oil and gas

STANTEC INC. $67.93 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 46.8 million; Market cap: $3.1 billion; Dividend yield: 1.1%) sells a range of consulting, project-delivery, design and technology services. Its clients operate in a variety of industries, including oil and gas, transportation and construction. In the quarter ended June 30, 2014, Stantec’s revenue rose 13.0%, to $530.3 million from $469.4 million a year earlier. Earnings gained 22.6%, to $44.3 million, or $0.95 a share, from $36.1 million, or $0.78. Timely move into Quebec...

Aveda Transportation and Energy Services Inc., $4.05, symbol AVE on Toronto (Shares outstanding: 19.9 million; Market cap: $80.6 million; www.avedaenergy.com), provides transportation services to oil and gas producers in Western Canada and the U.S., mainly in Texas, Pennsylvania, West Virginia and North Dakota. The U.S. supplies around 75% of the company’s revenue. Aveda’s trucks haul drilling rigs, storage tanks, pipeline components, temporary structures and other equipment. It also rents related gear, such as power generators and light towers. In January 2014, Aveda paid $51.4 million for North Dakota-based M&K Hotshot & Trucking, Inc. and M&K Rig Service, Inc. These businesses own 79 trailers, 15 transport trucks, 14 winch trucks and three cranes, along with 395 pieces of rental equipment....

Every Monday we feature “A Stock to Sell” as our daily post. With every stock we recommend as a sell, we give you a full explanation of why we advise against investing in the stock at this time. Virtus Oil and Gas Corp. (symbol VOIL on the OTCQB market; www.virtusoilandgas.com), began trading in June 2014. The OTCQB market, formerly called the U.S. over-the-counter bulletin board, has no minimum financial standards and includes shell companies and penny stocks with minimal operations....

HEWLETT-PACKARD CO., $33.50, New York symbol HPQ, plans to break itself into two separate companies. The first firm, called Hewlett-Packard Enterprise, will sell computing products, like servers and analytics software, to businesses and governments. It will also offer cloud computing services and financing. Hewlett-Packard Enterprise will have annual revenue of $58.4 billion and $6 billion of gross profits. Meg Whitman, Hewlett’s current chief executive officer, will become its CEO....

Torstar has struggled in the past few years as more people get their news from the Internet, rather than newspapers. Meanwhile, Pengrowth (see box) has also suffered as rising North American shale production has cut oil and gas prices. The resulting share-price declines are why both companies’ dividend yields appear so high. But both are doing a good job of responding to their challenges, which should let them improve their earnings and maintain their current payouts. TORSTAR CORP. $7.11 (Toronto symbol TS.B; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 80.1 million; Market cap: $569.5 million; Price-to-sales ratio: 0.5; Dividend yield: 7.4%; TSINetwork Rating: Average; www.torstar.com) publishes the Toronto Star, Canada’s largest daily newspaper by circulation. It also publishes three other daily papers and over 100 weeklies....

Virtus Oil and Gas Corp., $2.01, symbol VOIL on the OTCQB market (Shares outstanding: 49.7 million; Market cap: $99.9 million; www.virtusoilandgas.com), began trading in June 2014. The OTCQB market, formerly called the U.S. over-the-counter bulletin board, has no minimum financial standards and includes shell companies and penny stocks with minimal operations. Virtus was originally formed as Curry Gold Corp. It had planned to operate and franchise food trucks in Switzerland that would serve a German snack known as currywurst to German tourists. The company later planned to expand into New York, Washington, Boston and Chicago, because those cities had the largest numbers of German tourists and expatriates in the U.S....

Diamond Offshore Drilling Inc., $34.60, symbol DO on New York (Shares outstanding: 137.1 million; Market cap: $4.7 billion; www.diamondoffshore.com); SeaDrill, $25.65, symbol SDRL on New York (Shares outstanding: 493.1 million; Market cap: $12.6 billion; www.seadrill.com); and Transocean Ltd., $31.72, symbol RIG on New York (Shares outstanding: 362.2 million; Market cap: $12.5 billion; www.deepwater.com), all continue to fall in price. That’s because producers are shifting toward drilling onshore shale wells after a lack of significant deepwater discoveries in 2013. In fact, last year was the first time in 20 years that the oil and gas industry failed to discover a field with the potential to recover one billion barrels of oil over its lifetime. Hiring deepwater rigs can cost $500,000 a day or more, so most explorers have, at least temporarily, cut their deepwater budgets. As well, the price of crude has moved down over the last few years, and this, combined with a rapid rise in deepwater rig construction, has resulted in overcapacity and falling drilling rates. Ultra-deepwater day rates have declined to $375,000 to $500,000 so far this year, compared to $650,000 in 2013. They will likely keep falling....

ENCANA CORP., $23.86, Toronto symbol ECA, has agreed to buy Athlon Energy Inc. (New York symbol ATHL). Athlon produces 30,000 barrels of oil equivalent (80% oil and 20% natural gas) a day from 1,138 wells in Texas’s Midland Basin. To put that in context, Encana’s daily output was 491,700 barrels (86% gas, 14% oil) in the second quarter of 2014. Right now, Athlon uses traditional vertical drilling techniques. However, Encana feels it can use its expertise with horizontal drilling to make Athlon’s wells more productive. That will help Encana reach its goal of producing 250,000 barrels of oil a day by 2017....

Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. The group administers over $2 trillion U.S. in 170 mutual funds. Vanguard, which went into business in 1975, offers low-fee index mutual funds. Generally speaking, Canadians can’t buy units of mutual funds that are registered in the U.S., because they aren’t registered with provincial securities commissions. For that matter, some Canadian funds aren’t available in all provinces. Canadians can, however, buy Vanguard exchange traded funds (ETFs) that trade on stock exchanges. We don’t recommend all of Vanguard’s ETFs, but here are two we do see as low-fee buys....

STANTEC INC. $67.93 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 46.8 million; Market cap: $3.1 billion; Dividend yield: 1.1%) sells a range of consulting, project-delivery, design and technology services. Its clients operate in a variety of industries, including oil and gas, transportation and construction.

In the quarter ended June 30, 2014, Stantec’s revenue rose 13.0%, to $530.3 million from $469.4 million a year earlier. Earnings gained 22.6%, to $44.3 million, or $0.95 a share, from $36.1 million, or $0.78.

Timely move into Quebec

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