, economic development, employment opportunities, and community participation, Penn West appears to provide more than the standard lip service to this sometimes controversial issue.

 

Penn West (PWT) has more than 2,000 employees and is a stable presence on the Canadian energy scene.  The third quarter of 2011 saw a 30% increase in year-over-year revenues from 2010, and reached an overall total of $348 million.  Income from the quarter rose to $138 million.  The stock is currently trading around $21.44.  This is closer to its 52-week high of $28.20 than its low of $13.22.  Even at this relatively high price, it still has a reasonable Price-to-Earnings ratio of 14.48.  The large market cap (almost 10 billion) and annual dividend of $1.08 (5% dividend ratio) make Penn West a legitimate competitor for your energy investment dollar on the crowded TSX.  I believe there might be slightly better-valued companies out there at the moment, but there is little doubt that PWT is a solid company and will remain highly profitable for the foreseeable future.

 

Penn West (PWT) Technical Analysis:

PWT trend analysis

PWT is trading on a up trendGet your Free PWT trend analysis report.

Penn West (PWT) Stock Graph:

TSE PWT

Penn West (PWT) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
PWTPenn West Petroleum Ltd25.144.3303.540.2510306-17.91227-31.66667

Trilogy Energy Corp (TET)

 

 

Trilogy Energy Corporation (TET) is an mid-sized Canadian energy company that was brought into existence as a spinoff of Paramount Resources in the spring of 2005.  It operated under the structure of an energy trust until 2010 (which seen most of Canada’s energy trust switch over to alternate business models due to new tax regulations).  The company is focused on developing assets in the Kaybob area.  This allows Trilogy to keep a tight control on costs and associated risk.  While the energy company’s goal under the energy trust model was to maintain a certain level of production and pass earnings on to shareholders, Trilogy (TET) has developed more of a growth model after their re-structuring in 2010.  They have also been on the cutting edge of technology in the energy field and have made great use of horizontal drilling and completion techniques, which have allowed the company to exploit smaller reservoirs and further cut costs.  Since 2012 management has seen fit to reinvest more of the company’s earnings into growing and developing a larger asset base.

 

Over 93% of Trology’s production came from their Kaybob property last year.  It also accounted for 88% of the capital expenditures, and has been identified as the main production focus of 2011 as well.  Trilogy (TET) has found that this area represents the most efficient and profitable drilling opportunities for the company going forward, and that it has a large quantity of high quality gas assets.  Since the company has already sunk the majority of the infrastructure costs into the area, management believes that the most profitable years are still ahead in terms of profit margin.  In 2010 the Kaybob property produced over 21,200 boe/d, which was a large increase from the 17,837boe/d that were produced in 2009.  Thus proving that the capital expenditures and investment in technology are paying immediate dividends, especially when it came to using horizontal wells.  It is definitely worthy for potential investors of Trilogy Energy (TET) to note that board chairman Clay Riddell recently purchased an additional 100,000 shares of the company.  While these stock options were realized at a huge discount relative to the market premium, it still represents a substantial vote of confidence for the company.

 

Trilogy is recent trading in the $36.00 range.  This is after an explosion in stock value during 2011 from a 52-week low of $11.65.  It has a market capitalization of $4,269 million.  I’m not quite sure where the confidence has come from for investors to boost the price of this company so high.  While the energy sector is notoriously volatile, a 300% jump in share price is definitely considerable.  With a very high Price-to-Earnings ratio of over 30, I’m not rushing out to buy the stock at current prices.  The company’s annual dividend of $0.42, gives the company a yield of merely 1.10%.  This just isn’t competitive with the other companies in the energy sector.

 

Trilogy Energy (TET) Technical Analysis:

TET trend analysis

TET is trading on a strong uptrend, CLICK HERE to get your free trend analysis report on TET.

Trilogy Energy (TET) Stock Graph:

TSE TET

Trilogy Energy (TET) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
TETTrilogy Energy Corp21.781.93528.160.1966435-33.33595-24.32433

Peyto Exploration & Development Corp (PEY)

 

 

Peyto Exploration & Development Corp (PEY) is a mid-sized Canadian natural gas exploration company.  They specialize in unconventional natural gas reserves centered around Alberta’s Deep Basin.  They claim that their industry-leading cost structure and focus on profitability make them unique within the energy industry.  The company converted from an energy trust to the current corporation model going into 2011 just like many of the other oil and gas energy trusts that dominated the sector, because of the new Canadian tax laws.  The vast majority of Peyto’s natural gas properties and associated pipelines are located right next to the Rocky Mountains.

