oil and gas

DEVON ENERGY CORP., $62.57, symbol DVN on New York, is paying GeoSouthern Energy $6 billion for oil-producing assets and other properties in Texas’s Eagle Ford shale formation. This purchase consists of 53,000 barrels of oil equivalent a day of production (including natural gas) and 82,000 acres of land with at least 1,200 undrilled locations. Peak production is expected to reach as much as 140,000 barrels a day within five years. To put these figures in perspective, Devon’s output averaged 691,000 barrels a day in the three months ended September 30, 2013....

MANITOBA TELECOM SERVICES INC., $29.00, Toronto symbol MBT, recently agreed to sell its Allstream subsidiary to a private company controlled by an Egyptian billionaire. Allstream provides integrated telephone, Internet and other communication services to over 50,000 businesses across Canada, as well as government agencies. Manitoba Telecom planned to contribute $130 million of the $405 million it would have received from the sale to its underfunded employees’ pension fund. However, Ottawa blocked the deal on national security grounds....

BIRCHCLIFF ENERGY $7.27 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 142.8 million; Market cap: $1.1 billion; No dividends paid) develops, produces and explores for oil and natural gas, mainly in the Peace River Arch area near the Alberta/B.C....

DOREL INDUSTRIES $36.46 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 31.5 million; Market cap: $1.2 billion; Dividend yield: 3.4%) makes a range of products, including ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; and recreational products, mainly bicycles.

In the three months ended September 30, 2013, Dorel’s sales fell 1.0%, to $607.3 million from $613.3 million a year earlier (all figures except share price and market cap in U.S....

WAJAX CORP. $35.72 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $601.2 million; Dividend yield: 6.7%) 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 resource, construction, manufacturing and transportation industries.

In the three months ended September 30, 2013, Wajax’s revenue declined 5.0%, to $338.5 million from $356.4 million a year earlier....

Top 20 Dividend Trust, $10.75, symbol TTY.UN on Toronto (Units outstanding: 8.0 million; Market cap: $86.0 million; www.scotiamanagedcompanies.com), invests in an equally weighted portfolio made up of the 20 highest-yielding stocks in the S&P/TSX 60 Index. The trust has an MER of 0.88% and yields 6.5%. Top 20 Dividend Trust first sold units to the public at $10 and began trading on the Toronto exchange in June 2012. Many of the top-yielding stocks in the S&P/TSX 60 Index are former oil and gas royalty trusts. Seven of the trust’s 20 holdings are oil and gas stocks, including ARC Resources, Canadian Oil Sands, Crescent Point Energy, Encana Corp., Enerplus Corp., Husky Energy and Penn West Petroleum. Together, they make up a high 35% of the trust’s portfolio....

Twin Butte Energy, $2.21, symbol TBE on Toronto (Shares outstanding: 342.1 million; Market cap: $755.8 million; www.twinbutteenergy.com), produces oil and gas in western Canada with a focus on the greater Lloydminster area along the Alberta and Saskatchewan border. Its output is 87% oil and 13% gas. In the three months ended June 30, 2013, Twin Butte produced 16,849 barrels of oil equivalent per day, up 18.7% from 14,193 barrels a year earlier. Despite the increase in production, Twin Butte’s cash flow fell 2.1%, to $33.1 million from $33.8 million. Cash flow per share fell 27.8%, to $0.13 from $0.18, on more shares outstanding. The lower cash flow was the result of sharply higher expenses as the company shifts into more costly oil production and away from natural gas. It also incurred higher road repair and other maintenance costs after unusually heavy rain and snow run-off....

Chicago Bridge & Iron Company NV, $77.85, symbol CBI on New York (Shares outstanding: 107.5 million; Market cap: $8.4 billion; www.cbi.com), is one of the world’s leading engineering and construction companies. It specializes in projects in the energy, petrochemical and natural resource industries. Netherlands-based Chicago Bridge was founded in 1889. The company’s projects include oil and gas processing plants, liquefied natural gas (LNG) terminals, nuclear containment systems, offshore structures, bulk liquid terminals and water storage and treatment facilities. Chicago Bridge also provides a range of maintenance and repair services. Customers include Shell, ExxonMobil, PetroChina, Chevron, Rosneft, BP, ConocoPhillips and Saudi Aramco. Warren Buffett’s Berkshire Hathaway is Chicago Bridge’s biggest shareholder, with an 8.9% interest....

Pat McKeough responds to many requests from members of his Inner Circle for specific advice on stocks 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 one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....

ENCANA CORP. $18 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 740.1 million; Market cap: $13.3 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.6%; TSINetwork Rating: Average; www.encana.com) is cutting its reliance on natural gas, as rising shale gas production has cut prices from $11.50 U.S....