oil and gas
GENERAL ELECTRIC CO. $27 (New York symbol GE; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 10.1 billion; Market cap: $272.7 billion; Priceto- sales ratio: 1.8; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.ge.com) is selling most office buildings and real estate loans belonging to GE Capital, its financing subsidiary, to a group of investors for $26.5 billion. The company will also hand out its remaining 85% stake in Synchrony Financial (New York symbol SYF), which provides credit card loans through retailers. GE will give its shareholders the chance to swap their stock for Synchrony shares. It will take two years for GE to complete these transactions. After that, the financing business will supply just 10% of its earnings, down from 42% in 2014. The company plans to use the funds from these sales to buy back $50 billion worth of its shares....
CENOVUS ENERGY INC. $22 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 824.5 million; Market cap: $18.1 billion; Price-to-sales ratio: 1.1; Dividend yield: 4.8%; TSINetwork Rating: Average) gets 35% of its revenue from its oil sands projects and conventional oil and gas wells in Western Canada.
Refining supplies the remaining 65% of Cenovus’s revenue. The company ships its oil to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these operations. These refineries help cut Cenovus’s exposure to falling oil prices, as cheaper crude cuts their operating costs.
Cenovus continues to expand its 50%-owned Christina Lake and Foster Creek oil sands operations; ConocoPhilips (New York symbol COP) owns the remaining 50%.
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Refining supplies the remaining 65% of Cenovus’s revenue. The company ships its oil to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these operations. These refineries help cut Cenovus’s exposure to falling oil prices, as cheaper crude cuts their operating costs.
Cenovus continues to expand its 50%-owned Christina Lake and Foster Creek oil sands operations; ConocoPhilips (New York symbol COP) owns the remaining 50%.
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Basic Energy Services Inc., $7.94, symbol BAS on New York (Shares outstanding: 41.8 million; Market cap: $351.1 million; www.basicenergyservices.com), provides drilling and well services to over 2,000 oil and natural gas exploration firms. Most of Basic Energy’s clients operate in shale oil areas, including the Permian and Eagle Ford (Texas), Bakken (North Dakota), Haynesville (Louisiana) and Marcellus (Pennsylvania). The company has four divisions:...
Hercules Offshore Inc., $0.74, symbol HERO on Nasdaq (Shares outstanding: 161.1 million; Market cap: $126.2 million; www.herculesoffshore.com), provides shallow-water drilling and marine services to companies that produce and explore for oil and natural gas. Hercules operates around the world. Producers have sharply cut capital spending in response to lower oil and gas prices, hurting most offshore drillers. Drilling companies with modern gear, contractually protected backlogs and well-capitalized customers will cope more easily with the downturn. Hercules, however, will see a sharp decline in earnings as contracts expire on its mostly older-generation rigs....
ENCANA $14.14 (Toronto symbol ECA; Shares outstanding: 741.1 million; Market cap: $10.3 billion; TSINetwork Rating: Average; Div. yield: 2.5%; www.encana.com) has sold 98.5 million shares for $14.60 each to raise $1.44 billion.
The company will use these funds to redeem $1.6 billion worth of notes. As of December 31, 2014, Encana’s long-term debt was $7.3 billion U.S., or a high 90% of its $10.3-billion (Canadian) market cap.
The stock sale has increased Encana’s total shares outstanding by roughly 13%. However, paying down debt will cut the company’s interest costs and help it conserve cash until oil and gas prices rebound. It could also use the savings to make acquisitions at bargain prices.
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The company will use these funds to redeem $1.6 billion worth of notes. As of December 31, 2014, Encana’s long-term debt was $7.3 billion U.S., or a high 90% of its $10.3-billion (Canadian) market cap.
The stock sale has increased Encana’s total shares outstanding by roughly 13%. However, paying down debt will cut the company’s interest costs and help it conserve cash until oil and gas prices rebound. It could also use the savings to make acquisitions at bargain prices.