 

Peyto (PEY) was first created in 1998 by Rick “Buck” Braund and Don Gray.  In 2000 the company built their first natural gas facility at the Sundance Field (initial capacity was 10 million cubic feet per day).  Like many Canadian energy producers, Peyto converted to an energy trust in 2003 in order to take advantage of Canada’s tax laws.  In 2004 the company surpassed the 20,000 boe/d mark, and processing capacity reached 100 million cubic feet per day.  The company began to form its current leadership structure in 2006 when they hired Daren Gee as President and CEO, while in 2008 Don Gray stepped into the role of Chairman of the Board of Directors.  In 2010 Peyto (PEY) was proud to announce that overall distributions hit $1 billion, and production escalated to 30,000 boe/d, and a processing capacity exceeded 245 mmcf/d.

 

Peyto (PEY) recently raised $100 million worth of capital by selling 4,260,000 shares of the company (at $23.50 per share).  BMO Capital Markets took care of the underwriting responsibilities.  Company management has stated that the new funds will primarily be used to strengthen Peyto’s balance sheet by lowering their debt ratio, and the balance will fund on-going capital expenditures.  The final closing of the stock sell off occurred on Dec. 16, 2011.

 

Shares of Peyto (PEY) are currently trading around $25.50.  This price is near the top of its 52-week trading range, with a high of $26.33 and a low of $17.83.  The company is currently paying a dividend of 72 cents a year, which gives it a dividend yield of 2.9%.  The future of the entire natural gas sector is so hard to predict right now.  I don’t like this price point for Peyto.  It’s Price-to-Earnings ratio is 24.74, which is way too high for my liking in an industry that is looking pretty battered.  It’s balance sheet isn’t great, and the dividend is not competitive with many of the other Canadian energy options.  I’d stay away from this natural gas exploration and production company for the time being.

 

Peyto (PEY) Technical Analysis:

PEY trend analysis

PEY is trading on a major down trend, CLICK HERE to get your free trend analysis on PEY

 

Peyto (PEY) Stock Graph:

TSE PEY

Peyto (PEY) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
PEYPeyto Exploration & Development Corp19.823.63143.850.1455887-4.364751-16.66667

Husky Energy Inc (HSE)

 

 

Husky Energy Inc (HSE) is foremost on most experts’ lists amongst the many Canadian energy companies.  The interesting thing about the founding of Husky is that it actually began in 1938 in Wyoming as the Husky Refining Company.  Although it is still an international company, Husky (HSE) is now based out of Calgary, Alberta.  The company’s three defined growth pillars are the Oil Sands, Atlantic Region and the Asia Pacific Region.  The Oil Sands properties are focused on the Sunrise Energy Project and the cutting-edge efficiency it is targeting.  Its Atlantic Region operations center around the White Rose Oil Field, and smaller interests in the Terra Nova field as well.  The Pacific wing of Husky came online in 1989, and the main goals of this area revolve around natural gas development in the South China Sea (about 300km southeast of Hong Kong).  While these three pillars of growth are of interest to investors looking for capital gains, it should be noted that these pillars rest of a bedrock profit-generator that his the greater western Canada region, and the consistent returns that it produces.

 

After its inception in 1938, Husky (HSE) began to grow as a resulted of the USA’s involvement in World War II.  In 1946 the company took the big step of moving its main refinery from Wyoming, to Lloydminster, Alberta in order to process heavy oil into asphalt and bunker fuel.  By 1949 Husky was issuing common shares in Canada.  It took until 1960 for the full Canadian transformation to take effect, and in that year Husky Oil acquired all the outstanding shares of their U.S. branch.  They energy giant would go on to sell the majority of its USA assets (including service stations) in 1984.  One piece of infrastructure that will irrevocably leave Husky’s stamp on Calgary and the rest of Canada to some degree is the massive Husky Tower that the company built in 1967 to honour Canada’s Centennial.  They later sold the tower and it was subsequently given the Calgary Tower mantra that it proudly wears to this day.

