imperial oil

SNC-LAVALIN GROUP INC., $39.40, Toronto symbol SNC, fell 5% this week in response to the arrest of Pierre Duhaime, the company’s former chief executive officer. The charges relate to possible illegal payments that SNC may have paid to secure a contract to build the new McGill University Health Centre in Montreal. The company and its partners won this deal in April 2010 under a public-private partnership with the Quebec government. It’s unclear if these payments are related to the $56 million U.S. in unusual payments to agents that SNC discovered in March 2012. To put that in context, SNC earned $378.8 million (Canadian), or $2.49 a share, in 2011. This situation prompted Mr. Duhaime to step down as CEO and a director of the company. SNC also fired other executives....

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....

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: 1.1%; TSINetwork Rating: Average; www.imperialoil.ca) is getting a lot of inquiries about an oil refinery it is selling in Dartmouth, Nova Scotia. Imperial is selling this facility because it uses higher priced oil from the North Sea instead of cheaper crude from western Canada. After the sale, it will still own three refineries.

The company aims to complete the sale in early 2013. If it can’t, it will probably convert the refinery into a storage terminal.

Imperial Oil is a buy.

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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: 1.1%; TSINetwork Rating: Average; www.imperialoil.ca) is getting a lot of inquiries about an oil refinery it is selling in Dartmouth, Nova Scotia. Imperial is selling this facility because it uses higher priced oil from the North Sea instead of cheaper crude from western Canada. After the sale, it will still own three refineries. The company aims to complete the sale in early 2013. If it can’t, it will probably convert the refinery into a storage terminal. Imperial Oil is a buy.

CENOVUS ENERGY INC., $34.42, Toronto symbol CVE, has agreed to buy oil sands properties in northern Alberta and Saskatchewan held by Oilsands Quest, which went bankrupt in November 2011. Cenovus will pay $10 million when the sale closes next week. This is a small purchase for the company, which reported cash flow of $925 million, or $1.22 a share, in the three months ended June 30, 2012. Most of these new properties are next to to Cenovus’s 100%-owned Telephone Lake oil sands project. If regulators approve, the company could begin developing Telephone Lake in 2014....

CANADIAN PACIFIC RAILWAY $85.01 (Toronto symbol CP; Shares outstanding: 171.7 million; Market cap: $14.6 billion; TSINetwork Rating: Average; Dividend yield: 1.7%; www.cpr.ca) continues to make progress with its plan to improve its efficiency with new trains and streamlined schedules. The company has just launched its new transcontinental service for intermodal containers (which can be shipped by rail, ship or truck), which uses a more direct route with fewer stops. As a result, CP can now ship containers from Vancouver to Toronto in four days instead of five. Shipping to Chicago also takes four days, down from six. CP Rail is a buy....

IMPERIAL OIL $46.36 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $39.3 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 in Western Canada. It also owns four refineries and operates 1,850 Esso gas stations.

In the three months ended June 30, 2012, Imperial’s earnings fell 12.5%, to $635 million, or $0.75 a share, on lower oil and gas prices. A year earlier, it earned $726 million, or $0.85 a share. Revenue fell 3.3%, to $7.5 billion from $7.8 billion. However, cash flow per share rose 0.9%, to $1.09 from $1.08.

Imperial’s production is set to keep rising thanks to its new oil sands operations, including the $10.9-billion Kearl project, which is more than 94% complete. Imperial owns 71% of Kearl. ExxonMobil (New York symbol XOM) owns the remaining 29%. Exxon also holds a 69.6% interest in Imperial.

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Parkland Fuel Corp., $16.97, symbol PKI on Toronto (Shares outstanding: 66.6 million; Market cap: $1.1 billion, www.parkland.ca), operates gas stations, convenience stores and a fuel distribution business, mostly in Western Canada and Ontario. The company was called Parkland Income Fund prior to its conversion to a dividend-paying corporation on December 31, 2010. Parkland owns 163 rural gas stations and convenience stores. Its brands include Fas Gas Plus, Race Trac Gas and Short Stop (convenience stores). Many stations sell propane in addition to gasoline and diesel fuel. The company also operates Esso gas stations in western Canada and Ontario under a licensing deal with Imperial Oil Ltd. (symbol IMO on Toronto)....

Imperial Oil’s Cold Lake oil sands project in Alberta supplied about two-thirds of the 231,000 barrels of oil equivalent that the company produced in its latest quarter. Oil sands will play an even bigger role when the first phase of its Kearl Lake project starts up later this year and adds 78,100 barrels to its output. Phase two will add another 78,100 barrels in 2015. Oil sands projects are expensive to develop, but their reserves last for decades, and their operating costs tend to fall after they start up. IMPERIAL OIL $46.36 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $39.3 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 in Western Canada. It also owns four refineries and operates 1,850 Esso gas stations. In the three months ended June 30, 2012, Imperial’s earnings fell 12.5%, to $635 million, or $0.75 a share, on lower oil and gas prices. A year earlier, it earned $726 million, or $0.85 a share. Revenue fell 3.3%, to $7.5 billion from $7.8 billion. However, cash flow per share rose 0.9%, to $1.09 from $1.08....

CENOVUS ENERGY INC. $32 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.7 million; Market cap: $24.2 billion; Price-to-sales ratio: 1.3; Dividend yield: 2.8%; TSINetwork Rating: Extra Risk; www.cenovus.com) operates three heavy oil projects in Alberta and one in Saskatchewan. It gets about half of its output from the oil sands. Conventional oil and natural gas wells supply the other half.

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 properties produce heavy bitumen, which Cenovus ships to its 50%-owned refineries in Illinois and Texas. ConocoPhillips recently spun off its refining operations as a separate company called Phillips 66 (New York symbol PSX). This new firm owns the other 50% of these refineries.

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