imperial oil

IMPERIAL OIL $50.82 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $42.7 billion; TSINetwork Rating: Average; Dividend yield: 1.0%; www.imperialoil.ca) is a major integrated oil company with oil sands projects in Alberta and conventional oil and gas operations across Western Canada. It also operates four refineries and 1,850 Esso gas stations.

In the three months ended December 31, 2013, Imperial produced an average of 329,000 barrels of oil equivalent a day, up 15.4% from 285,000 barrels a year earlier. The gain was mainly due to the start-up of its Kearl oil sands project in April 2013.

The higher production increased Imperial’s revenue by 7.2%, to $8.4 billion from $7.8 billion. However, insufficient pipeline capacity has made it difficult for the company to sell its oil in higher-priced markets. That cut its earnings per share by 1.5%, to $1.24 from $1.26. Cash flow per share fell 11.7%, to $1.67 from $1.89.
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LOBLAW COMPANIES LTD., $47.01, Toronto symbol L, has received approval from competition regulators for its acquisition of Shoppers Drug Mart Corp. (Toronto symbol SC), which operates 1,253 drug stores across Canada. To win approval for the purchase, Loblaw has agreed to sell 18 stores and 9 pharmacies. It does not plan to close any of its 1,000 supermarkets. Loblaw will pay roughly $12.4 billion in cash and shares for Shoppers when the deal closes on March 28, 2014. The price is equal to 93% of its $13.3-billion market cap. After the deal closes, Shoppers shareholders will own 29% of the combined company....

Imperial Oil plans to almost double its production, to 600,000 barrels of oil a day, by the end of this decade. A big part of that gain will come from its Kearl oil sands project in Alberta. Kearl, which started up last year, added 78,100 barrels to the company’s daily output....

Suncor and Imperial Oil (see box) are shipping more oil by rail while they wait for governments to approve new pipelines (see TransCanada on page 23). That’s adding to their costs.

But at the same time, recently completed oil sands projects are raising their production—and these fields should last for decades.

SUNCOR ENERGY INC....

IMPERIAL OIL LTD. $47 (Toronto symbol IMO; Conservative Growth and Income Portfolios; Resources sector; Shares outstanding: 847.6 million; Market cap: $39.8 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.1%; TSINetwork Rating: Average; www.imperialoil.ca) produced an average of 329,000 barrels of oil equivalent a day (90% oil and 10% natural gas) in the fourth quarter of 2013....

IMPERIAL OIL $45.18 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $38.5 billion; TSINetwork Rating: Average; Dividend yield: 1.2%; www.imperialoil.ca) produced an average of 329,000 barrels of oil equivalent a day (90% oil and 10% natural gas) in the three months ended December 31, 2013....

PLEASE NOTE: Next week, Canadian Wealth Advisor will reveal its “#1 Safety-Conscious Stock Pick for 2014.” One week from today, on February 7, 2014, shortly after the stock market closes at 4:00 p.m. Toronto time, we will reveal our our #1 Safety-Conscious Pick for 2014 to subscribers of Canadian Wealth Advisor. You can be among the first to hear about our #1 pick for 2014. Because you’re a loyal subscriber, we are happy to offer you a bargain-priced, no-risk introduction to Canadian Wealth Advisor. It gives you the first month—and the 2013 U.S. Stock of the Year—FREE. But you must act now. Click here. BANK OF MONTREAL, $68.06, Toronto symbol BMO, has agreed to buy U.K.-based wealth management firm F&C Asset Management. F&C sells a variety of investment services to individuals and institutional clients, such as pension plans and insurance companies. It has $136 billion U.S. in assets under management, which will increase the assets Bank of Montreal’s Global Asset Management division administers to $269 billion U.S. The purchase will also add many wealth management clients outside North America....

PLEASE NOTE: This is our last Hotline for 2013. Our next Hotline will go out on Friday, January 3, 2014. ENBRIDGE INC., $45.35, Toronto symbol ENB, has won regulatory approval for its Northern Gateway pipeline. Northern Gateway will pump crude from Alberta’s oil sands to Kitimat, B.C. From there, tankers would ship the oil to customers in Asia....

Oil prices have soared from around $18 U.S. a barrel in 1993 to around $97 U.S. today. However, new drilling technologies have made it easier to extract oil from hard-to-reach deposits, such as oil sands and shale rock formations. Rising production from these sources could hurt oil prices in the same way the shale gas boom has depressed natural gas prices....

CENOVUS ENERGY INC. $30 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.7 million; Market cap: $22.7 billion; Price-to-sales ratio: 1.3; Dividend yield: 3.2%; TSINetwork Rating: Average; www.cenovus.com) gets 60% of its production from its three heavy oil projects in Alberta and one in Saskatchewan. Conventional oil and natural gas wells supply the remaining 40%. In all, Cenovus’s proved reserves should last at least 23 years.

U.S.-based ConocoPhillips (New York symbol COP) owns 50% of Cenovus’s main Foster Creek and Christina Lake oil sands projects in Alberta. These operations produce heavy bitumen, which Cenovus ships to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these refineries.

In the three months ended September 30, 2013, Cenovus produced 264,100 barrels of oil equivalent a day (67% oil and 33% gas), down 1.3% from 267,500 barrels a year earlier.
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