VERESEN $10.85 (Toronto symbol VSN; Shares outstanding: 293.1 million; Market cap: $3.2 billion; TSINetwork Rating: Average; Dividend yield: 9.2%; www.vereseninc.com) owns pipelines, power plants and gas-processing facilities across North America.
A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Veresen also owns the Alberta Ethane Gathering System, 42.7% of the Aux Sable natural gas liquids plant and the Hythe/Steeprock natural gas gathering and processing complex in the Cutbank Ridge region of Alberta and B.C. In the three months ended September 30, 2015, Veresen’s cash flow per share rose 31.6%, to $0.25 from $0.19 a year earlier.
In late 2014, Veresen paid $1.43 billion for 50% of the Ruby pipeline, which runs 1,100 kilometres from Wyoming to Oregon. Partner Kinder Morgan operates the line, which generates steady cash flow.
Veresen is also moving ahead with plans to build the $6.8-billion Jordan Cove liquefied natural gas plant in Oregon. The Ruby pipeline terminates at the state’s Malin hub, so it will give Veresen a nearby natural gas source for Jordan Cove, if needed.
The company’s longer-term outlook is sound. The stock trades at 10.4 times Veresen’s forecast 2015 cash flow of $1.04 a share. It yields a high 9.2%, and the dividend appears safe.
Veresen is still a buy.