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PEYTO EXPLORATION & DEVELOPMENT CORP. $33.96 (Toronto symbol PEY; Shares outstanding: 153.7 million; Market cap: $5.2 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.9%; www.peyto.com) produces and explores for oil and natural gas in Alberta. Its average daily production of 83,251 barrels of oil equivalent is 90% gas and 10% oil.
In the quarter ended December 31, 2014, Peyto’s cash flow rose 34.5%, to $1.13 a share from $0.84 a year ago. That’s because it raised its production by 23.7%, and realized higher gas prices.
Like Crescent Point, Peyto will cut spending this year. Its outlays will now total $560 million to $600 million, down from $690 million in 2014.
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In the quarter ended December 31, 2014, Peyto’s cash flow rose 34.5%, to $1.13 a share from $0.84 a year ago. That’s because it raised its production by 23.7%, and realized higher gas prices.
Like Crescent Point, Peyto will cut spending this year. Its outlays will now total $560 million to $600 million, down from $690 million in 2014.
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CRESCENT POINT ENERGY CORP. $28.24 (Toronto symbol CPG; Shares outstanding: 443.4 million; Market cap: $12.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 9.8%; www.crescentpointenergy.com) produces oil and natural gas in Western Canada, with a focus on its Bakken light oil development in southeastern Saskatchewan. Its output is 92% oil and 8% gas.
In the three months ended December 31, 2014, Crescent Point’s cash flow rose 7.4%, to $572.9 million from $533.3 million a year earlier. The company raised its daily output by 20.5%, which offset lower oil prices and increased its cash flow.
Cash flow per share fell 5.2%, to $1.28 from $1.35, because the company issued shares to pay for acquisitions, including $378.0 million for oil properties from Lightstream Resources in September 2015.
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In the three months ended December 31, 2014, Crescent Point’s cash flow rose 7.4%, to $572.9 million from $533.3 million a year earlier. The company raised its daily output by 20.5%, which offset lower oil prices and increased its cash flow.
Cash flow per share fell 5.2%, to $1.28 from $1.35, because the company issued shares to pay for acquisitions, including $378.0 million for oil properties from Lightstream Resources in September 2015.
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PEMBINA PIPELINE $40.02 (Toronto symbol PPL; Shares outstanding: 336.0 million; Market cap: $13.5 billion; TSINetwork Rating: Average; Dividend yield: 4.4%; www.pembina.com) owns pipelines that carry half of Alberta’s conventional oil, 30% of Western Canada’s natural gas liquids (NGLs) and almost all of B.C.’s conventional oil.
Pembina also owns extensive facilities to extract, process and store NGLs.
In the quarter ended December 31, 2014, Pembina’s cash flow per share fell 16.9%, to $0.49 from $0.59. However, that’s mainly because lower oil and gas prices cut volumes and profit margins at its NGL extraction business.
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Pembina also owns extensive facilities to extract, process and store NGLs.
In the quarter ended December 31, 2014, Pembina’s cash flow per share fell 16.9%, to $0.49 from $0.59. However, that’s mainly because lower oil and gas prices cut volumes and profit margins at its NGL extraction business.
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While this split-share company dabbles in call options, investors would be better off buying the bank and oil stocks it holds separately.
ALIMENTATION COUCHE-TARD $49.82 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 418.1 million; Market cap: $29.0 billion; Dividend yield: 0.4%) (All amounts except share price and market cap in U.S. dollars) operates 6,314 convenience stores throughout North America. Canadian outlets operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand. In Europe, Couche-Tard operates 2,233 stores across Scandinavia, Poland, the Baltic States (Estonia, Latvia and Lithuania) and Russia. In the three months ended February 1, 2015, Couche-Tard’s sales rose just 1.7%, to $2.33 billion from $2.29 billion a year earlier. The higher U.S. dollar cut the revenue contribution of its European operations....