imperial oil

IMPERIAL OIL LTD. $45 (Toronto symbol IMO; Conservative Growth Portfolio; Resources sector; Shares outstanding: 847.6 million; Market cap: $38.1 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.2%; TSINetwork Rating: Average; www.imperialoil.ca) produces oil and natural gas, mainly from its oil sands projects in Alberta. It also owns three refineries and operates 1,800 Esso gas stations.

Imperial began operating its new Kearl oil sands project in April 2013. It owns 71% of Kearl. ExxonMobil (New York symbol XOM) holds the other 29%. Exxon also owns 69.9% of Imperial.

In the three months ended September 30, 2013, Imperial produced an average of 288,000 barrels of oil equivalent a day (88% oil and 12% natural gas). That’s up 1.1% from 285,000 barrels a year earlier.
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Oil prices have soared from around $18 U.S. a barrel in 1993 to close to $100 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....

Oil prices have soared from around $18 U.S. a barrel in 1993 to around $100 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 (see Encana on Page 111).

Even so, these three oil producers continue to expand their oil sands operations....

IMPERIAL OIL $44.59 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $38.2 billion; TSINetwork Rating: Average; Dividend yield: 1.1%; www.imperialoil.ca) began operating its new Kearl oil sands project in Alberta in April 2013.

Imperial owns 71% of Kearl....

IMPERIAL OIL $44.62 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $38.0 billion; TSINetwork Rating: Average; Div. yield: 1.1%; www.imperialoil.ca) has teamed up with its parent, ExxonMobil (New York symbol XOM), to buy 226,000 acres of undeveloped oil sands properties near Fort McMurray, Alberta. (Exxon owns 69.9% of Imperial.)

Imperial will hold 27.5% of these properties, while Exxon will own the remaining 72.5%. Imperial’s share of the $751-million cost is $206.5 million. That’s equal to 63% of the $327 million, or $0.38 a share, that the company earned in the second quarter of 2013.

Purchases like this will help Imperial achieve its goal of raising its daily production from 276,000 barrels of oil equivalent (including gas) in the latest quarter to 600,000 barrels by 2020.
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BLACKBERRY LTD., $9.08, Toronto symbol BB, fell 16% on Friday after the company announced that it will cut 40% of its workforce due to slow demand for its new BlackBerry 10 smartphones. In its fiscal 2014 second quarter, which ended August 31, 2013, BlackBerry sold 3.7 million phones. That’s down from 7.4 million phones a year earlier. BlackBerry will also write down the value of its unsold phones. As a result, it expects to report a loss of between $950 million, or $1.81 a share, and $995 million, or $1.90 a share, in the second quarter (all amounts except share price in U.S. dollars). If you exclude unusual items, it will still lose between $0.47 and $0.51 a share....

Cenovus Energy took its present form on December 1, 2009, after the old EnCana Corp. split itself into two new companies: Cenovus, which specializes in oil sands, and the new Encana (see box at right), which focuses on natural gas. Lower gas prices have pushed Encana’s shares down by about 68% since the split, but Cenovus’s stock is up about 12%.

The stock trades at higher multiples to earnings and cash flow than larger oil sands operations like Suncor and Imperial Oil....

IMPERIAL OIL $44.62 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $38.0 billion; TSINetwork Rating: Average; Div. yield: 1.1%; www.imperialoil.ca) has teamed up with its parent, ExxonMobil (New York symbol XOM), to buy 226,000 acres of undeveloped oil sands properties near Fort McMurray, Alberta....

BCE INC. $44.58 (Toronto symbol BCE; Shares outstanding: 775.9 million; Market cap: $34.8 billion; TSINetwork Rating: Above Average; Yield: 5.2%; www.bce.ca) has gained in response to U.S.-based Verizon Communications’ (New York symbol VZ) announcement that it will not enter the Canadian wireless market right now (see box below).

BCE is Canada’s second-largest wireless carrier, with 7.72 million subscribers....

ENBRIDGE INC. $43 (Toronto symbol ENB; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 826.0 million; Market cap: $35.5 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.9%; TSINetwork Rating: Above Average; www.enbridge.com) is extending its Woodland pipeline, which will let it pump more bitumen from the recently opened Kearl oil sands project in northern Alberta to refineries and other pipelines in Edmonton. Imperial Oil (see above) owns 71% of Kearl; Exxon owns the remaining 29%.

The company will spend $1.3 billion on this project, which should begin operating in the third quarter of 2015.

Enbridge is a buy.
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