oil and gas
ALIMENTATION COUCHE-TARD INC., $40.67, symbol ATD.B on Toronto, recently agreed to buy Norway’s Statoil Fuel & Retail ASA for $2.8 billion U.S. That’s equal to 39% of Couche-Tard’s $7.3-billion market cap. Statoil Fuel has over 1,700 gas stations in Scandinavia and over 550 in Central and Eastern Europe. The company accounts for over 30% of convenience store sales in Norway, Sweden, Denmark, Latvia and Estonia, and is among the top five in both Lithuania and Poland. Norway’s largest North Sea oil producer, government-controlled Statoil ASA, owns 54% of publicly traded Statoil Fuel....
American Depositary Receipts make foreign investing easier and safer for individual investors. The foreign company must provide detailed financial information to U.S. regulators and to the sponsor, or depositary, bank or broker. As well, since ADRs trade on U.S. stock exchanges in U.S. dollars, you don’t have to worry about currency exchange rates, foreign stock exchange rules, or language barriers. We have a high opinion of these four global leaders, but not all are buys right now. BHP BILLITON LTD. ADRs $63 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.7 billion; Market cap: $170.1 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.5%; TSINetwork Rating: Average; www.bhpbilliton.com) is the world’s largest mining company, with operations in Australia, South Africa, Chile and the U.K. It produces iron ore, coal, oil, natural gas, aluminum, manganese, diamonds and titanium....
BHP BILLITON LTD. ADRs $63 (New York symbol BHP; Conservative Growth Portfolio, Resources sector; ADRs outstanding: 2.7 billion; Market cap: $170.1 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.5%; TSINetwork Rating: Average; www.bhpbilliton.com) is the world’s largest mining company, with operations in Australia, South Africa, Chile and the U.K. It produces iron ore, coal, oil, natural gas, aluminum, manganese, diamonds and titanium.
In 2011, BHP expanded its oil and gas business with two major purchases: it paid $12.0 billion for Petrohawk Energy Corp., which produces oil and natural gas in Texas and Louisiana; and $4.75 billion for shale gas properties in Arkansas.
These acquisitions increased BHP’s oil and gas production by 58% in three months ended March 31, 2012, to 56.5 million barrels of oil equivalent (including gas) from a year earlier.
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In 2011, BHP expanded its oil and gas business with two major purchases: it paid $12.0 billion for Petrohawk Energy Corp., which produces oil and natural gas in Texas and Louisiana; and $4.75 billion for shale gas properties in Arkansas.
These acquisitions increased BHP’s oil and gas production by 58% in three months ended March 31, 2012, to 56.5 million barrels of oil equivalent (including gas) from a year earlier.
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Inter Pipeline Fund, $19.82, symbol IPL.UN on Toronto (Units outstanding: 267.2 million; Market cap: $5.3 billion; www.interpipelinefund.com), transports, stores, markets and processes oil and natural gas. The fund has four divisions:
- The oil sands division’s pipelines transport 35% of Canadian oil sands production.
- The conventional business’s pipelines handle 15% of western Canadian conventional crude oil.
- NGL Extraction converts 40% of Alberta’s exported natural gas into natural gas liquids, like ethane, propane and butane.
- The storage division operates terminals in the U.K., Germany and Ireland under the Simon Storage banner, and in Denmark under the Inter Terminals brand.
SHERRITT INTERNATIONAL $5.26 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 296.7 million; Market cap: $1.6 billion; Dividend yield: 2.9%) is a diversified natural resource company that produces nickel, cobalt, thermal coal, oil and gas. It also manages 376 megawatts of power generation capacity in Cuba. Sherritt is a major nickel producer, with operations in Cuba and Canada. It is also close to finishing a mine at its 40%-owned Ambatovy project on the island nation of Madagascar, off Africa’s east coast. As well, Sherritt produces oil and gas in Cuba, Spain and Pakistan. It is also Canada’s largest thermal coal producer. In the three months ended March 31, 2012, Sherritt’s revenue fell 2.6%, to $462.2 million from $474.5 million a year earlier. Lower nickel prices were the main reason for the decline. Cash flow fell 17.0%, to $117 million, or $0.40 a share, from $141 million, or $0.48 a share. That was due to the lower revenue and higher production costs....