In its recent budget release Husky (HSE) recently announced that it would have a $4.7 billion capital expenditure budget for 2012.  This sum of money is mind-blowing for most of the energy companies on the TSX.  Now the issue becomes of just how efficient Husky can be with this large budget.  Husky CEO Asim Ghosh has this to say about 2011 and looking forward into 2012, “This has been a year of significant progress as we achieved a number of milestones in our growth plan, delivered a solid increase in production, strengthened reserves replacement and reported strong financial results. Our business strategy is on course and demonstrating its ability to deliver value to shareholders. Our 2012 program will build on that progress as we remain focused on execution” Husky (HSE) finished 2011 with an overall production of over 312,000 boe/d.

The fact that Husky is such a media darling gives my contrarian investing side a little bit of the shivers; however, I have to agree that it is an extremely attractive dividend investing option going forward.  The company has managed to maintain some decent growth, but it is a mature and stable energy producer that has a current divided ratio of 5%.  Oil prices would absolutely have to crash for the company to look at cutting that dividend number.  Right now Husky (HSE) is trading near $24.00 a share.  This is close to the middle of its overall 52-week trading range that has seen lows of $20.63 and highs of $30.58.  While there are many energy plays on the TSX, Husky’s Price-to-Earnings ratio of 10.36 really recommends the company’s management and efficiency.

 

Husky Energy Inc (HSE) Technical Analysis:

HSE trend analysis

HSE is trading on a very high uptrend, CLICK HERE to get your free trend analysis report on HSE.

Husky Energy Inc (HSE) Stock Graph:

TSE HSE

Husky Energy Inc (HSE) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
HSEHusky Energy Inc27.784.3286.960.17705286.159350

Progress Energy Resources Corp (PRQ)

 

Progress Energy Resources Corporation (PRQ) is another of Canada’s mid-sized energy companies.  They are extremely focused on the natural gas sector.  The company’s main holdings include over 900,000 acres of land in the Montney fairway (making them the largest landowner in the formation).  The Montney area has been called, “The oil sands of natural gas” in terms of the amount of wealth ready to exploited from the Earth.  Because of this, Progress Energy has dedicated their team to developing the most efficient way to harvest the energy and is not overly concerned about other operations.  They currently are producing about 45,000 boe/d and are looking to boost production dramatically in the upcoming years (with a stated goal of 90,000 boe/d in five year’s time).  Progress (PRQ) management has pointed out the fact that their major land capital costs have already been absorbed, and they are now in a prime position to begin generating serious cash flow, even at current low natural gas prices.  With over double the land mass available for production as their closest natural gas competitor, there is little doubt that Progress Energy has all the assets available to become a dominant force within the sector.

 

Progress (PRQ) recently announced their budged for 2012.  The major highlight of the announcement was the fact that the company intends to allocate $465 million in 2012 in order to develop the north Montney part of their property holdings.  It will use the funds in concert with those from PETRONAS in a joint venture on the property.  Michael Culbert, the President and Chief Executive Officer of Progress stated, “In 2011 we executed on a number of key initiatives that have strengthened our balance sheet while attracting a strong joint venture partner, PETRONAS, to accelerate development of our North Montney assets and provide expertise in LNG development and market access, the focus of our 2012 capital program will continue to be on our North Montney resource base and expansion of our light oil play in the Deep Basin.”  The company intends to invest another $315 million in capital expenditures within its other properties.

 

In my opinion, Progress Energy Resources Corp (PRQ) is a great pure natural gas play.  They appear to be a very well-managed company that is poised for major growth if natural gas prices were to escalate and boost profit margins.  They certainly have the properties to be a long-term player in the natural gas sector.  Shares of the company have recently been trading in the $13.50 range.  The stock has been remarkably stable for a commodity-based company and has a 52-week high of $15.65 and a low of $11.55.  For a company that is so focused on growth, Progress still manages to provide shareholders with a $0.40 annual dividend (representing a yield of 3%).  If you believe that natural gas prices will rebound, Progress Energy (PRQ) would undoubtedly be a great way to capitalize on this.

