oil and gas
Pat McKeough responds to many personal questions for stock investing advice and to other questions on investment and the economy from the members of his Inner Circle. 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....
Heckmann Corp., $3.99, symbol HEK on New York (Shares outstanding: 251.7 million; Market cap: $1.0 billion; www.heckmanncorp.com), disposes of the waste water that results from unconventional oil and gas exploration and production, such as the fracking methods used in shale oil and gas regions. (Fracking involves the high-pressure injection of water, sand and chemicals into rock formations to break them up and make it easier to retrieve oil and gas reserves.) The company has more than 1,200 trucks in service. It also rents out more than 4,200 “frac tanks,” for containing waste water, and 1,900 upright and other types of tanks....
Encana took its present form on December 1, 2009, after the old EnCana Corp. split itself into two new companies: the new Encana, which focuses on natural gas, and Cenovus Energy, which specializes in oil sands. Lower gas prices have pushed Encana’s shares down by about 36% since the split. Oil prices have weakened lately, but Cenovus’s stock is still up about 12%. Here is our latest report on these two energy stocks....
SHERRITT INTERNATIONAL $4.33 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 296.9 million; Market cap: $1.3 billion; Dividend yield: 4.0%) is a diversified natural resource company that produces nickel, cobalt, thermal coal, oil and gas. It also manages 356 megawatts of power generation capacity in Cuba, with an additional 150 megawatts starting up this year.
The company is a major nickel producer, with operations in Cuba and Canada. As well, it is now starting up its 40%-owned Ambatovy mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and is Canada’s largest thermal coal producer.
In the three months ended December 31, 2012, Sherritt’s revenue fell 12.8%, to $467.9 million from $536.8 million a year earlier. Lower nickel and cobalt prices and a decline in thermal coal sales were the main reasons for the drop. Cash flow fell 56.4%, to $39.5 million, or $0.13 a share, from $90.7 million, or $0.31. That was due to the lower revenue and higher production costs.
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The company is a major nickel producer, with operations in Cuba and Canada. As well, it is now starting up its 40%-owned Ambatovy mine on the island nation of Madagascar, off Africa’s east coast. Sherritt also produces oil and gas in Cuba, Spain and Pakistan and is Canada’s largest thermal coal producer.
In the three months ended December 31, 2012, Sherritt’s revenue fell 12.8%, to $467.9 million from $536.8 million a year earlier. Lower nickel and cobalt prices and a decline in thermal coal sales were the main reasons for the drop. Cash flow fell 56.4%, to $39.5 million, or $0.13 a share, from $90.7 million, or $0.31. That was due to the lower revenue and higher production costs.
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MCCOY CORP. $4.29 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780-453-8451; www.mccoyglobal.com; Shares outstanding: 26.6 million; Market cap: $114.1 million; Dividend yield: 4.7%) operates through two divisions: Mobile Solutions and Energy Products and Services.
Energy Products and Services sells hydraulic equipment for drilling rigs. This equipment includes power tongs, which are large, wrench-like tools that tighten and loosen the pipe in the drill hole.
Mobile Solutions builds heavy-duty trailers for U.S. and Canadian clients in the oil and gas, wind energy, infrastructure and construction industries.
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Energy Products and Services sells hydraulic equipment for drilling rigs. This equipment includes power tongs, which are large, wrench-like tools that tighten and loosen the pipe in the drill hole.
Mobile Solutions builds heavy-duty trailers for U.S. and Canadian clients in the oil and gas, wind energy, infrastructure and construction industries.
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WAJAX CORP. $35.88 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $599.2 million; Dividend yield: 9.0%) sells and services heavy equipment, including cranes and forklifts. It also sells related parts (such as bearings, motors, hoses and fittings) and power systems (including diesel engines and transmissions).
Wajax operates through 128 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries.
In the three months ended December 31, 2012, Wajax’s revenue fell 3.2%, to $364.9 million from $377.2 million a year earlier. Earnings declined 14.3%, to $14.2 million, or $0.85 a share, from $16.6 million, or $1.00 a share.
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Wajax operates through 128 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries.
In the three months ended December 31, 2012, Wajax’s revenue fell 3.2%, to $364.9 million from $377.2 million a year earlier. Earnings declined 14.3%, to $14.2 million, or $0.85 a share, from $16.6 million, or $1.00 a share.
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BELLATRIX EXPLORATION $5.93 (Toronto symbol BXE; TSINetwork Rating: Speculative) (403-266-8670; www.bellatrixexploration- .com; Shares outstanding: 107.9 million; Market cap: $639.8 million; No dividends paid) produces natural gas (70% of output) and oil (30%) in Alberta, B.C. and Saskatchewan.
In the three months ended December 31, 2012, Bellatrix’s production rose 32.1%, to 18,763 barrels of oil equivalent per day (including gas) from 14,209 a year earlier. Cash flow per share increased 7.1%, to $0.30 from $0.28.
Bellatrix continues to have considerable exploration success thanks to its expertise in horizontal drilling (or drilling down and “across” to oil and gas deposits) and fracturing, which involves pumping water, chemicals and other materials into rock to allow oil and gas to flow upward.
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In the three months ended December 31, 2012, Bellatrix’s production rose 32.1%, to 18,763 barrels of oil equivalent per day (including gas) from 14,209 a year earlier. Cash flow per share increased 7.1%, to $0.30 from $0.28.
Bellatrix continues to have considerable exploration success thanks to its expertise in horizontal drilling (or drilling down and “across” to oil and gas deposits) and fracturing, which involves pumping water, chemicals and other materials into rock to allow oil and gas to flow upward.
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ENBRIDGE INC. $46.66 (Toronto symbol ENB; Shares outstanding: 806.5 million; Market cap: $37.6 billion; TSINetwork Rating: Above Average; Dividend yield: 2.7%; www.enbridge.com) gets 90% of its revenue from pipelines that pump oil and gas from western Canada to eastern Canada and the U.S.
The remaining 10% mainly comes from distributing gas to 2 million consumers in Ontario, Quebec and parts of New York State.
Enbridge is spending $27 billion on expansion projects between 2012 and 2016....
The remaining 10% mainly comes from distributing gas to 2 million consumers in Ontario, Quebec and parts of New York State.
Enbridge is spending $27 billion on expansion projects between 2012 and 2016....
Encana took its present form on December 1, 2009, after the old EnCana Corp. split itself into two new companies: the new Encana, which focuses on natural gas, and Cenovus Energy, which specializes in oil sands. Lower gas prices have pushed Encana’s shares down by about 36% since the split....
Emerging markets continue to have sound longterm outlooks. A good way to profit from their growth with less risk is through low-fee exchange traded funds (ETFs). Here are two we see as buys.
ISHARES S&P INDIA NIFTY 50 INDEX FUND $23.61 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities.
The fund’s top holdings are ITC Ltd....
ISHARES S&P INDIA NIFTY 50 INDEX FUND $23.61 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that aims to track the S&P CNX Nifty Index, which represents the 50 largest, most liquid Indian securities.
The fund’s top holdings are ITC Ltd....