PASON SYSTEMS $14.24 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403- 301-3400; www.pason.com; Shares outstanding: 81.9 million; Market cap: $1.1 billion; Dividend yield: 3.1%) reported 31.8% higher revenue in the three months ended March 31, 2012, to $111.7 million from $84.7 million a year earlier. Many of the company’s clients increased their drilling, especially for shale gas and oil. Earnings jumped 66.0%, to $29.5 million, or $0.36 a share, from $17.8 million, or $0.22 a share. Pason has raised its semi-annual dividend by 10%, to $0.22 from $0.20. The shares now yield 3.1%. The company is heavily reliant on the resource sector. However, Pason’s revenue and earnings should keep rising as oil and gas drilling continues to increase....
WESTJET AIRLINES $15.48 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 130.8 million; Market cap: $2.0 billion; Dividend yield: 1.6%) serves 76 destinations in North America and the Caribbean. Its fleet of 98 modern Boeing Next-Generation 737s are 30% more fuel efficient than older aircraft. WestJet is scheduled to receive 37 more 737s through 2018. In the three months ended March 31, 2012, West- Jet’s revenue rose 15.3%, to $781.5 million from $692.2 million a year earlier. Earnings jumped 41.6%, to $68.3 million from $48.2 million. That’s a new record for the first quarter. It also marks the company’s 28th consecutive quarter of profitability. The higher revenue was the main reasons for the gain. Earnings per share rose 47.1%, to $0.50 from $0.34, on fewer shares outstanding....
Aqua-Pure Ventures, $0.16, symbol AQE on Toronto (Shares outstanding: 86.6 million; Market cap: $13.9 million; www.aqua-pure.com), is a Calgary-based company that recycles waste water. Aqua-Pure has developed what it believes is a superior technology to deal with waste water produced during hydraulic fracturing, or fracking. This process, which is used to extract oil and gas from shale rock, involves pumping water and chemicals into rock formations. This fractures the rock and releases the oil and gas. A significant amount of the fluid used in the fracking process comes back to the surface as contaminated “flowback” water, full of sand, clay, polymers, oil, salt and other substances. And contaminated water continues to flow to the surface throughout the well’s life....
STANTEC INC., $31.53, symbol STN on Toronto, sells a range of consulting, project delivery, design and technology services. The company’s clients operate in a variety of industries, including transportation, construction and oil and gas. Stantec has over 11,000 employees in 170 locations throughout North America. It also has four international offices. In the three months ended March 31, 2012, the company’s revenue rose 7.4%, to $439.1 million from $408.7 million a year earlier. Acquisitions were part of the reason for the gains; Stantec is also working on a number of new projects. Earnings rose 4.5%, to $24.9 million, or $0.55 a share, from $23.8 million, or $0.52....
RUSSEL METALS $25.90 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 60.1 million; Market cap: $1.6 billion; Dividend yield: 5.4%) is one of North America’s largest metal distributors. The company serves its roughly 33,000 customers through a network of 51 locations in Canada and 12 in the U.S.
In the three months ended March 31, 2012, Russel’s revenue rose 22.1%, to $802.9 million from $657.7 million a year earlier. Revenue rose at all three of Russel’s divisions: The steel distribution division’s revenue rose 42% on higher sales volumes. Metal services revenue rose 18%, also on higher sales volumes. The energy tubular products division, which supplies pipes for oil and gas firms, saw its revenue rise 23%, because of increased drilling activity. Earnings per share were flat at $0.55 on steady steel prices.
Russel raised its quarterly dividend by 16.7% with the June 2012 payment, to $0.35 from $0.30. The stock now yields 5.4%. The company holds cash of $160.3 million, or $2.67 share. Its $294.6 million of long-term debt is a reasonable 18.9% of its market cap.
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In the three months ended March 31, 2012, Russel’s revenue rose 22.1%, to $802.9 million from $657.7 million a year earlier. Revenue rose at all three of Russel’s divisions: The steel distribution division’s revenue rose 42% on higher sales volumes. Metal services revenue rose 18%, also on higher sales volumes. The energy tubular products division, which supplies pipes for oil and gas firms, saw its revenue rise 23%, because of increased drilling activity. Earnings per share were flat at $0.55 on steady steel prices.
Russel raised its quarterly dividend by 16.7% with the June 2012 payment, to $0.35 from $0.30. The stock now yields 5.4%. The company holds cash of $160.3 million, or $2.67 share. Its $294.6 million of long-term debt is a reasonable 18.9% of its market cap.
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