enbridge

ENCANA CORP., $20.37, Toronto symbol ECA, continues to produce more oil and natural gas liquids (NGLs), such as ethane, propane and butane. NGLs tend to be priced at the same level as crude oil. The company is shifting toward oil and NGLs because low natural gas prices are cutting profits at its regular gas business, which supplied 95% of its overall production in the first quarter of 2012. Encana does not plan to cut its natural gas production. This week, Encana announced that it will spend an extra $600 million (all amounts except share price in U.S. dollars) on its oil and NGL properties this year. The company had originally planned to spend $2.9 billion on all of its capital projects in 2012....

CANADIAN PACIFIC RAILWAY LTD., $73.54, Toronto symbol CP, has resumed normal operations now that Ottawa has ended an eight-day strike by its locomotive engineers, conductors and yard workers. The strike probably cut CP’s earnings per share by around $0.20 in the second quarter of 2012. The company earned $0.82 a share in the first quarter. At CP’s recent annual meeting, U.S.-based activist investment firm Pershing Square Capital Management, which owns 14.2% of the company, succeeded in replacing seven of CP’s 16 directors with its own nominees....

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ENBRIDGE INC. $39.40 (Toronto symbol ENB; Shares outstanding: 784.9 million; Market cap: $30.9 billion; TSINetwork Rating: Above Average; Dividend yield: 2.9%; www.enbridge.com) has announced several upgrades to its oil pipelines. One of these improvements is a plan to reverse the flow of its pipeline between Montreal and Sarnia, Ontario. Right now, the line pumps oil from Montreal to Sarnia. Reversing the flow will let Enbridge supply more oil from western Canada to refineries in Ontario and Quebec. That will improve demand from refiners, because it will let them cut their reliance on higher-priced imported oil. Enbridge also plans to expand other pipelines to take better advantage of rising production of shale oil in the Bakken area, which covers parts of Montana, North Dakota and Saskatchewan....

VERESEN $14.40 (Toronto symbol VSN; Shares outstanding: 193.7 million; Market cap: $2.8 billion; TSINetwork Rating: Average; Yield: 6.9%) 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 from Fort St. John, B.C., to Chicago. Enbridge owns the other 50%.

As well, the company owns the Alberta Ethane Gathering System, and Veresen and Enbridge together own 85.4% of the Aux Sable natural gas liquids plant.

In December 2011, Veresen bought the Hythe/ Steeprock gas gathering and processing complex in the Montney region of B.C. and Alberta from Encana Corp. for $920 million. Encana has also agreed to buy most of the facility’s gas under a long-term contract.

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PEMBINA PIPELINE $29.78 (Toronto symbol PPL; Shares outstanding: 285.0 million; Market cap: $8.5 billion; TSI Network Rating: Average; Dividend yield: 5.4%; www.pembina.com) owns pipeline systems with a total length of over 7,500 kilometres. These lines pump oil and gas from fields in B.C. and Alberta to refineries, or feed into major pipelines, such as the Enbridge Pipeline System.

Pembina also owns the Syncrude, Horizon and Cheecham pipelines, which pump crude oil from the Alberta oil sands. In addition, the company holds a 50% stake in the Fort Saskatchewan Ethylene Storage Limited Partnership. It also owns the Cutbank Complex, a network of natural gas gathering and processing facilities.

In the three months ended December 31, 2011, Pembina’s cash flow rose 2.9%, to $66.8 million, or $0.40 a share, from $64.9 million, or $0.39 a share, a year earlier.

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ENBRIDGE INC. $40 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 785.0 million; Market cap: $31.4 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.enbridge.com) owns 100% of Enbridge Gas New Brunswick Inc. (EGNB), which distributes natural gas to 11,000 customers in that province. Enbridge is now expanding EGNB’s system to connect to an additional 30,000 clients.

However, the New Brunswick government recently enacted new regulations that limit the rates that EGNB can charge its customers. That makes it harder for Enbridge to recoup the funds that it has already invested in this business. As a result, the company will write down this investment by $262 million. That’s equal to 24% of the $1.1 billion, or $1.48 a share, that Enbridge earned in 2011.

Enbridge is still a buy.

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CANADIAN PACIFIC RAILWAY LTD., $74.11, Toronto symbol CP, rose 1% this week after U.S.-based activist investment firm Pershing Square Capital Management, which owns 14.2% of the company, succeeded in replacing seven of CP’s 16 directors with its own nominees. CP’s chairman, John Cleghorn, and chief executive officer, Fred Green, also resigned. Pershing Square will probably try to install Hunter Harrison, the successful former CEO of CN Rail, as CP’s new chief executive officer. Even if CP hires someone other than Mr. Harrison, the company will continue to work on improving its efficiency by purchasing new locomotives, upgrading its tracks and streamlining its schedules....

ENBRIDGE INC. $40 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 785.0 million; Market cap: $31.4 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.enbridge.com) owns 100% of Enbridge Gas New Brunswick Inc. (EGNB), which distributes natural gas to 11,000 customers in that province. Enbridge is now expanding EGNB’s system to connect to an additional 30,000 clients. However, the New Brunswick government recently enacted new regulations that limit the rates that EGNB can charge its customers. That makes it harder for Enbridge to recoup the funds that it has already invested in this business. As a result, the company will write down this investment by $262 million. That’s equal to 24% of the $1.1 billion, or $1.48 a share, that Enbridge earned in 2011. Enbridge is still a buy....

Pipelines have been in the news. Canada’s largest pipeline company, TransCanada Corporation (symbol TRP on Toronto) has made headlines with its ongoing disagreement with the U.S. government over the completion of its Keystone XL pipeline to the Gulf Coast. The Obama administration blocked the Nebraska section of the project last November, citing environmental concerns. TransCanada has submitted a proposal for a re-routing of the pipeline and is awaiting a new environmental review. Pembina Pipelines had attracted much less attention until it came up with some interesting news of its own this year: the purchase of a firm with significant assets in natural gas liquids (NGL)....