 

Progress Energy Resources Corp (PRQ) Technical Analysis:

 PRQ trend analysis

PRQ is trading on a heaving down trend, CLICK HERE to get your free trend analysis report on PRQ

 

Progress Energy Resources Corp (PRQ) Stock Graph:

 TSE PRQ

Progress Energy Resources Corp (PRQ) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
PRQProgress Energy Resources Corp13.013.07N/A0.2162303N/A0

Encana Corp (ECA)

 

 

Encana Corporation (ECA) is an absolute natural gas giant (the second largest natural gas company in North America), with a market capitalization of over $14 billion.  The predecessors to the current version of Encana can trace their lineage back over 125 years.  They have been an integral part of developing Canada’s West since the very exploration of the region.  Encana (ECA) in its current form was created in 2002 when PanCanadian Energy Corporation and the Alberta Energy Company Ltd, merged.  External evaluators have estimated they energy titan’s natural gas reserves to be in the neighbourhood of 50 years of drilling inventory.  This gives the company the largest and longest resource life base of reserves in their history, and one of the largest of any natural gas company in the world.  Going forward, Encana (ECA) has stated that their focus will be to, “Unlock the tremendous value unrecognized within our asset base.”  Simply put, the raw materials are in place for Encana to succeed over the long-term, not it can focus on operating at peak efficiency and re-investing capital in the most advantageous way possible.  The company hopes to significantly increase their natural gas and oil projection substantially within the next few years.  In addition to the production side of their operations, Encana (ECA) is a major player in the overall lobby for natural gas energy expansion in the fields of power generation, transportation, and industry.

 

Encana’s history truly began all the way back in 1881 when the Canadian Government commissioned the Canadian Pacific Railway (CPR) to build a railroad across the continent.  As part of their payment, the railway agreed to take over 25 million acres in land, and that parcel included the surface and mineral rights in many places as well.  In 1883 a crew that was working for the railway stumbled upon a natural gas deposit when drilling for water near Medicine Hat Alberta.  This would be a harbinger of things to come in Western Canada.  In 1958 CPR formed the Canadian Pacific Oil and Gas Company (CPOG) in order to pursue exploration and energy production in the area.  This company would eventually become Encana (ECA).  In more recent history, Encana decided to split operations into two separate entities.  The original company would carry on as a purely natural gas conglomerate, while the new spin-off – Cenovus Energy Inc. would take all of the integrated oil assets and begin life as its own separate company.

In 2011 Ecana (ECA) sold its Fort Lupton, Colorado, natural gas processing facility to Western Gas Partners for over $300 million.  Their main capital investment was to purchase a 30% interest in the future Kitimat natural gas export terminal which includes a substantial amount of pipeline-related infrastructure.  They also engaged in a fairly public dispute with the U.S. Environmental Protection Agency over their controversial drilling methods.  The company contends that the EPA is suing faulty methodology.  “It is our belief the EPA made critical mistakes and misjudgments in almost every step in the process – from the way it designed the study, to the way it drilled and completed its wells, to the way it collected and interpreted the data, and to its decision to release a preliminary draft report without independent third-party review,” stated David Steward, Head of Environment, Health and Safety for Encana’s Wyoming branch.

 

Shares of Encana (ECA) recently closed at $19.58.  This is near the company’s 52-week low of $18.40 and substantially off of the 2011 highs of $34.25.  The company has managed to maintain a dividend of $0.82 which is gives it a yield of 4.3%.  This is the ideal energy play going forward if you believe that natural gas will rebound be a large part of the energy landscape in the near future.  Encana has truly massive reserves, and its large size allows for widespread innovation and efficiency breakthroughs.  If you believe that energy infrastructure will move away from natural gas, obviously looking at one of Canada’s other major energy companies would be in your best interests.

 

Encana (ECA) Technical Analysis:

ECA trend analyis

 ECA is trading on a down trend, CLICK HERE to get your free trend analysis report on ECA.

