oil and gas

Triangle Petroleum, $6.79, symbol TPLM on the American exchange (Shares outstanding: 44.4 million; Market cap: $310.5 million; www.trianglepetroleum.com), is a relatively new oil and gas explorer in the Bakken shale and Three Forks regions, which are located in North Dakota’s Williston Basin. Triangle has acquired 86,000 acres of exploration properties in the area. The company also operates RockPile Energy Services (an oilfield services firm) and Caliber Midstream (a joint venture that installs pipelines for crude oil gathering and processing). Triangle’s production now stands at roughly 3,300 barrels of oil per day. This year, it aims to raise its output to at least 3,600 to 4,000 barrels of oil and oil equivalent (including gas) per day....

Cummins Inc., $115.50, symbol CMI on New York (Shares outstanding: 189.8 million; Market cap: $22.1 billion; www.cummins.com), designs, makes, distributes and services diesel engines for trucks, buses and cars. It also makes engine parts and power-generation systems. The company serves customers in 160 countries through 550 company-owned and independent distributors and 5,000 dealers. It gets about 59% of its sales from outside the U.S. In the three months ended December 31, 2012, Cummins’s revenue fell 12.8%, to $4.29 billion from $4.92 billion a year earlier. Earnings per share declined 21.9%, to $2.00 from $2.56. However, the latest earnings still beat the consensus estimate of $1.74....

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 61% gas and 39% oil....

BHP BILLITON LTD. ADRs $70 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.7 billion; Market cap: $189.0 billion; Price-to-sales ratio: 2.7; Dividend yield: 3.3%; TSINetwork Rating: Average; www.bhpbilliton.com) is the world’s largest mining company, with major operations in Australia, South Africa, Chile and the U.K. Its main products include iron ore, coal, aluminum, manganese, titanium, oil and natural gas.

In the six months ended December 31, 2012, BHP earned $5.7 billion, or $2.14 per ADR. (BHP’s fiscal year ends June 30; each ADR represents two BHP common shares.) That’s down 43.4% from $10.0 billion, or $3.77 per ADR, a year earlier. Lower prices for commodities, particularly iron ore, cut BHP’s gross profits by $5.4 billion in the latest period. Unfavourable exchange rates also lowered earnings by $574 million. Revenue fell 14.1%, to $32.2 billion from $37.5 billion.

In response to weak commodity prices, BHP has agreed to sell $4.3 billion of less-important projects. That includes a deal to sell its remaining diamond operations in Canada for $500 million.
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WESTJET AIRLINES, $23.45, symbol WJA on Toronto, is now in the process of upgrading its interline agreement with Air France to a full code-sharing arrangement. This will be WestJet’s ninth code-sharing deal. Under their current agreement, WestJet and Air France co-operate on flights and baggage handling. WestJet has interline agreements with 21 other airlines around the world. Through code-sharing deals, airlines sell seats on one another’s planes using the same two-letter code. In this case, the AF code will be used when travellers on Air France flights to Toronto connect to Vancouver, Edmonton, Saskatoon, Regina, Thunder Bay, Ottawa, Quebec City, St. John’s, Moncton and Halifax. The AF code will also apply to Air France passengers taking WestJet flights to Winnipeg and Calgary from Toronto and Montreal....

DEVON ENERGY CORP. $55.69 (New York symbol DVN; TSINetwork Rating: Speculative) (405-235- 3611; www.dvn.com; Shares outstanding: 406.0 million; Market cap: $22.7 billion; Dividend yield: 1.6%) is one of the largest U.S.-based oil and natural gas explorers and producers....

STANTEC INC. $43.25 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 46.0 million; Market cap: $2.0 billion; Dividend yield: 1.5%) sells a range of consulting, project delivery, design and technology services....

Lukoil (ADR), $65.85, symbol LUKOY on the U.S. over-the-counter market (ADRs outstanding: 1.1 billion; Market cap: $55.8 billion; www.lukoil.com), produces, refines, markets and explores for oil and gas around the world. Its exploration and production activities are primarily in Russia, Azerbaijan, Kazakhstan, Uzbekistan, the Middle East, South America, Africa and Southeast Asia. Lukoil trades at a lower price-to-earnings multiple than many major western integrated oil stocks. For example, it trades at just 5.3 times its latest 12 months of earnings, where Exxon Mobil (see below) trades at 9.2 times earnings. However, that low p/e ratio reflects the considerable political risk of investing in Russia, where there continues to be uncertainty surrounding the rule of law, corporate governance, transparency and property rights. There is also an ongoing risk of confiscation or expropriation of assets by the Russian government or its political allies....

The long-term outlook for oil and natural gas is positive, although in the short term, shale oil and gas discoveries continue to rapidly increase supply. That’s keeping prices low—and pushing down the shares of producers. We advise against overindulging in any one sector. However, we do think most safety-conscious investors should stick with the energy stocks we rate as buys in Canadian Wealth Advisor. Here is our latest advice on two of them....

DOREL INDUSTRIES, $39.80, symbol DII.B on Toronto, moved up over 8% this week after it reported improved results in the latest quarter. The company makes a wide 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 December 30, 2012, Dorel’s sales rose 10.9%, to $622.6 million from $561.6 million a year earlier (all figures except share price and market cap in U.S. dollars)....