oil and gas
Dear client,
The best way for conservative investors to profit from cyclical oil and natural gas prices is with well-established leaders like Chevron. That’s partly because its large international presence cuts its exposure to any one region.
Chevron also offers investors a growth element....
The best way for conservative investors to profit from cyclical oil and natural gas prices is with well-established leaders like Chevron. That’s partly because its large international presence cuts its exposure to any one region.
Chevron also offers investors a growth element....
APACHE CORP. $80 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 391.3 million; Market cap: $31.3 billion; Price-to-sales ratio: 1.9; Dividend yield: 0.9%; TSINetwork Rating: Average; www.apachecorp.com) had to write down some of its Canadian properties by $539 million due to low natural gas prices in the quarter ended September 30, 2012....
Last week, we examined Precision Drilling (Toronto symbol PD) which, in the wake of the long slump in natural gas prices, has 84% of its rigs drilling for oil (view the article here). Today we look at an oil and gas producer that has also cut back on natural gas, although it still has a third of its production in gas. ZARGON OIL & GAS (Toronto symbol ZAR; www.zargon.ca ) produces natural gas and oil in Alberta, Manitoba, Saskatchewan and North Dakota. Its production is 67% oil and 33% gas....
CHEVRON CORP. $110 (New York symbol CVX; Conservative Growth Portfolio, Resources sector; Shares outstanding: 2.0 billion; Market cap: $220.0 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.chevron.com) is the second-largest integrated oil company in the U.S., after ExxonMobil Corp. (New York symbol XOM).
Chevron gets 90% of its earnings by producing oil (70% of production) and natural gas (30%). The remaining 10% comes from its refineries, petrochemical operations and its 17,800 gas stations, which operate under the Chevron, Texaco and Caltex banners.
At the end of 2011, the company’s reserves consisted of 8.5 billion barrels of oil equivalent (51% oil and 49% natural gas), plus an additional 2.7 billion barrels through joint ventures and affiliated businesses. The company produces about 1 billion barrels a year.
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Chevron gets 90% of its earnings by producing oil (70% of production) and natural gas (30%). The remaining 10% comes from its refineries, petrochemical operations and its 17,800 gas stations, which operate under the Chevron, Texaco and Caltex banners.
At the end of 2011, the company’s reserves consisted of 8.5 billion barrels of oil equivalent (51% oil and 49% natural gas), plus an additional 2.7 billion barrels through joint ventures and affiliated businesses. The company produces about 1 billion barrels a year.
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APACHE CORP. $80 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 391.3 million; Market cap: $31.3 billion; Price-to-sales ratio: 1.9; Dividend yield: 0.9%; TSINetwork Rating: Average; www.apachecorp.com) had to write down some of its Canadian properties by $539 million due to low natural gas prices in the quarter ended September 30, 2012. If you disregard that and other unusual items, Apache would have earned $861 million, or $2.16 a share. That’s down 25.8% from $1.2 billion, or $2.95 a share, a year earlier. Revenue declined 3.4%, to $4.2 billion from $4.3 billion. Half of Apache’s production is gas, and gas prices fell 15.3% from a year earlier. Oil prices rose 0.9%.
The company is now producing more higher-priced oil and natural gas liquids, which cuts its exposure to low gas prices. As well, it produces half of its oil and gas in international markets, where prices are generally higher than in North America.
Apache is a buy.
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The company is now producing more higher-priced oil and natural gas liquids, which cuts its exposure to low gas prices. As well, it produces half of its oil and gas in international markets, where prices are generally higher than in North America.
Apache is a buy.
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MCCOY CORP. $4.35 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780-453-8451; www.mccoyglobal.com; Shares outstanding: 26.6 million; Market cap: $115.7 million; Dividend yield: 4.6%) operates through two divisions: Mobile Solutions and Energy Products and Services. Energy Products and Services sells hydraulic equipment, including power tongs, for drilling rigs. Power tongs 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....
WAJAX CORP. $39.60 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $661.3 million; Dividend yield: 8.2%) 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 118 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries. In the quarter ended September 30, 2012, Wajax’s revenue fell 1.5%, to $356.4 million from $361.9 million a year earlier. Earnings fell 9.4%, to $16.2 million, or $0.97 a share, from $17.9 million, or $1.08 a share....
TRILOGY ENERGY CORP. $28.25 (Toronto symbol TET; TSINetwork Rating: Speculative) (403-290- 2900; www.trilogy.com; Shares outstanding: 116.5 million; Market cap: $3.3 billion; Dividend yield: 1.5%) owns oil and gas properties in the Kaybob and Grande Prairie areas of central Alberta. About 62% of Trilogy’s production is natural gas. The remaining 38% is oil. In the three months ended September 30, 2012, Trilogy produced 33,412 barrels of oil equivalent per day (including gas). That’s up 15.1% from 29,035 barrels a year earlier. But even with the higher production, a 40.1% decline in gas prices pushed down the company’s cash flow per share by 21.6%, to $0.40 from $0.51. Trilogy pays out just 26% of its cash flow as dividends. That gives it a low 1.5% yield, but it’s also letting the company maintain an active drilling program. In the first three quarters of 2012, Trilogy spent $274 million on exploration and development, up 10.5% from $248 million in the same period a year earlier. The company drilled 55 wells, up 25.0% from 44....
The Successful Investor Hotline. Friday, December 14, 2012 Dear client,...
WAJAX CORP. $39.60 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $661.3 million; Dividend yield: 8.2%) 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 118 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries. In the quarter ended September 30, 2012, Wajax’s revenue fell 1.5%, to $356.4 million from $361.9 million a year earlier. Earnings fell 9.4%, to $16.2 million, or $0.97 a share, from $17.9 million, or $1.08 a share....