 

Encana (ECA) Stock Graph:

TSE ECA

Encana (ECA) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
ECAEncana Corp31.652.4439.360.354149517.83074-37.27226

Cenovus Energy Inc (CVE)

 

 

Cenovus Energy Inc. (CVE) is another Canadian giant in the oil and gas energy.  While Cenovus itself was only formed very recently (November 30, 2009) as a spinoff from the natural gas conglomerate Encana Corporation, the history of the overall company can be traced back to the 1880’s and exploration of Canada.  When the Canadian Government gave the Canadian Pacific Railway (CPR) land rights to build the first railroad across Canada, these included the mineral rights in many cases.  Of course these mineral rights would later become very valuable when it was determined that much of the land lay on top of oil-rich land in western Canada.  Cenovus (CVE) is essentially all of the oil assets that Encana used to own, and the original parent company is now extremely focused on the natural gas sector.  The two major companies that joined together to form Encana back in 2002 were the PanCanadian Energy Corporation and the Alberta Energy Company.  Cenovus has retained many of these original assets from two of the world’s oldest energy companies.

 

Cenovus (CVE) is focused on, “Applying fresh, progressive thinking to safely and responsibly unlock energy resources the world needs.”  The company has operations all over western Canada, including northern Alberta and southern Saskatchewan.  While Cenovus obviously has substantial exploration and extraction capability, they are very multidimensional in that they also boast considerable refining capacity as well through a 50% ownership stake in two American refineries.  This vertical integration is key to their efficiency strategy.  Cenovus (CVE) employs more than 3,500 people.  They have a pretty good track record in such areas as innovation, safety, low-cost efficiency, and solid management.  The large amount of property under ownership and the large-scale diversity that Cenovus (CVE) brings to the table make it very attractive to long-term investors.

 

The two major income-producing properties for the company are their oil sands holdings at Foster Creek and Christina Lake.  They are located in the wealthy Athabasca Region in northeastern Alberta.  These two projects, along with a few other smaller properties, constitute 1.4 million acres in northern Alberta alone.  More recently, Cenovus has expanded its production near the Weyburn oil field in Saskatchewan.

 

Shares of Cenovus (CVE) recently closed at around $34.00.  This is near their 52-week high of $38.98 and is relative to a 52-week low of $28.85.  In terms of market capitalization, Cenovus is a huge company with a cap number of almost $26 billion.  It’s most recent Earnings-per-Share was 1.71.  At the $34.00 mark, the company has a Price-to-Earnings ratio of around $20.  Its annual dividend of $0.81 gives it a yield of 2.4%.  While Cenovus (CVE) has substantial assets, and looks to be poised for considerable growth, this price point is just too high for me.  That is a very low yield number relative to much of the rest of Canada’s energy companies, and it could easily be argued that Cenovus’ old partner – Encana – has much more room to grow given its natural gas concentration.  Overall, it is definitely a well-diversified energy company (I especially like the refining capacity) however, I would wait for shares to drop a little closer to the $30 level before looking at taking a large position.

 

Cenovus (CVE) Technical Analysis:

CVE trend analysis

CVE is trading on a uptrend, click here to get your free trend analysis on CVE.

 

Cenovus (CVE) Stock Graph:

TSE CVE

Cenovus (CVE) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
CVECenovus Energy Inc32.92.4360.520.1507045N/A93.09678

Canadian Oil Sands Ltd (COS)

 

 

The giant energy company known as Canadian Oil Sands Ltd. (COS) is that largest shareholder (36.74% owner) in the massive oil sands project known as Syncrude.  By investing in COS, you are essentially getting a non-hedged bet on the project since the company does not own many other assets.  The two-pronged approach to ideal profitability levels for the Canadian Oil Sands is to maintain a strong balance sheet, including low debt levels.  Keeping a strong financial position allows the company to pursue great growth opportunities when profitable investments present themselves, and pay shareholders generous dividend rates during times when investment opportunities are not as plentiful.  These two items have been the main focus on the company since it began in 1995.

 

The Syncrude Project is a huge drilling project owned by several of Canada’s large energy companies.  It is located in northern Alberta around the city of Fort McMurray.  Snycrude has been in operation in 1978 and has a productive capacity of over 350,000 barrels per day of high quality crude oil.  COS is the largest owner of Syncrude, and other major shareholders are as follows:

 

Imperial Oil Resources (25%)

Suncor Energy Oil and Gas Partnership (12%)

Sinopec Oil Sands Partnership (9.03%)

Nexen Oil Sands Partnership (7.23%)

Mocal Energy Limited (5%)

Murphy Oil Company Ltd. (5%)

 

Syncrude is mainly managed by Imperial Oil Resources since it is a subsidiary of the massive ExxonMobil oil company, and consequently has access to all the expertise and resources of that mega-conglomerate.  The high quality of bitumen produced from the Syncrude project means that it has lower production costs and better profit margins.  Syncrude has produced over 2 billion barrels of oil since its inception.

