encana

PENGROWTH ENERGY CORP. $5.59 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 507.1 million; Market cap: $2.8 billion; Price-to-sales ratio: 1.8; Dividend yield: 8.6%; TSINetwork Rating: Average; www.pengrowth.com) has suffered from low natural gas prices, same as Encana. That’s why in May 2012 it bought NAL Energy Corp., which gets roughly half of its production from higher-priced oil. Thanks to this purchase, Pengrowth’s daily production rose 26.4% in the three months ended September 30, 2012, to a record 94,284 barrels of oil equivalent from 74,568 a year ago. Natural gas accounted for 60% of its production, down from 63% a year earlier. Depressed natural gas prices pushed down Pengrowth’s cash flow by 6.2% in the quarter, to $141.1 million from $150.4 million a year earlier. Cash flow per share fell 39.1%, to $0.28 from $0.46, on more shares outstanding. Even so, the extra production from NAL should let Pengrowth keep paying monthly dividends of $0.04 a share (for an 8.6% annualized yield). Pengrowth is still a buy.

TELUS $64.23 (Toronto symbol T.A; Shares outstanding: 324.9 million; Market cap: $20.9 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%; www.telus.com) has received shareholder approval for its plan to convert its 151 million non-voting class A shares into regular common shares (with one vote each) on a one-for-one basis. Following the conversion, Telus will have 326 million common shares outstanding. The B.C. Supreme Court must still approve the plan. A hearing is set for November 5, 2012. However, U.S.-based hedge fund Mason Capital, which now owns around 19% of Telus’s common shares and a small portion of the non-voting stock, will try to block the conversion. Mason feels that common shareholders should receive compensation in exchange for the dilution of their voting power. Even though they receive identical dividends and have similar liquidity, the non-voting shares are typically cheaper than the common shares....

BCE INC., $42.86, Toronto symbol BCE, has failed to win regulatory approval for its $3.4-billion deal to buy Astral Media Inc. (Toronto symbols ACM.A and ACM.B). Montreal-based Astral owns 22 TV stations, 84 radio stations and several pay TV and specialty channels, such as the Movie Network, Family Channel and Teletoon. It also owns billboards and sells other outdoor advertising in Quebec, Ontario and B.C. Regulators felt the purchase would give BCE an overwhelming share of the TV broadcast market, which would hurt competition....

ENCANA CORP. $21 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 736.3 million; Market cap: $15.5 billion; Price-to-sales ratio: 2.0; Dividend yield: 3.7%; TSINetwork Rating: Average; www.encana.com) owns the Deep Panuke offshore natural gas field south of Nova Scotia. The project’s cost has risen to $960 million from an earlier estimate of $750 million because Encana had problems building the drilling platform (all amounts except share price and market cap in U.S. dollars). To put that in context, the company’s cash flow was $794 million, or $1.08 a share, in the quarter ended June 30, 2012. Even with these delays, Encana still aims to begin producing gas at Deep Panuke by the end of 2012. At full capacity, this new project will increase the company’s daily gas production by 9%....

ENCANA CORP $21.36 (Toronto symbol ECA; Shares outstanding: 736.3 million; Market cap: $15.7 billion; TSINetwork Rating: Average; Dividend yield: 3.9%; www.encana.com) is one of North America’s largest natural gas producers. Its reserves should last over 11 years.

Encana’s cash flow was $1.08 a share in the three months ended June 30, 2012 (all amounts except share price and market cap in U.S. dollars). That’s down 27.0% from $1.48 a share, a year earlier.

Natural gas accounts for 95% of Encana’s production. In response to falling gas prices, the company lowered its output during the quarter; this was the main reason for the lower cash flow.

...

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.

...

Encana took its present form on December 1, 2009, after the old EnCana Corp. split itself into two new companies: the new Encana, which focuses on natural gas, and Cenovus Energy, which specializes in oil sands. Falling gas prices have pushed Encana’s shares down about 30% since the split. Oil prices have weakened lately, but Cenovus’ shares are up about 14%. ENCANA CORP (Toronto symbol ECA; www.encana.com) is one of North America’s largest natural gas producers. Its reserves should last over 11 years....

Growth by acquisition can be risky. Newly purchased companies may develop unforeseen problems, especially in an unsettled economy. But Pembina has cut that risk by buying a rival in a business it’s already a leader in — and Veresen focuses on adding plants with long-term sales contracts already in place. PEMBINA PIPELINE $26.86 (Toronto symbol PPL; Shares outstanding: 288.7 million; Market cap: $7.8 billion; TSI Network Rating: Average; Dividend yield: 6.0%; www.pembina.com) owns pipeline systems that transport half of Alberta’s conventional oil production, 30% of the natural gas liquids (NGLs) produced in Western Canada and virtually all of B.C.’s conventional oil output. In the three months ended June 30, 2012, revenue rose 70.0%, to $870.9 million from $512.4 million a year earlier. In January 2012, it bought rival Provident Energy, which extracts, transports and stores NGLs, for $3.2 billion. Provident’s contribution was the main reason for the higher revenue....

Encana took its present form on December 1, 2009, after the old EnCana Corp. split itself into two new companies: the new Encana, which focuses on natural gas, and Cenovus Energy, which specializes in oil sands. Falling gas prices have pushed Encana’s shares down about 30% since the split. Oil prices have weakened lately, but Cenovus’shares are up about 14%. ENCANA CORP $21.36 (Toronto symbol ECA; Shares outstanding: 736.3 million; Market cap: $15.7 billion; TSINetwork Rating: Average; Dividend yield: 3.9%; www.encana.com) is one of North America’s largest natural gas producers. Its reserves should last over 11 years. Encana’s cash flow was $1.08 a share in the three months ended June 30, 2012 (all amounts except share price and market cap in U.S. dollars). That’s down 27.0% from $1.48 a share, a year earlier....

LOBLAW CO. $32.56 (Toronto symbol L; Shares outstanding: 281.4 million; Market cap: $9.2 billion; TSINetwork Rating: Above Average; Dividend yield: 2.6%; www.loblaw.ca) starting selling its popular Joe Fresh clothing and accessories in its supermarkets in 2006. It has also opened 12 stand-alone Joe Fresh stores in Canada and six in the U.S. Loblaw has formed a new partnership with J.C. Penney (New York symbol JCP). Under this deal, Loblaw will build Joe Fresh boutiques in 700 of Penney’s 1,100 U.S. department stores. (J.C. Penney is a recommendation of Wall Street Stock Forecaster, our newsletter that focuses on U.S. stocks.) These outlets should open in April 2013. Penney will also sell Joe Fresh products through its website. Loblaw is a buy....