oil and gas

CRESCENT POINT ENERGY CORP. $43.17 (Toronto symbol CPG; Shares outstanding: 398.1 million; Market cap: $17.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.4%; 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 91% oil and 9% gas.

In the three months ended June 30, 2014, Crescent Point’s cash flow rose 26.2%, to $636.7 million from $504.4 million a year earlier.

The company increased its output by 16.7%, to 137,368 barrels of oil equivalent from 117,799. That, plus higher oil and gas prices, was the main reason for the higher cash flow. Cash flow per share rose at a slower rate of 18.3%, to $1.55 from $1.31, because Crescent Point issued shares to pay for acquisitions.

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CARFINCO FINANCIAL GROUP INC., $11.33, symbol CFN on Toronto, is the subject of a friendly takeover bid from Banco Santander of Spain (ADR symbol SAN on New York). The offer is for $11.25 a share in cash. Carfinco will also pay a special dividend of up to $0.10 a share when the deal closes. Carfinco is now trading at $11.33, which is just about equal to the value of the cash and special dividend. The company’s directors and executive officers, who collectively own a 12.9% stake, have agreed to support the deal. However, Carfinco could attract a rival bid, or significant shareholders, such as mutual funds, could hold out for a higher offer....

CHESAPEAKE ENERGY $25.35 (New York symbol CHK; TSINetwork Rating: Extra Risk) (405-848-8000; www.chkenergy.com; Shares outstanding: 665.8 million; Market cap: $16.9 billion; Dividend yield: 1.4%) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 72% gas and 28% oil. Chesapeake’s shares have nearly doubled since mid- 2012, when activist investor Carl Icahn bought a stake in the firm. Icahn, who has a history of pushing companies to make changes that raise shareholder value, subsequently replaced four of Chesapeake’s eight board members with his nominees. The company also pushed out controversial co-founder, CEO and chairman Aubrey K. McClendon. The company continues to restructure by selling non-essential properties and assets. That lets it pay down debt and focus on areas with strong potential....

PASON SYSTEMS $32.79 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403-301-3400; www.pason.com; Shares outstanding: 82.7 million; Market cap: $2.7 billion; Dividend yield: 2.1%) is trading near all-time highs as it continues to benefit from the boom in U.S. shale oil and gas drilling. Pason rents equipment for monitoring and managing oil and gas rigs. It also sells communication technology, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas producers and drilling contractors in Canada, the U.S., Mexico, Argentina and Australia. In the three months ended June 30, 2014, the company’s revenue rose 26.1%, to $103.8 million from $82.4 million a year earlier. Pason saw higher sales in all markets, but especially in the U.S....

Market Vectors Africa Index ETF, $32.10, symbol AFK on New York (Units outstanding: 4.0 million; Market cap: $128.4 million; www.vaneck.com), aims to match the performance of the Market Vectors GDP Africa Index. This index tracks the performance of the largest and most liquid companies in Africa. A country’s weighting in the index is determined by the size of its gross domestic product. The ETF’s top holdings are Commercial International Bank Egypt SAE, Guaranty Trust Bank plc (Nigeria: banking), Acergy SA (U.K.: offshore oilfield services), Zenith Bank plc (Nigeria: banking), Orascom Telecom Holding SAE (Egypt: telecom), Nigerian Breweries plc, Naspers Ltd. (South Africa: media and Internet), Talaast Moustafa Group (Egypt: real estate), Attijarwafa Bank (Morocco: banking) and Tullow plc (U.K.: oil and gas)....

APPLE INC., $101.66, Nasdaq symbol AAPL, unveiled several upgrades to its hugely popular iPhone smartphone this week. The new model comes in two screen sizes, 4.7 inches (called the iPhone 6) and 5.5 inches (iPhone 6 Plus), both of which are larger than the current 4.0-inch iPhone 5. The bigger screens should help Apple compete with cheaper smartphones powered by Google’s Android software, particularly in emerging markets. The iPhone 6 also includes the company’s new wireless payment system, called Apple Pay. With this service, users add their credit card information to their phones. They can then use them to pay for goods at any tap-and-pay-enabled cash register and for some online purchases. To prevent fraudulent transactions, the phone will scan the user’s fingerprint to confirm their identity....

SASOL LTD. (ADR), $56.09, symbol SSL on New York, has developed a technology to convert coal and natural gas into motor fuels. The company is the world’s largest producer of fuel from coal at its Secunda, South Africa, facility. It also makes synthetic fuels from natural gas at plants in Qatar and Nigeria. As well, Sasol produces chemicals, oil and gas in Africa. It’s also South Africa’s third-largest coal producer. In its 2014 fiscal year, which ended June 30, 2014, Sasol’s revenue rose 19.3%, to 202.7 billion South African rand (1 rand = $0.1039 U.S.) from 169.9 billion rand in fiscal 2013. Earnings per ADR rose 14.3%, to a record 60.16 rand from 52.62 rand. Oil prices were relatively flat, and chemical prices were higher. The U.S. dollar also rose against the rand, increasing the value of Sasol’s sales outside South Africa....

ENCANA CORP., $24.89, Toronto symbol ECA, announced this week that it will sell its remaining 54% stake in PriarieSky Royalty Ltd. (Toronto symbol PSK) to a group of underwriters. The company recently set up PrairieSky as a new firm to hold its Clearwater properties in southern Alberta. PriarieSky owns the oil and natural gas rights to 5.2 million acres. It does not drill wells or explore for new reserves. Instead, it collects royalties from other oil and gas producers. Encana will receive $2.6 billion when it completes the sale later this month. That’s equal to 14% of its $18.6-billion market cap....

Pat McKeough responds to many requests from members of his Inner Circle for specific stock advice, as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week we offer you a report on one of the stocks profiled in these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “Our Top U.S. Stocks” on Thursday. Recently we had a question from an Inner Circle member on an industrial firm that serves a diverse clientele. Ingersoll Rand, an Irish-based company that trades on the New York exchange, has one segment devoted to Climate Control and another to Industrial Technologies. Pat examines Ingersoll’s different businesses and looks at its prospects in light of a spinoff the company executed last year and an acquisition it has just agreed to make. Q: Hello: What is your opinion of Ingersoll-Rand? Thank you....

PRECISION DRILLING CORP. $13 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 292.7 million; Market cap: $3.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.8%; TSINetwork Rating: Extra Risk; www.precisiondrilling.comtarget="_blank”) provides contract drilling services to land-based oil and gas producers, mainly in North America. It operates 333 rigs. Higher oil and gas prices have spurred demand for Precision’s drilling services. As a result, revenue rose 25.4% in the second quarter of 2014, to $475.2 million from $378.9 million a year ago. However, the company lost $7.2 million, or $0.02 a share. Precision recently changed the way it calculates depreciation on its rigs, and the new method cut its earnings by $14 million, or $0.05 a share. A year earlier, it earned $473,000, or nil per share....