oil and gas

COMPUTER MODELLING GROUP $12.85 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403-531-1300; www.cmgl.ca; Shares outstanding: 78.5 million; Market cap: $1.0 billion; Dividend yield: 3.1%) sells software and services that help conventional oil and gas producers create 3-D models of reservoirs. That lets them squeeze more out of those reservoirs using advanced recovery techniques, such as injecting steam or chemicals. Typically, only 25% to 30% of oil and gas is recovered during primary production. Unconventional producers using hydraulic fracturing, or fracking, of oil and gas-bearing shale can also use Computer Modelling’s software to determine optimal drilling locations and depths. In the three months ended March 31, 2015, the company’s revenue rose 2.0%, to $20.4 million from $20.0 million a year earlier. Software licensing revenue (89% of the total) rose 2.8%, and consulting and professional services revenue (11%) gained 9.6%....

AGT FOOD & INGREDIENTS $32.17 (Toronto symbol AGT; TSINetwork Rating: Extra Risk) (306-525- 4490; www.alliancegrain.com; Shares outstanding: 23.1 million; Market cap: $755.8 million; Dividend yield: 1.9%) has bought the assets of West Central Road & Rail for $22 million. The acquisition includes five bulk-loading sites in Saskatchewan. Purchases like this are important because they help ensure that AGT can supply its manufacturing plants and continue its growth. AGT Food & Ingredients is still a buy....

Whitecap Resources, $13.36, symbol WCP on Toronto (Shares outstanding: 298.0 million; Market cap: $4.0 billion; www.wcap.ca), produces and explores for oil and natural gas in Western Canada. Oil makes up 74% of its daily output; the remaining 26% is gas. In the three months ended March 31, 2015, acquisitions increased Whitecap’s average daily production by 44.7%, to 38,351 barrels of oil equivalent from 26,508 a year earlier. The higher output offset sharply lower oil and gas prices, and Whitecap’s cash flow increased 8.9%, to $109.9 million from $100.9 million. However, cash flow per share fell 15.7%, to $0.43 from $0.51, as Whitecap issued more shares to pay for its acquisitions....

Capstone Infrastructure Corp., $3.10, symbol CSE on Toronto (Shares outstanding: 93.7 million; Market cap: $302.2 million; www.capstoneinfrastructure.com), is an electricity producer with 449 megawatts of capacity. It operates gas, wind, hydro, biomass and solar facilities and is developing a total of 79 megawatts of wind projects. Capstone also invests in utilities, including a 33.3% stake in a municipal-heating business in Sweden and 50% of a regulated water utility in the U.K. The company plans to keep looking for acquisitions to boost its cash flow. But that adds risk, especially since it has previously added a wide range of operations, including solar and biomass, and made acquisitions in foreign markets like Sweden....

These four companies provide hard-to-replace services to oil and gas producers. That gives them a big advantage, particularly as oil prices have started to recover. Crude’s recent gains should also spur their earnings and give them more room for dividend hikes. SNC-LAVALIN GROUP INC. $46 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 152.1 million; Market cap: $7.0 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.2%; TSINetwork Rating: Average; www.snclavalin.com) fell to $36.24 in March 2015 after the RCMP charged the company and two subsidiaries for using bribes to win construction deals in Libya between 2001 and 2011. These are the same allegations that prompted SNC to replace its senior executives in 2012 and bring in a new program to enforce ethical practices. The company plans to fight these charges....

Freehold Royalties Ltd., $17.42, symbol FRU on Toronto (Shares outstanding: 98.0 million; Market cap: $1.7 billion; www.freeholdroyalties.com), holds oil and natural gas rights on 3.5 million acres of land in Alberta, Saskatchewan, B.C., Manitoba and Ontario. These reserves are 47% natural gas, 24% light crude oil, 22% heavy crude oil and 7% natural gas liquids. Freehold collects royalties from oil and gas producers that operate over 38,000 wells on its land, in addition to holding royalty interests in seven potash mines in Saskatchewan. Long-life royalty properties account for about 75% of Freehold’s cash flow, and wells it has a working interest in, and shares the cost of operating, supply the remaining 25%....

With $44 billion earmarked for new projects, Enbridge builds up its cash flow and keeps our rating as one of Canada’s best dividend stocks.

Imperial Oil continues to face low oil prices, and Alberta’s new NDP government could increase royalties or impose new environmental regulations. However, Imperial plans to keep expanding Kearl and Cold Lake, its two main oil sands properties in Alberta. These projects will prosper when oil prices recover, and they should last for decades. IMPERIAL OIL $49.32 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $41.9 billion; TSINetwork Rating: Average; Dividend yield: 1.1%; 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 three refineries and 1,700 Esso gas stations. Oil prices hit a high of $147 U.S. a barrel in July 2008, but then plummeted to a low of $32 in December 2008 as the recession took hold. Prices climbed back to over $100 in 2010, and remained near there until mid-2014 when oil plunged from $110 to less than half that price by the end of the year. Oil is now at $60 a barrel....

CRESCENT POINT ENERGY CORP. $28.03 (Toronto symbol CPG; Shares outstanding: 449.5 million; Market cap: $12.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 9.9%; www.crescentpointenergy.com) produces oil and natural gas in Western Canada, with a focus on its Bakken light oil development in southeastern Saskatchewan. The company is now buying heavily indebted Legacy Oil + Gas (Toronto symbol LEG) for $563 million plus the assumption of $967 million in debt. Activist investors put a lot of pressure on Legacy to complete a deal. The move will add about 22,000 barrels of oil a day to Crescent Point’s current output of 150,000 barrels. About 15,000 barrels of Legacy’s output is in Crescent Point’s core Bakken area....

We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of highquality stocks. Here’s a look at six international ETFs:...