energy stocks
BELLATRIX EXPLORATION (Toronto symbol BXE; www.bellatrixexploration.com) produces oil and natural gas in Alberta, B.C. and Saskatchewan. Gas makes up about 69% of its output; the remaining 31% is oil....
U.S. oil production is up 40% since 2008. That’s largely because of new technologies like hydraulic fracturing, or fracking. This involves injecting water, sand and chemicals to break up shale and other tight rock formations and allow access to the oil and gas. The best way to profit from this volatile industry is through companies with high-quality reserves and diverse operations. Here is one of the diversified U.S. energy stocks we cover regularly....
Slowing industrial activity in North America and China has pushed down oil demand. At the same time, rising shale oil production from North Dakota’s Bakken region has increased inventories. Both of these factors have weighed on prices. However, low prices are a mixed blessing for integrated oil companies like Suncor Energy. They earn less profit by producing crude, but their refineries also pay less for the oil they use....
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. Lower gas prices have pushed Encana’s shares down by about 36% since the split. Oil prices have weakened lately, but Cenovus’s stock is still up about 12%. Here is our latest report on these two energy stocks....
PRECISION DRILLING CORP. (Toronto symbol PD; www.precisiondrilling.com) sells contract drilling services to oil and gas producers, mainly in North America. It ended 2012 with 321 active rigs....
DEVON ENERGY CORP. (New York symbol DVN; www.dvn.com) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 61% gas and 39% oil....
BELLATRIX EXPLORATION (Toronto symbol BXE;www.bellatrixexploration.com) produces oil and natural gas in Alberta, B.C. and Saskatchewan. Gas makes up about 69% of its output; the remaining 31% is oil. In the three months ended December 31, 2012, Bellatrix’s production rose 32.1%, to 18,763 barrels of oil equivalent per day (including natural gas) from 14,209 barrels. Cash flow per share rose 7.1%, to $0.30 from $0.28....
The long-term outlook for oil and natural gas is positive, although in the short term, shale oil and gas discoveries continue to rapidly increase supply. That’s keeping prices low—and pushing down the shares of producers. We advise against overindulging in any one sector. However, we do think most safety-conscious investors should stick with the energy stocks we rate as buys in Canadian Wealth Advisor. Here is our latest advice on two of them....
iShares S&P/TSX Capped Energy Index Fund, $15.61, symbol XEG on Toronto (Shares outstanding: 56.0 million; Market cap: $874.2 million; ca.ishares.com), aims to mirror the performance of the S&P/TSX Capped Energy Index, which is made up of the largest-capitalization energy stocks on the Toronto exchange. The weight of any one company is capped at 25% of the index’s market capitalization. The fund’s MER is 0.60%. It yields 1.5%. iShares S&P/TSX Capped Energy Index Fund’s top 10 holdings are Suncor Energy, 17.6%; Canadian Natural Resources, 12.0%; Cenovus Energy, 8.9%; Nexen, 5.3%; Crescent Point Energy, 5.2%; Encana Corp., 4.9%; Talisman Energy, 4.7%; Imperial Oil, 3.9%; Canadian Oil Sands Trust, 3.4%; and Husky Energy Trust, 3.3%. We continue to think most investors are better off investing in individual companies as part of a well-balanced and diversified portfolio rather than in funds that focus on narrow market sectors. As well, indexes that cap their holdings at a certain level can cut your return by reducing the contribution from top performers if they rise to make up more than the capped limit....
Weak natural gas prices have hurt oil and gas producers with a high gas component. In June 2012, the price of gas dropped below $2 U.S. per million British thermal units (BTUs). That was the lowest price in over 10 years, and down 87% from an all-time high of $15.40 in December 2005. High inventories and record-warm temperatures were the main reasons for the price decline. Gas has since risen to around $3.37. The long-term outlook for natural gas is positive, although in the short term, shale gas discoveries continue to rapidly increase supply. That’s keeping prices low. Shale gas is natural gas that is trapped in rock formations. To extract it, companies must pump water and chemicals into the rock. This fractures the rock and releases the natural gas....