oil and gas

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.

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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.

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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.

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Pipelines have been in the news. Canada’s largest pipeline company, TransCanada Corporation (symbol TRP on Toronto) has made headlines with its ongoing disagreement with the U.S. government over the completion of its Keystone XL pipeline to the Gulf Coast. The Obama administration blocked the Nebraska section of the project last November, citing environmental concerns. TransCanada has submitted a proposal for a re-routing of the pipeline and is awaiting a new environmental review. Pembina Pipelines had attracted much less attention until it came up with some interesting news of its own this year: the purchase of a firm with significant assets in natural gas liquids (NGL)....

CHESAPEAKE ENERGY CORP., $17.39, symbol CHK on New York, is down about 50% from its high of $35.75 last August. That’s largely because natural gas prices have fallen to near 10-year lows. However, the drop has accelerated lately, partly on news that the company’s co-founder, CEO and chairman, Aubrey K. McClendon, took out loans that could put him in a conflict of interest. The U.S. Securities and Exchange Commission (SEC) is now investigating....

PEMBINA PIPELINE $29.78 (Toronto symbol PPL; Shares outstanding: 285.0 million; Market cap: $8.5 billion; TSI Network Rating: Average; Dividend yield: 5.4%; www.pembina.com) owns pipeline systems with a total length of over 7,500 kilometres. These lines pump oil and gas from fields in B.C. and Alberta to refineries, or feed into major pipelines, such as the Enbridge Pipeline System. Pembina also owns the Syncrude, Horizon and Cheecham pipelines, which pump crude oil from the Alberta oil sands. In addition, the company holds a 50% stake in the Fort Saskatchewan Ethylene Storage Limited Partnership. It also owns the Cutbank Complex, a network of natural gas gathering and processing facilities. In the three months ended December 31, 2011, Pembina’s cash flow rose 2.9%, to $66.8 million, or $0.40 a share, from $64.9 million, or $0.39 a share, a year earlier....

Emerging markets continue to have strong longterm outlooks. One of the best ways to profit from their growth with less risk is through low-fee exchange traded funds (ETFs). ISHARES S&P INDIA NIFTY 50 INDEX FUND $22.40 (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. (conglomerate), 8.3%; Reliance Industries Ltd. (conglomerate), 7.8%; Infosys Technologies (software), 7.1%; Housing Development Finance, 6.2%; ICICI Bank, 6.2%; HDFC Bank, 6.1%; Larsen & Toubro Ltd. (conglomerate), 4.1%; Tata Consultancy Services (information technology), 3.8%; and State Bank of India, 3.5%....

ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $38.31 (New York symbol FXI; buy or sell through brokers) is an ETF that aims to track the FTSE/Xinhua China 25 Index, which is made up of the 25 largest and most liquid Chinese stocks. All of the stocks in the index trade on the Hong Kong exchange. Some also trade as American Depositary Receipts (ADRs) on the New York exchange. The fund’s top holdings are China Mobile, 10.3%; China Construction Bank, 8.7%; Industrial & Commercial Bank, 7.9%; CNOOC, 6.9%; Bank of China, 6.0%; Ping An Insurance, 4.2%; Petrochina, 4.1%; China Merchants Bank, 4.1%; and China Life Insurance, 4.1%. The fund’s holdings give it the following industry breakdown: Financials, 53.9%; Telecommunications, 18.0%; Oil and Gas, 14.8%; Basic Materials, 10.3%; and Industrials, 2.2%; The ETF has an expense ratio of 0.72%....

Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. The group manages over $1.7 trillion U.S. in 170 mutual funds. Vanguard, which went into business in 1975, offers low-fee index mutual funds. Generally speaking, Canadians can’t buy units of mutual funds that are registered in the U.S., because they aren’t registered with provincial securities commissions. For that matter, some Canadian funds aren’t available in all provinces. Canadians can, however, buy Vanguard exchange traded funds (ETFs) that trade on stock exchanges. We don’t recommend all of Vanguard’s ETFs, but here are two we do see as low-fee buys....

Celtic Exploration, $14.48, symbol CLT on Toronto (Shares outstanding: 104.9 million; Market cap: $1.5 billion; www.celticex.com), is an Alberta-based oil and gas explorer and producer. Celtic’s shares are down almost 56% from $27.08 in November 2011. The shares have dropped along with many other energy stocks. In addition, Celtic’s production is about 77% natural gas and 23% oil. That high gas component has hurt the company as gas prices have fallen; they recently dropped below $2 U.S. per million British thermal units (BTUs) for the first time in more than a decade....