TRILOGY ENERGY CORP. $28.59 - Toronto symbol TET

TRILOGY ENERGY CORP. $28.59 (Toronto symbol TET; TSINetwork Rating: Speculative) (403-290-2900; www.trilogyenergy.com; Shares outstanding: 99.5 million; Market cap: $3.6 billion; Dividend yield: 1.5%) owns oil and gas properties in central Alberta’s Kaybob and Grande Prairie areas. About 61% of Trilogy’s production is natural gas. The remaining 39% is oil.

In the three months ended March 31, 2014, Trilogy produced 33,135 barrels of oil equivalent a day (including gas), down 8.2% from 36,119 barrels a year earlier.

Cash flow per share fell 4.5%, to $0.64 from $0.67, as higher oil and gas prices partly offset the production drop.

The company plans to spend $375 million on exploration and development this year, down 5.5% from the $397 million it likely spent in 2013. As well, it’s now focusing on its shale oil prospects at Kaybob and spending less on its more mature oil pools in the same area.

That shift could slow Trilogy’s production growth this year, but it could push its average daily output to over 42,000 barrels by 2015.

The company’s long-term debt is $582.7 million, or a low 16.2% of its market cap. Trilogy trades at 11.2 times its cash flow, based on the latest quarter. The shares yield 1.5%.

Trilogy Energy is still a hold.

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