 

COS recently released their budget for 2012.  The plans include a $1,460 million investment in the Syncrude project that will be used to boost efficiency and overall production.  Reports are that $974 million of the money will be directly allocated to large-scale infrastructure projects that will keep Syncrude in production for 20 years, while improving on the development’s environmental record.  Marcel Coutu, President and CEO of the company stated that, “We are well positioned to fund our business plan with a strong balance sheet and excellent liquidity […] During 2012, we plan to maintain our dividend, at least at the current level, based on the assumptions in our outlook for the year and support from our cash balances as necessary. We will remain unhedged to capture the full value of oil prices for potentially higher dividends in the near term. Further out, we look forward to the completion of our mine train projects in 2014 and correspondingly higher free cash flow, assuming continued strength in oil prices, to support dividend growth.”  COS hopes to boost production from 106 million barrels in 2011 to 117 million barrels in 2012.

 

 

Canadian Oil Sands recently opened at $24.08.  This is close to the middle of the company’s 52-week trading range that has saw a low of $18.17 and a high of $33.94.  COS has a large market capitalization of over $11.5 billion.  This gives you an idea of just how large the Syncrude project is.  Right now, the company has a very attractive Price-to-Earnings ratio of 9.42.  The annual dividend of $1.20 gives the stock a yield of 5%.  Some investors are scared off by the environmental lobby that has targeted the oil sands to some degree, but I think this an outstanding investment opportunity as energy costs around the globe continue to soar.

 

Canadian Oil Sands Ltd. (COS) Technical Analysis:

COS trend analysis

COS is trading on a down trend, click here to get your free trend analysis report on COS

 

Canadian Oil Sands Ltd. (COS) Stock Graph:

TSE COS

Canadian Oil Sands Ltd. (COS) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
COSCanadian Oil Sands Ltd30.983.87101.130.0977206316.271178.94738

Baytex Energy Corp (BTE)

 

 

Baytex Energy Corporation (BTE) is another of Canada’s world leading oil and gas companies.  Their headquarters are based in Calgary, Alberta and they are primarily focused on oil and natural gas holdings within Western Canada Sedimentary Basin.  Baytex has recently developed properties in the Northern USA as well.  Like many of the other energy giants on the Toronto Stock Exchange, Baytex (BTE) is focused on upping their value through aggressive acquisitions and efficient management of production on their current properties.  The company began back in 1993 as a junior exploration company.  In 2003 Baytex decided that it was best to undergo a corporate restructuring  in order to take advantage of the beneficial Canadian tax laws in regards to trust structures.  In 2010 these beneficial tax laws expired and the company subsequently revered back to a corporate structure.  In all of these stages of development, Baytex’s ultimate goals of returning value to shareholders, and sustainable growth remained consistent.  Since its debut, the company has created an efficient management structure, a solid inventory of long-term drilling opportunities, and a has retained a solid balance sheet.  One unique aspect of Baytex (BTE) operations is their management structure that includes eleven semi-autonomous project teams divided amongst the divisions of Heavy Oil, Light Oil, Natural Gas, and USA production.

 

Recently, Baytex Energy announced a large acquisition of heavy oil assets in northern Alberta and western Saskatchewan.  The total cash required was almost $160 million and the funding primarily came from the company’s revolving credit faculties.  This was a great strategic addition for a company that already had operations in the area.  The property has reserves of approximately 10.5 million boe, as determined by an impartial 3rd party.

