oil and gas

ENERPLUS CORP. $13.06 (Toronto symbol ERF; Shares outstanding: 205.4 million; Market cap: $2.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.6%) produces an average of 105,591 barrels of oil equivalent a day (56% gas and 44% oil). The company’s properties are mainly in Alberta, Saskatchewan, B.C., North Dakota and Montana, as well as the Marcellus shale, which passes through Pennsylvania, New York, Ohio and West Virginia.

In the quarter ended December 31, 2014, Enerplus’s production rose 12.1% from a year earlier. That increase, plus higher realized gas prices, pushed cash flow per share up 15.7%, to $1.03 from $0.89.

Like ARC, Enerplus will cut spending this year. Its outlays will now total $480 million, down 24.4% from its original estimate of $635 million and 40.8% from $811.0 million in 2014.

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ARC RESOURCES $24.16 (Toronto symbol ARX; Shares outstanding: 335.0 million; Market cap: $8.2 billion; TSINetwork Rating: Speculative; Dividend yield: 5.1%; www.arcresources.com) produces oil and natural gas in Western Canada. Its average daily output of 117,986 barrels of oil equivalent is 61% gas and 39% oil.

In the quarter ended December 31, 2014, ARC’s cash flow per share rose 3.9%, to $0.79 from $0.76 a year earlier. Realized oil prices fell 12.5%, to $72.49 a barrel from $82.85, but ARC’s production gained 17.0%, and its realized gas prices rose 15.0%.

Like many oil and gas producers, ARC plans to cut back on exploration and development spending. This year, the company will devote $750.0 million to this purpose, down from $945.5 million in 2014.

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MENTOR GRAPHICS CORP., $25.30, symbol MENT on Nasdaq, makes hardware and software for improving the design of electronic products and speeding up their development. For example, Mentor’s software lets automakers use less wiring in a car, identify potential safety issues and minimize electromagnetic effects on sensitive components. In the quarter ended October 31, 2014, Mentor’s revenue rose 6.2%, to $292.7 million from $275.6 million a year earlier. Excluding one-time items, earnings per share gained 6.3%, to $0.34 from $0.32....

COMPUTER MODELLING GROUP $12.73 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403-531-1300; www.cmgl.ca; Shares outstanding: 78.6 million; Market cap: $1.0 billion; Dividend yield: 3.1%) sells software and consulting services that help conventional oil and gas producers create complex 3D 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 December 31, 2014, Computer Modelling’s revenue rose 31.1%, to $25.2 million from $19.2 million a year earlier. Software licensing revenue (92% of the total) rose 34.8%, and consulting and professional services revenue (8%) was virtually unchanged....

BELLATRIX EXPLORATION $3.50 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266-8670; www.bellatrixexploration.com; Shares outstanding: 191.5 million; Market cap: $735.5 million; No dividends paid) will cut its 2015 exploration and development spending by 33.3%, to $200 million from $300 million in 2014, in response to low oil and gas prices. However, Bellatrix can still draw on $85 million from its joint venture partners, bringing total spending to $285 million this year. As a result of the spending cut, the company now expects to produce an average of 43,000 to 44,000 barrels of oil equivalent a day in 2015. That’s down from its original forecast of 47,000 to 48,000 but about 14% higher than its 2014 average production of 38,100 barrels a day....

Journey Energy, $5.75, symbol JOY on Toronto (Shares outstanding: 33.0 million; Market cap: $189.8 million; www.journeyenergy.ca), is an oil and gas producer that’s focused on southern Alberta. Its production is 55% oil and 45% natural gas. The company first sold shares to the public at $12 each and began trading on Toronto on June 19, 2014. In the three months ended September 30, 2014, Journey’s production jumped 103.5%, to 11,002 barrels of oil equivalent from 5,408 a year earlier. The gains mainly came from a major acquisition that closed in March 2014. Cash flow rose 24.5%, to $0.61 a share from $0.49....

Linn Energy, $13.13, symbol LINE on Nasdaq (Shares outstanding: 331.9 million; Market cap: $4.4 billion; www.linnenergy.com), acquires and develops oil and gas properties in the Mid-Continent region in the southern U.S., the Permian Basin (Texas and New Mexico) and the Hugoton Basin (Texas and Kansas), as well as in California, Michigan and Illinois. In December 2013, Linn bought Berry Petroleum for $4.3 billion in stock. The move added long-lasting, mature properties and boosted Linn’s growth prospects. Berry’s reserves were roughly 75% oil. Linn’s shares have dropped lately, along with oil and gas prices, despite the fact that its average daily oil and gas production rose 51% in the third quarter of 2014 from a year earlier....

Every Tuesday we bring you “Best Canadian Stocks.” You get our specific recommendations on the stocks we profile, with a full explanation of how we arrived at our opinion. You’ll read about stocks making moves you should know about, from coverage in one of our three newsletters featuring Canadian stocks—The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor. ENBRIDGE INC. (Toronto symbol ENB; www.enbridge.com) gets 90% of its revenue from pipelines that pump oil and natural gas from Western Canada to Eastern Canada and the U.S. The remaining 10% mainly comes from distributing gas to 2.1 million consumers in Ontario, Quebec, New Brunswick and New York State. Since 2008, Enbridge has spent $20 billion on 39 new pipelines and other projects. Thanks to these investments, the company’s revenue soared 164.1%, from $12.5 billion in 2009 to $32.9 billion in 2013. Its revenue probably increased to $37.7 billion in 2014....

ENCANA CORP. $15.20 (Toronto symbol ECA; Shares outstanding: 741.1 million; Market cap: $11.6 billion; TSINetwork Rating: Average; Dividend yield: 2.3%; www.encana.com) produced 416,700 barrels a day (74% gas, 26% oil) in the three months ended December 31, 2014. That’s down 20.4% from 523,400 barrels a year earlier. As well, Encana’s realized gas prices, which include the benefit of hedging contracts, fell 4.1%, while oil prices declined 0.9%. As a result, the company’s cash flow per share fell 44.0%, to $0.51 from $0.91. Encana plans to spend $2.0 billion to $2.2 billion on new projects and upgrades in 2015, down from its earlier forecast of $2.7 billion. Even so, that’s more than its projected cash flow of $1.4 billion to $1.6 billion....

ISHARES MSCI BRAZIL INDEX FUND $33.26 (New York symbol EWZ; buy or sell through brokers) is an ETF that is designed to track the Brazilian stock market. Its top holdings are Cia Itau Unibanco Holding (banking), 10.3%; AmBev SA (beer and beverages), 8.6%; Banco Brandesco SA, 8.0%; Petrobras (oil and gas), 6.3%; Vale do Rio Doce (mining), 5.6%; BRF SA (food), 4.6%; and Cielo SA (payment processing), 3.4%. The ETF was launched on July 10, 2000. It has a 0.62% expense ratio....