oil and gas

Argent Energy Trust, $10.00, symbol AET.UN on Toronto (Units outstanding: 21.8 million; Market cap: $218.0 million; www.argentenergytrust.ca), aims to acquire and develop oil and natural gas properties, mainly in the U.S. The trust began trading on the Toronto exchange on August 10, 2012, at $10 per unit. Argent’s public offering raised $212.3 million, which was scaled back from its original $325-million proposal. Due to low oil prices, investor interest in the trust’s offering was not as strong as originally anticipated....

AGRIUM INC., $98.86, Toronto symbol AGU, rose 2% this week on news that activist investment firm Jana Partners LLC now owns roughly 4% of Agrium’s stock. This is the same company that pressured McGraw-Hill (New York symbol MHP) to split itself into two new firms: one that will produce financial-information products and one that will publish textbooks for colleges and schools. McGraw-Hill is a recommendation of Wall Street Stock Forecaster, our newsletter that focuses on U.S. stocks. Jana now wants Agrium to spin off its retail division as a separate company. These stores sell seed, fertilizer and other products to farmers. They also supply two-thirds of Agrium’s revenue and half of its earnings....

PASON SYSTEMS INC., $14.24, symbol PSI on Toronto, saw its revenue jump 29.8% in the three months ended June 30, 2012, to $81.1 million from $62.4 million a year earlier. Cash flow rose 31.5%, to $30.1 million, or $0.37 a share, from $22.9 million, or $0.28 a share. Pason rents equipment for monitoring and managing land-based oil rigs. It also provides communication systems that companies use to remotely collect data from their drilling operations. The company serves oil and natural gas companies and drilling contractors throughout Canada, the U.S., Mexico and Argentina. Even with declining oil prices and continued low gas prices, drilling activity rose 6% in the U.S. and Canada in the latest quarter, with a combined 188,291 active days and a rig count of 2,069, compared to 177,791 days and 1,954 rigs a year earlier. That was the main reason for the higher revenue and cash flow. The company also benefited from stronger activity in all of its international markets, particularly Argentina, Brazil, Australia and Mexico....

BIRCHCLIFF ENERGY $7.00 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 141.4 million; Market cap: $989.8 million; No dividends paid) develops, produces and explores for oil and natural gas, mainly in the Peace River Arch area near the Alberta/B.C. border. About 75% of Birchcliff’s production is natural gas. The remaining 25% is oil. Prominent Toronto investor Seymour Schulich is the company’s largest shareholder; he owns about 28% of its outstanding shares. In the three months ended June 30, 2012, Birchcliff’s production rose 27.2%, to 22,039 barrels of oil equivalent per day (including natural gas) from 17,324 barrels a year earlier....

WAJAX CORP. $45.65 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $762.3 million; Dividend yield: 7.1%) 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 117 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries. In the three months ended June 30, 2012, the company’s revenue rose 15.7%, to $386.6 million from $334.1 million a year earlier. That was largely due to increased sales of mining equipment and record sales of Hitachi construction excavators in western Canada. Those gains offset lower sales of power systems to western Canadian oil and gas drillers....

Kodiak Oil & Gas Corp., $8.87, symbol KOG on Nasdaq (Shares outstanding: 263.5 million; Market cap: $2.3 billion; www.kodiakog.com), develops, produces and explores for oil and natural gas in North Dakota’s Williston Basin. The basin is part of the Bakken formation, which covers parts of Montana, North Dakota and Saskatchewan, and could contain over 500 billion barrels of oil. The first oil discovery at Bakken was made in 1951, but it has always been hard to extract the oil from the rock. Kodiak continues to increase its production and reserves. The oil and gas it’s drilling for are hard to reach, but today’s more advanced drilling techniques are boosting its production....

DUNDEE REIT, $38.40, symbol D.UN on Toronto, owns and manages 27.6 million square feet of office, industrial and retail space. The real estate investment trust’s occupancy rate is 95.6%. In the three months ended June 30, 2012, Dundee’s revenue jumped 89.6%, to $181.2 million from $95.6 million a year earlier. Most of the increase came from properties the trust recently purchased. The best way to assess a real estate investment trust’s operating performance is to look at its cash flow, and Dundee’s cash flow rose 78.9% in the latest quarter, to $56.0 million from $31.3 million. Cash flow per unit rose 8.9%, to $0.61 from $0.56, due to more units outstanding (the trust issued new units to pay for recent property purchases)....

These three leading oil producers are aggressively expanding their oil sands operations. These projects are more expensive to develop than conventional deposits, and the recent drop in oil prices could hurt their profitability. However, their reserves should last for decades, and their operating costs tend to fall after they start up. Moreover, these companies’ refineries, which convert oil into gasoline and other fuels, help shield them from volatile oil and gas prices. That’s because refineries pay less for crude when oil prices decline; this enhances their profits. SUNCOR ENERGY INC. $32 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $48.0 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.6%; TSINetwork Rating: Average; www.suncor.com) became Canada’s largest integrated oil company in 2009, when it merged with Petro- Canada....

MCCOY CORP. $3.59 (Toronto symbol MCB; TSINetwork Rating: Speculative) (780-453-8451; www.mccoyglobal.com; Shares outstanding: 26.5 million; Market cap: $95.1 million; Dividend yield: 5.5%) 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 Canadian and U.S. clients in the oil and gas, wind energy, infrastructure and construction industries.

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WAJAX CORP. $45.65 (Toronto symbol WJX; TSINetwork Rating: Extra Risk) (905-212-3300; www.wajax.ca; Shares outstanding:16.7 million; Market cap: $762.3 million; Dividend yield: 7.1%) 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 117 dealerships across Canada. Its customers are in the natural resource, construction, manufacturing, industrial processing and transportation industries.

In the three months ended June 30, 2012, the company’s revenue rose 15.7%, to $386.6 million from $334.1 million a year earlier. That was largely due to increased sales of mining equipment and record sales of Hitachi construction excavators in western Canada. Those gains offset lower sales of power systems to western Canadian oil and gas drillers.

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