 

  • The past year was a great one for the Canadian energy company.  Third quarter production seen the oil-equivalent production increased by 17% (even as natural gas production was scaled back).  This comes on the heels of a successful second quarter that seen a 10% increase.  Capital expenditures for the third quarter alone topped $100 million, and this resulted in Baytex (BTE) drill 48 new wells.  This includes 19 in the aforementioned Lloydminster area, 15 light oil well in western Canada, 5 oil wells in the Bakken oil field (North Dakota) and 7 heavy oil wells in the Seal region of Alberta.  The mix of overall production for the year by Baytex came in at 70% heavy oil, 14% light oil, and 16% natural gas.  The total exploration and development capital budget for the year was about $355 million.

 

Shares of Baytex (BTE) recently closed at $58.50.  This was essentially the new 52-week high for the stock, that has seen a 52-week low of 39.18 (for a Beta of 1.447).  The company rewards shareholders with a dividend of $2.64, that results in a dividend yield of 4.50%.  While Baytex appears to be a great energy company, this price point is just too high for me.  The Price-to-Earnings ratio at this share price is 30.37 and there are simply better options in the energy sector of the TSX.

 

Baytex (BTE) Technical Analysis:

BTE trend analysis

BTE is trading on a uptrend, click here to get your free BTE trend analysis report.

 

Baytex (BTE) Stock Graph:

TSE BTE

Baytex (BTE) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
BTEBaytex Energy Corp53.24.51137.020.085615553.31454629.88509

Bonavista Energy Corp (BNP)

 

 

Bonavista Energy Corporation (BNP) is a proven oil and gas company that has been in business since 1997.  Through intelligent acquisitions, and organic growth, the company is now one of the most well-known dividend players on the Toronto Stock Exchange and has a massive market capitalization of almost $3.9 billion.  Bonavista is currently producing roughly 75,000 boe/per day and has an estimated 312 boes.  The company’s holdings are focussed within Western Canada.

 

Bonavista Energy (BNP) has clearly defined six key principles that they have adhered to since their founding and they credit them with their continuing success.  They are:

 

  • Build and retain entrepreneurial and knowledgeable staff to apply disciplined technical, operational, and financial expertise
  • Create operational strength and dominance in geographically focused regions
  • Develop low cost, low-risk economic opportunities with appropriate commodity balance
  • Enforce capital efficiency and strict cost controls through acute attention to detail
  • Preserve financial strength and flexibility to take advantage of new opportunities
  • Pursue complementary acquisitions to add long reserve life, low-decline assets

 

Bonavista began in 1997 as a junior oil and natural gas company.  Within three years they had cleared many of the initial start-up obstacles, and were already producing close to 15,000 boe/per day.  Their early annual growth of 40-80% speaks to the value of their management team.  From 2000-2003 the company expanded at a more deliberate place, but still seen 20-40% growth each of the three years, while steadily expanding their asset base and the efficiency of current operations.  In 2003 Bonavista (BNP) converted into an energy trust in order to provide the maximum value to shareholders and reap the tax benefits.  Over the next few years the company focused on extracting maximum value from our high quality asset base, and in turn, generating sustainable distributions for shareholders.  In 2007 the company seen the proverbial writing on the wall as the government determined that the tax advantages enjoyed by energy trusts were not sustainable, and would be fully-taxed beginning in 2011.  In response the company began shifting to a corporate structure.  Since 2008 Bonavista (BNP) has been focussed on acquiring new properties, with long production lives through their capital expenditure budget, while at the same time returning generous amounts of earnings to shareholders.  The company had a 2011 capital expenditure budget of roughly $360 million (with most of that going to light oil property development).

 

Bonavista recently closed at $26.77 per share.  This is close to the middle of their 52-week trading range, with a high of $32 and a low of $19.88.  At this price, the stock has a Price-to-Earnings ratio of 23.53, and it’s annual dividend of $1.44 gives the company a dividend yield of 5.4%.  While I wouldn’t say the company is “cheap” at this price, it has certainly proved itself to be a quality company that has solid management behind it.  For investors looking for an income-producing stock that also some decent growth potential, Bonavista (BNP) should definitely be looked at.

 

Bonavista Energy (BNP) Technical Analysis:

BNP trend analysis

 BNP is trading on a down trend, Get your Free BNP Trend Analysis Report

 

Bonavista Energy (BNP) Stock Graph:

TSE BNP

Bonavista Energy (BNP) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
BNPBonavista Energy Corp28.075.13125.160.2110023-13.7389-8.333331