imperial oil

IMPERIAL OIL LTD. $46 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $39.0 billion; Price-to-sales ratio: 1.6; Dividend yield: 1.0%; TSINetwork Rating: Average; www.imperialoil.ca) is a major integrated-oil company. U.S.-based ExxonMobil Corp. (New York symbol XOM) owns 69.6% of Imperial’s shares. Most of the Imperial’s production comes from its oil-sands projects in Alberta. It also has conventional oil and natural-gas operations in western Canada, and holds interests in offshore projects in Atlantic Canada. The company’s other operations include four refineries and roughly 1,900 Esso gas stations. In the three months ended March 31, 2011, Imperial earned $781 million, or $0.91 a share. That’s up 64.1% from $476 million, or $0.56 a share. Cash flow per share rose 4.7%, to $1.12 to $1.07. Revenue rose 11.4%, to $6.9 billion from $6.2 billion....

We continue to advise against overindulging in oil stocks. That’s because the Resource sector (including oil) is highly volatile, and no one can accurately predict future oil prices. For instance, after rising to $115 U.S. a barrel, oil dropped 16% in the first week of May 2011, to $97 U.S., on fears that the global economic recovery may be stalling. That’s why investors should stick with well-established oil producers with high-quality reserves and rising production, such as these three. All three should also benefit from the election of the Conservative majority government, which has promised not to impose onerous new carbon taxes or environmental regulations on oil-sands operators....

Royal Dutch Shell plc (ADR), $76.69, symbol RDS.A on New York, (ADRs outstanding: 1.8 billion; Market cap: $137.9 billion; www.shell.com), owns interests in the many companies that make up the Royal Dutch Shell Group. Together, these companies are engaged in various aspects of the oil and gas industry around the world. Shell also has interests in chemical companies and other energy-related businesses. As well, it owns about 45,000 service stations worldwide. Shell recently completed two major projects in the Middle East: the Pearl gas-to-liquids (GTL) plant in Qatar, which is the world’s largest; and the Qatargas 4 plant, also in Qatar. This is Shell’s first entry into Qatar’s liquefied natural gas (LNG) industry. Shell now participates in LNG supply projects in seven countries. These projects will add growth in an area that had been sluggish for the company....

PLEASE NOTE: Our next Hotline will go out on Thursday, April 7, 2011. BOMBARDIER INC., Toronto symbols BBD.A $7.09 and BBD.B $7.11, rose 12% this week after the company reported better-than-expected earnings. In its 2011 fiscal year, which ended January 31, 2011, Bombardier’s earnings rose 8.2%, to $755 million from $698 million in fiscal 2010 (all amounts except share price in U.S. dollars). Earnings per share rose 7.7%, to $0.42 from $0.39, on more shares outstanding. That easily beat the consensus estimate of $0.36 a share....

IMPERIAL OIL $51.49 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $43.6 billion; TSINetwork Rating: Average; Dividend yield: 0.9%; www.imperialoil.ca) is Canada’s largest integrated oil company. Imperial earned $0.95 a share in the three months ended December 31, 2010. That’s up 50.8%, from $0.63 a share a year earlier. The rise was mainly the result of higher oil and gas prices, and improved profits at Imperial’s refineries. Revenue rose 18.2%, to $6.9 billion from $5.9 billion. The company’s production is set to rise in the long term, thanks to its new oil-sands projects, including the $8-billion Kearl project, which is more than 50% complete. When it starts operating in 2012, Kearl should add 78,100 barrels of oil to Imperial’s daily production of 294,000 barrels. Imperial owns 71% of Kearl. ExxonMobil Corp. (New York symbol XOM) owns the remaining 29%. Exxon also holds a 69.6% interest in Imperial....

Imperial Oil’s large oil and gas reserves should last for decades. But the company also owns four refineries that convert crude oil into gasoline and other fuels. Imperial also operates 1,900 Esso gas stations. This diversification helps shield the company from volatile oil and gas prices. Moreover, Imperial focuses on politically stable North America. That makes it an ideal resource stock for safety-conscious investors. IMPERIAL OIL $51.49 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $43.6 billion; TSINetwork Rating: Average; Dividend yield: 0.9%; www.imperialoil.ca) is Canada’s largest integrated oil company. Imperial earned $0.95 a share in the three months ended December 31, 2010. That’s up 50.8%, from $0.63 a share a year earlier. The rise was mainly the result of higher oil and gas prices, and improved profits at Imperial’s refineries. Revenue rose 18.2%, to $6.9 billion from $5.9 billion....

I think the political turmoil in the Arab world will eventually turn out to be a good thing for the world economy and stock markets. However, it definitely raises the already high political risk for foreign companies, including oil and gas firms, operating in those countries. In Canadian Wealth Advisor, we’ve long emphasized oil and gas stocks with a strong base of growing operations in Canada and the U.S. That not only eliminates political risk, but lets them profit when turmoil elsewhere pushes up oil and gas prices. Here are six top favourites:...

Prices for oil, copper and other commodities continue to rise as the global economy recovers. That has pushed up the share prices of most resource companies, including the three oil producers we analyze in this issue. Another way to profit from surging commodity prices is by investing in companies that sell equipment and services to the resources industry. Finning is a top example. The stock has nearly doubled from its recent low of $16 in June 2010. Even so, it still trades at a reasonable multiple to earnings. FINNING INTERNATIONAL INC. $29 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 171.2 million; Market cap: $5.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.finning.com) sells, rents and repairs heavy equipment, such as tractors, bulldozers and trucks, made by Caterpillar Inc....

Canada’s oil sands still face strong opposition from environmentalists. However, new technology has sharply lowered the oil sands’ greenhouse-gas emissions. As well, turmoil in Egypt and other Middle Eastern countries highlights the oil sands’ strategic importance to the U.S. and Canada. These factors make it less likely that Ottawa will introduce regulations that would slow oil-sands development. These three oil-sands producers have all moved up lately, but they still have plenty of room to grow. SUNCOR ENERGY INC. $40 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.6 billion; Market cap: $64.0 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.0%; TSINetwork Rating: Average; www.suncor.com) became Canada’s largest oil company when it merged with Petro-Canada in August 2009. About 50% of Suncor’s production is conventional oil and natural gas. The remaining 50% comes from oil sands, including the company’s 12% stake in the massive Syncrude development. Suncor aims to expand its oil-sands operations until they account for about 70% of its production....

SUNCOR ENERGY INC., $40.61, Toronto symbol SU, reported better-than-expected earnings this week. As well, the turmoil in Egypt has pushed up oil prices, and helped lift Suncor’s share price. In 2010, Suncor’s earnings jumped 113.4%, to $2.7 billion from $1.3 billion in 2009. Earnings per share rose 64.6%, to $1.74 from $1.06, on more shares outstanding. These figures exclude several unusual items, including gains on sales of assets Suncor received as a part of its 2009 takeover of Petro-Canada. On this basis, the 2010 earnings easily beat the consensus estimate of $1.57 a share. Cash flow per share rose 82.1% in 2010, to $4.26 from $2.34. Revenue gained 38.2%, to $34.4 billion from $24.8 billion....