oil and gas

ARC RESOURCES $26.76 (Toronto symbol ARX; Shares outstanding: 317.4 million; Market cap: $8.1 billion; TSINetwork Rating: Speculative; Dividend yield: 4.5%; www.arcresources.com) produces oil and natural gas in Western Canada. Its average daily output of 110,165 barrels of oil equivalent is 60% gas and 40% oil.

In the three months ended June 30, 2014, ARC’s cash flow per share jumped 43.1%, to $0.93 from $0.65 a year earlier.

Production gained 17.9%, even though maintenance on existing wells cost the company an estimated 2,400 barrels a day in the latest quarter. ARC’s realized gas price rose 28.3%. Oil prices increased 14.5%.

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PENGROWTH ENERGY $4.36 (Toronto symbol PGF; Shares outstanding: 528.1 million; Market cap: $2.2 billion; TSINetwork Rating: Average; Dividend yield: 11.0%; www.pengrowth.com) produces oil and natural gas in Western Canada and off the Nova Scotia coast. Gas accounts for 46% of its production; the other 54% is oil.

In the three months ended September 30, 2014, Pengrowth produced 72,472 barrels a day (including gas), down 13.0% from 83,275 barrels a year earlier. That’s mainly because it sold several less important oil and gas properties in Western Canada.

Pengrowth is investing the proceeds from these sales in more promising projects, like its Lindbergh oil sands development in Alberta’s Cold Lake region. Lindbergh should start up in early 2015 and produce 12,500 barrels a day. Future phases will raise the project’s daily output to 50,000 barrels.

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CENOVUS ENERGY INC. $29 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 757.1 million; Market cap: $22.0 billion; Price-to-sales ratio: 1.0; Dividend yield: 3.7%; TSINetwork Rating: Average; www.cenovus.comtarget=”_blank”) gets 40% of its revenue from its oil sands projects and conventional oil and gas wells in western Canada. These properties’ reserves should last 24 years.

Refining supplies the remaining 60% 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.

Thanks to higher production and oil prices, Cenovus’s revenue increased 62.0%, from $11.5 billion in 2009 to $18.7 billion in 2013. Even with the recent oil price decline, its revenue should rise to around $20 billion in 2014.

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SUNCOR ENERGY INC., $40.52, Toronto symbol SU, plans to spend between $7.2 billion and $7.8 billion to expand and upgrade its operations in 2015. To put these figures in context, the company’s cash flow was $7.6 billion in the first nine months of 2014. Suncor will invest 55% of the 2015 estimate, or $4.3 billion, in its oil sands and other growth projects. The remaining 45% will go to refineries and conventional oil and gas properties. The midpoint of the 2015 range is 10.3% higher than the $6.8 billion the company expects to spend this year—even though oil prices have fallen by more than 20% in the past six months. Suncor feels its new oil sands projects can still generate positive cash flow at today’s prices....

BMTC GROUP, $16.00, symbol GBT.A on Toronto, is one of Quebec’s largest retailers of furniture, electronic goods and household appliances, with 36 stores. In March 2012, BMTC introduced a new banner, Economax, which offers lower-priced products. The company rebranded four outlets that had been Brault & Martineau liquidation centres. In 2013, BMTC opened four more EconoMax stores. It added another, in Joliette, in March 2014, and an additional one, in LaSalle, on October 24, 2014. BMTC is now considering purchasing land in Drummondville for a new store that would open in late 2015....

SHERRITT INTERNATIONAL $2.62 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 297.5 million; Market cap: $779.5 million; Dividend yield: 1.5%) sold off all of its coal interests for $793 million in cash in April 2014. The company is now focused on nickel production, with operations in Cuba and Canada. As well, it has a 40% interest in the Ambatovy nickel mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and manages 506 megawatts of power generation capacity in Cuba. In the three months ended September 30, 2014, Sherritt’s revenue jumped 55.0%, to $302.7 million from $195.3 million a year earlier. That’s mainly because Ambatovy started up. Cash flow per share rose 25.0%, to $0.15 from $0.12....

COMPUTER MODELLING GROUP $12.59 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403-531-1300; www.cmgl.ca; Shares outstanding: 78.8 million; Market cap: $990.2 million; Dividend yield: 3.2%) sells software and consulting services that help oil and gas producers use advanced recovery techniques to get more out of their wells. In the quarter ended September 30, 2014, Computer Modelling’s revenue rose 14.8%, to $19.7 million from $17.2 million a year earlier. Earnings gained 33.3%, to $7.5 million, or $0.09 a share, from $5.6 million or $0.07. The company cut its costs, pushing its earnings higher. Computer Modelling holds cash of $65.4 million, or $0.83 a share, and has no debt. The stock yields 3.2%....

WAJAX CORP. $35.46 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.8 million; Market cap: $595.0 million; Dividend yield: 6.8%) sells and services cranes, forklifts and other heavy equipment. It also provides related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions). The company’s customers are in the natural resource, construction, manufacturing and transportation industries. In the three months ended September 30, 2014, Wajax’s revenue rose 6.2%, to $359.5 million from $338.5 million a year earlier. All of its segments reported higher sales, including mining and forestry....

Surge Energy, $6.26, symbol SGY on Toronto (Shares outstanding: 219.8 million; Market cap: $1.4 billion; www.surgeenergy.ca), produces oil and gas in central and northwestern Alberta and southwestern Saskatchewan. Its output is 85% oil and 15% gas. In the three months ended September 30, 2014, Surge produced 20,327 barrels of oil equivalent a day, up 69.3% from 12,008 barrels a year earlier. Acquisitions—including Longview Oil Corp., which Surge bought for $430 million in June 2014—were the main reason for the gain. Longview’s properties are near Surge’s holdings in southeastern Saskatchewan and central Alberta. Cash flow jumped 60.4%, to $71.3 million from $44.5 million, as the increased output and higher natural gas prices offset lower oil prices. However, per-share cash flow fell 10.8%, to $0.33 from $0.37, as the company issued more shares to pay for acquisitions, boosting the total number outstanding by 79%....

Xtreme Drilling & Coil Services Corp., $3.04, symbol XDC on Toronto (Shares outstanding: 82.0 million; Market cap: $249.3 million; www.xtremecoil.com), builds and operates a fleet of drilling rigs and related equipment. The company’s rigs use technology that it specifically developed for unconventional wells, such as shale oil deposits. The company believes its systems let its rigs reach deeper deposits and extract more oil than its competitors can. Xtreme makes two types of rigs: its 21 XDR drilling rigs mainly operate in the Alberta oil sands and North Dakota’s Bakken shale region. The company also owns seven XSR coiled-tubing rigs, which insert flexible steel pipe into oil and gas wells to make horizontal drilling more effective. The XSR rigs mainly operate in Saudi Arabia and Texas’s Eagle Ford area....