imperial oil

Parkland Fuel Corp., $12.87, symbol PKI on Toronto (Shares outstanding: 67.9 million; Market cap: $873.9 million, 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 167 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)....

Recovering global economies should boost oil and natural gas prices—although rising oil sands and shale gas production could hold back those increases. Imperial Oil’s large oil and gas reserves should last for decades. But the company also owns four refineries and operates 1,850 Esso gas stations. This diversification helps shield Imperial from volatile oil and gas prices and further cuts its risk. IMPERIAL OIL $46.03 (Toronto symbol IMO; Shares outstanding: 850.5 million; Market cap: $39.1 billion; TSINetwork Rating: Average; Dividend yield: 1.0%; www.imperialoil.ca) is a major integrated-oil company that gets most of its production from its oil sands projects in Alberta. Imperial also has conventional oil and natural-gas operations in western Canada, and it holds interests in offshore projects in Atlantic Canada. In the three months ended September 30, 2011, Imperial’s earnings jumped 105.5%, to $859 million, or $1.01 a share. A year earlier, it earned $418 million, or $0.49 a share. Imperial increased its oil sands production and benefited from rising oil prices and improved refinery profits. Revenue rose 35.8%, to $7.9 billion from $5.9 billion....

PLEASE NOTE: This is our last Hotline for 2011. Our next Hotline will go out on Friday, January 6, 2012. TRANSCANADA CORP., $44.05, Toronto symbol TRP, is buying nine solar-power projects in Ontario from Canadian Solar Inc. (Nasdaq symbol CSIQ). TransCanada will pay $470 million for these projects. That’s 12.7% more than the $417 million, or $0.59 a share, that it earned in the three months ended September 30, 2011....

SHAWCOR LTD., $24.80, Toronto symbol SCL.A, won two major contracts this week. The company makes sealants and coatings that protect onshore and offshore oil and natural gas pipelines from corrosion. It also makes industrial equipment, such as electrical wire and protective sheaths. One of these new deals is a $400 million U.S. agreement to provide coatings and other services to a natural gas pipeline on the Ichthys gas field off the northern coast of Australia. ShawCor did not say when the work would begin or how long the job would take....

New technologies are helping to unlock the vast reserves of the oil sands and shale-gas fields in North America. However, the extra production could hold back oil and natural gas prices. That’s why we feel it’s a great time to own our favourite integrated oil producer Imperial Oil. Besides drilling for oil, Imperial also owns refineries which convert crude oil into gasoline and other fuels. These operations profit when oil prices fall, because they pay less for the crude they refine. Imperial also operates 1,850 Esso gas stations. That helps diversify the company’s business, and further cuts its risk. IMPERIAL OIL LTD. $42 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $35.6 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.0%; TSINetwork Rating: Average; www.imperialoil.ca) is Canada’s third-largest publicly traded oil company, after Suncor Energy Inc. and Canadian Natural Resources Ltd. Imperial is a 69.6%-owned subsidiary of U.S.-based ExxonMobil Corp. (New York symbol XOM)....

Total S.A. (ADR), $51.32, symbol TOT on New York (Shares outstanding: 2.3 billion; Market cap: $118.1 billion; www.total.com), is one of the world’s largest publicly traded integrated oil companies. Total is based in France. The company is engaged in various aspects of the oil and gas industry around the world. It also has interests in refineries, chemical production and service stations. In the three months ended September 30, 2011, Total’s earnings rose 23.8%, to $4.0 billion, or $1.75 per ADR. A year earlier, it earned $3.2 billion, or $1.42 per ADR. Revenue rose 25.7%, to $65.2 billion from $51.9 billion....

IMPERIAL OIL $37.16 (Toronto symbol IMO; Shares outstanding: 853.9 million; Market cap: $29.8 billion; TSINetwork Rating: Average; Dividend yield: 1.2%; www.imperialoil.ca) has formed a new alliance with Sobeys Inc., which operates over 1,300 grocery stores across Canada. Under the deal, both companies’ customers will be able to earn loyalty points at Imperial’s Esso gas stations and at Sobeys’ supermarkets. Cardholders can then redeem their points for gasoline or groceries. Loyalty programs that offer rebates and other rewards are a good way for retailers to attract more customers. Moreover, joining with Sobeys should increase Esso’s sales....

BANK OF NOVA SCOTIA, $51.63, Toronto symbol BNS, continues to build up its operations in China. This week, Bank of Nova Scotia agreed to buy 19.99% of the Bank of Guangzhou; the Chinese government owns the remaining 80.01%. This bank is the 29th largest in China, with 84 branches. Bank of Nova Scotia will pay $719 million when the deal closes in December 2011. To put that in context, it earned $1.2 billion, or $1.11 a share, in the three months ended July 31, 2011....

IMPERIAL OIL $40.16 (Toronto symbol IMO; Shares outstanding: 853.9 million; Market cap: $33.1 billion; TSINetwork Rating: Average; Dividend yield: 1.1%; www.imperialoil.ca) continues to work on its Kearl oil-sands project in northern Alberta. Imperial owns 71% of Kearl. ExxonMobil Corp. (New York symbol XOM) owns the remaining 29%. Exxon also owns 69.6% of Imperial. The company had to import some of the larger mining equipment it needs from South Korea. This gear is now in Idaho. Due to problems securing permits to truck this equipment to the Kearl site, Imperial and Exxon are now taking apart most of this equipment so it will fit on smaller trucks. Kearl is now 68% complete. When the first phase starts up in late 2012, it will add 78,100 barrels to Imperial’s daily production; in the latest quarter, the company produced 231,000 barrels of oil equivalent a day (including natural gas). Imperial’s share of Kearl’s output will jump to 245,000 barrels a day when the project reaches full production later this decade. Kearl’s reserves should last at least 40 years....

CANADIAN TIRE CORP., $56.55, Toronto symbol CTC.A, reported lower-than-expected earnings this week. In the three months ended July 2, 2011, the company earned $105.8 million, or $1.29 a share. That missed the consensus estimate of $1.45 a share. The latest earnings are also down 13.8% from $122.8 million, or $1.50 a share, a year earlier. Canadian Tire spent more on advertising. As well, cooler spring weather hurt sales of seasonal merchandise, such as gardening equipment. Canadian Tire’s earnings were also held back by costs related to the upcoming, $771-million purchase of The Forzani Group Ltd. (Toronto symbol FGL). Forzani sells sporting goods through over 500 stores in Canada, including SportChek and Athlete’s World. Canadian Tire aims to complete this purchase by the end of September 2011....