oil and gas

ZARGON OIL & GAS $8.36 (Toronto symbol ZAR; TSINetwork Rating: Speculative) (403-264-9992; www.zargon.ca; Shares outstanding: 30.1 million; Market cap: $246.7 million; Dividend yield: 8.6%) produces natural gas and oil in Alberta, Manitoba, Saskatchewan and North Dakota. Its production is 64% oil and 36% gas.

In the quarter ended September 30, 2013, Zargon produced 7,560 barrels of oil equivalent a day, down 1.0% from 7,634 a year earlier. That’s because it sold some less important properties and cut back on natural gas drilling in response to lower gas prices.

However, higher oil and gas prices in the latest quarter more than offset the lower output, raising the company’s cash flow per share by 14.6%, to $0.55 from $0.48.
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PENN WEST PETROLEUM $9.14 (Toronto symbol PWT; Shares outstanding: 488.1 million; Market cap: $4.4 billion; TSINetwork Rating: A v e r a g e ; D i v i d e n d y i e l d : 6 . 1 % ; www.pennwest.com) is one of Canada’s largest oil and gas producers.

Penn West continues to shore up its finances and take steps to boost its value since appointing Rick George as chairman and Allan Markin as vice-chairman. These moves include cutting staff, selling assets and lowering its dividend.

The company now plans to sell a further $1.5 billion to $2 billion of assets by the end of 2014. It expects to close about $485 million of these deals by the end of this year. The company will use the proceeds to further pay down its debt.
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ENCANA CORP. $20.28 (Toronto symbol ECA; Shares outstanding: 740.2 million; Market cap: $15.0 billion; TSINetwork Rating: Average; Dividend yield: 1.4%; www.encana- .com) is one of North America’s largest natural gas producers.

However, rising shale gas production has cut prices from $11.50 U.S. per thousand cubic feet in 2008 to just $3.63 today.

That’s prompting Encana to cut its reliance on gas by narrowing its focus from around 30 properties to five: Montney (B.C.), Duvernay (Alberta), DJ Basin (Colorado), San Juan Basin (New Mexico) and Tuscaloosa Marine Shale (Louisiana).
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DEVON ENERGY CORP. (New York symbol DVN; www.dvn.com) is one of the largest U.S.-based oil and natural gas explorers and producers. Its production mix is 57% gas and 43% oil....

SHAWCOR LTD. $40 (Toronto symbol SCL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 59.4 million; Market cap: $2.4 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.3%; TSINetwork Rating: Average; www.shawcor.com) gets 90% of its revenue by making sealants and coatings that keep oil and natural gas pipelines from rusting. The remaining 10% comes from manufacturing industrial products, such as electrical wire and protective sheaths.

In April 2013, the company purchased the 49% of Socotherm LaBarge LLC that it did not already own for $30 million, which included assuming its debt. Texas-based Socotherm coats and insulates pipelines for deepwater oil and gas projects. Its clients operate in the Gulf of Mexico and off Africa’s west coast. Recently, ShawCor agreed to sell Socotherm’s half of a joint venture in Brazil for $30 million U.S.

Thanks to the Socotherm purchase and new pipeline-coating contracts in North America and Asia, ShawCor’s revenue rose 34.7% in the three months ended September 30, 2013, to $525.8 million from $390.5 million a year earlier.
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PLEASE NOTE: This is our last Hotline for 2013. Our next Hotline will go out on Friday, January 3, 2014. STANTEC INC., $66.94, symbol STN on Toronto, sells a range of consulting, project delivery, design and technology services. Its clients operate in a variety of industries, including transportation, construction and oil and gas. The company continues to grow through acquisitions. It has just agreed to pay an undisclosed sum for Virginia-based Williamsburg Environmental Group, which has over 115 employees in three offices....

New technology has increased oil production from North American shale rock formations. Even so, oil prices have held up due to the improving global economy and lower output from conventional wells.

However, the outlook for oil remains uncertain. The lifting of economic sanctions against Iran would increase world oil supplies and hurt prices....

DEVON ENERGY CORP. $59.34 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 406.0 million; Market cap: $24.2 billion; Dividend yield: 1.5%) is one of the largest U.S.-based oil and natural gas explorers and producers....

PASON SYSTEMS $22.28 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403- 301-3400; www.pason.com; Shares outstanding: 82.1 million; Market cap: $1.8 billion; Dividend yield: 2.5%) rents equipment for monitoring and managing land-based oil and gas rigs throughout Canada, the U.S., Mexico and Argentina....

SHERRITT INTERNATIONAL $3.02 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 297.3 million; Market cap: $900.8 million; Dividend yield: 5.7%) is a diversified natural resource company that produces nickel, cobalt, thermal coal, oil and gas....