VERESEN $12.77 (Toronto symbol VSN; Shares outstanding: 196.3 million; Market cap: $2.5 billion; TSINetwork Rating: Average; Yield: 7.8%) owns pipelines, power plants and natural gas processing facilities across North America. One of its major holdings is 50% of the Alliance gas pipeline, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Enbridge owns the other 50%.
The company also owns the Alberta Ethane Gathering System, and Veresen and Enbridge together hold 85.4% of the Aux Sable natural gas liquids plant.
In December 2011, Veresen paid Encana Corp. $920 million for the Hythe/Steeprock natural gas gathering and processing complex in the Montney region of B.C. and Alberta. Encana has agreed to purchase most of the facility’s gas under a long-term contract.
In the three months ended June 30, 2012, Veresen’s cash flow rose 6.6%, to $51.9 million from $48.7 million a year earlier. Cash flow per share fell 13.3%, to $0.26 from $0.30, on more shares outstanding. Veresen’s stock yields 7.8%.
To diversify beyond pipelines and gas-processing plants, Veresen continues to expand its power generation business. It now owns hydroelectric facilities in New York State and B.C.; naturalgas- fired plants in Ontario, California and Colorado; and waste-heat plants in B.C. and Saskatchewan.
Veresen is still a buy.
