oil and gas
Sea Dragon Energy, $0.14, symbol SDX on Toronto (Shares outstanding: 326.3 million; Market cap: $50.9 million; www.seadragonenergy.com), explores for oil and gas in Egypt, where it has interests in two concessions. Over the longer term, it aims to expand into other countries in north and sub-Saharan Africa. In the three months ended March 31, 2011, the company’s average daily production was 1,178 barrels of oil per day. Cash flow was positive at $2 million, or $0.01 a share, in the quarter (all figures except share price and market cap in U.S. dollars). Sea Dragon holds cash of $11.5 million, or $0.035 a share, and has no debt. That’s enough to support its $12.4-million capital spending program this year. But beyond that, it will have difficulty raising funds for further exploration and development at today’s low share price without diluting the interests of current shareholders....
EOG Resources, $104.02, symbol EOG on New York (Shares outstanding: 254.5 million; Market cap: $27.7 billion; www.eogresources.com), is a Houston-based explorer, developer, producer and marketer of oil and gas, primarily in the U.S., Canada, and off the coast of Trinidad. EOG is well positioned to gain in the fastest-growing unconventional shale-gas and shale-oil areas in the U.S. That includes oil from the Bakken formation, the Eagle Ford Shale and the Barnett Shale, and natural gas from the Horn River region, the Marcellus Shale and the Barnett shale. (Shale gas and oil is trapped in rock formations. To extract it, companies must pump water and chemicals into the rock. This fractures the rock and releases the oil or gas.)...
Delphi Energy, symbol DEE on Toronto, explores for oil and gas in Alberta and B.C. Natural gas makes up 74% of its daily output; the remaining 26% is oil. In the three months ended March 31, 2011, the natural gas stock’s production rose 8.0%, to an average of 8,259 barrels of oil equivalent (including natural gas) per day from 7,647 barrels a year earlier. Delphi’s cash flow rose 2.0%, to $15.1 million from $14.8 million. Higher production and oil prices were the main reason for the gain. The company’s operating costs also fell. Delphi sold 3.2 million shares to raise $9.0 million in the quarter. Due to more shares outstanding, cash flow per share fell 13.3%, to $0.13 a share from $0.15....
PLEASE NOTE: Our next Hotline will go out on Friday, July 8, 2011. IAMGOLD CORP., $18.14, symbol IMG on Toronto, has now sold its 18.9% stake in the Tarkwa and Damang gold mines in Ghana to South African mining giant Gold Fields Ltd. IAMGold received cash of $667 million U.S. for these interests. The company now holds over $1.1 billion U.S. in cash and gold bullion. That gives it lots of options to spur its share price: it could raise exploration spending; make an acquisition; pay dividends; or buy back shares....
Oilsands Quest Inc., $0.39, symbol BQI on Toronto (Shares outstanding: 306.3 million; Market cap: $132.4 million; www.oilsandsquest.com), changed its name from Canwest Petroleum on November 1, 2006. Oilsands Quest is a Colorado-based company that explores for oil and gas in the Alberta and Saskatchewan oil sands. Oilsands Quest held cash of $21 million, or $0.07 a share, on January 31, 2011. However, its projects will take large investments and many years to develop. Oilsands Quest will need to find a partner, or even put itself up for sale, to raise the necessary funds. The stock has fallen steadily this year, and could go lower. We don’t recommend Oilsands Quest....
Exxon Mobil, $80.34, symbol XOM on New York (Shares outstanding: 4.9 billion; Market cap: $389.3 billion; www.exxonmobil.com), was formed in 1999, following the merger of Exxon and Mobil. It is the world’s largest publicly traded oil company. Exxon Mobil owns 70% of Imperial Oil, symbol IMO on Toronto. In the three months ended March 31, 2011, Exxon Mobil’s earnings jumped to $2.14 a share from $1.33 a year earlier. That beat the consensus estimate of $1.75. The improved performance came from higher oil and natural gas prices, increased refining margins, and record performance from the chemicals division. The company continues to buy back large amounts of its stock. In the latest quarter, it bought back 69 million shares for $5.7 billion....
BREAKWATER RESOURCES, $7.41, symbol BWR on Toronto, is now the subject of a $663-million friendly takeover bid from Belgium-based Nyrstar, a major global producer of zinc and lead, as well as silver, gold and copper. The offer is for $7.00 a share in cash for all of Breakwater’s shares. In addition, Breakwater shareholders will get a special dividend of $0.50 a share in cash. At $7.50, that’s up 155% from the $2.94 we recommended the stock at a year ago in our July 2010 issue of Stock Pickers Digest....
Equal Energy, $6.80, symbol EQU on Toronto (Shares outstanding: 34.6 million; Market cap: $235.2 million; www.equalenergy.ca), is based in Calgary, but has a U.S. office in Oklahoma City. Equal has producing oil and gas properties that are mainly located in Oklahoma, Alberta, B.C. and Saskatchewan. The company’s production is 57% oil and 43% natural gas. In the first quarter of 2011, Equal’s cash flow was $0.42 a share. That’s down 37.3% from $0.67 a share a year earlier. Lower natural gas prices and a 9% drop in production were the main reasons for the decline....
DELPHI ENERGY, $2.56, symbol DEE on Toronto, explores for oil and gas in Alberta and B.C. Natural gas makes up 74% of its daily output; the remaining 26% is oil. In the three months ended March 31, 2011, Delphi’s production rose 8.0%, to an average of 8,259 barrels of oil equivalent (including natural gas) per day from 7,647 barrels a year earlier. Delphi’s cash flow rose 2.0% in the quarter, to $15.1 million from $14.8 million. Higher production and oil prices were the main reason for the gain. The company’s operating costs also fell. Delphi sold 3.2 million shares to raise $9.0 million in the quarter. Due to more shares outstanding, cash flow per share fell 13.3%, to $0.13 a share from $0.15....
Trilogy Energy Corp., symbol TET on Toronto, owns oil and gas properties in the Kaybob and Grande Prairie areas of central Alberta. About 78% of Trilogy’s production is natural gas. The remaining 22% is oil. In the three months ended March 31, 2011, Trilogy produced an average of 25,362 barrels of oil equivalent per day (including natural gas). That was up 9.9% from 23,079 barrels a day a year earlier. However, the natural gas stock’s cash flow per share fell 13.3%, to $0.39 from $0.45 a year earlier, mostly due to lower gas prices. Still, the company continues to bring new wells into production. Its daily production should jump to an average of 30,000 barrels for 2011....