VERESEN $16.24 (Toronto symbol VSN; Shares outstanding: 201.5 million; Market cap: $3.3 billion; TSINetwork Rating: Average; Yield: 6.2%) 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. It also owns the Alberta Ethane Gathering System, 42.7% of the Aux Sable NGL plant and the Hythe/Steeprock natural gas gathering and processing complex in the Cutbank Ridge region of Alberta and B.C.
To diversify its operations, Veresen is expanding into power generation, including hydroelectric facilities, wind farms and natural gas-fired plants.
Regulators have approved Veresen’s plan to ship gas from Canada to its proposed $6.8-billion Jordan Cove liquefied natural gas plant in Oregon for export to Asia. The U.S. Department of Energy would have to approve the project, which would start up in 2019. Veresen aims to make a final decision next year.
In the quarter ended December 31, 2013, Veresen’s cash flow per share rose 11.5%, to $0.29 from $0.26.
The company’s longer-term outlook is sound. The stock trades at 13.5 times Veresen’s forecast 2014 cash flow of $1.20 a share. It yields a high 6.2%, and the dividend appears safe.
Veresen is still a buy.
