oil prices
PetroBakken Energy, $10.97, symbol PBN on Toronto (Shares outstanding: 216.0 million; Market cap: $2.1 billion; www.petrobakken.com), produces and explores for oil, mainly in the Cardium area of west-central Alberta and the Bakken region of southeastern Saskatchewan. The Bakken formation covers parts of Montana, North Dakota and Saskatchewan, and could contain up to 500 billion barrels of oil or more. Oil was first discovered at Bakken in 1951, but it has always been hard to extract the oil from the rock. However, modern techniques, such as horizontal (or slant) drilling have made it easier to access hard-to reach deposits like those at Bakken....
Core Laboratories N.V. (ADR), $108.31, symbol CLB on New York (Shares outstanding: 48.7 million; Market cap: $5.1 billion; www.corelab.com), is a Netherlands-based firm that provides oil-field services. Core has 70 offices in over 50 countries. The company’s services determine and measure the quantity and quality of fluids, such as crude oil and natural gas, in their wells. That helps oil and gas producers around the world increase their production and better manage their reservoirs. Core also analyzes samples of reservoir rocks for their porosity and permeability. That helps determine the reservoir’s size, and the fluids’ ability to flow through the rock....
PENN WEST PETROLEUM $18.34 (Toronto symbol PWT; Shares outstanding: 466.9 million; Market cap: $8.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.9%) is one of North America’s largest oil and gas producers. The company produces an average of 156,107 barrels of oil equivalent per day (weighted 63% to oil and 37% to natural gas). In the three months ended June 30, 2011, cash flow per share rose 7.1%, to $0.85 from $0.62, mostly due to higher oil and gas prices. The company owns 50% of the huge Cordoba Embayment shale-gas project in B.C. Japan’s Mitsubishi Corp. owns 30%, state-owned Korea Gas Corp. owns 5%, and four other Japanese companies own 3.75% each. Penn West’s partners are spending a total of $850 million to earn their stakes....
Birchcliff Energy Inc., symbol BIR on Toronto, develops, produces and explores for natural gas and oil, mainly in the Peace River Arch area near the Alberta/B.C. border. In the three months ended June 30, 2011, the natural gas stock’s production rose 40.2% in the three months ended June 30, 2011, to 17,324 barrels of oil equivalent per day (including natural gas) from 12,357 barrels a year earlier. We analyze Birchcliff in Stock Pickers Digest, our newsletter that recommends stocks for the part of your portfolio you devote to aggressive investing....
When investors develop and act on strong investment views—on subjects such as the outlook for oil prices, say, or gold prices, or interest rates—they generally lose money overall. That’s because strong views on subjects like these tend to distort your investment decisions.
For instance, if you know (or think you know) that oil is sure to rise in the next six months or a year, say, then you are sure to invest more heavily in oil stocks than you would if you took a less extreme—that is, more balanced—view of the situation. You will also tend to invest in riskier oil stocks, rather than proven producers....
Stock market advice: Relying on predictions can tempt you to take on too much risk
Precision Drilling Corp., Toronto symbol PD, provides contract-drilling services to oil and gas producers. The company owns 360 drilling rigs in Canada, the U.S. and Mexico. We analyze Precision in The Successful Investor, our newsletter that recommends stock picks for conservative investors. Precision recently converted from an income trust to a regular corporation. Investors received one common share for each trust unit they held. The change was in response to Ottawa’s new tax on income-trust distributions, which came into effect on January 1, 2011....
Trilogy Energy Corp., symbol TET on Toronto, owns oil and gas properties in the Kaybob and Grande Prairie areas of central Alberta. About 76% of Trilogy’s production is natural gas. The remaining 24% is oil. Trilogy is one of the natural gas stocks we analyze in Stock Pickers Digest, our newsletter that recommends investments that may be appropriate for the part of your portfolio you devote to aggressive investing. In the three months ended June 30, 2011, Trilogy produced an average of 29,320 barrels of oil equivalent per day (including natural gas). That was up 21.7% from 24,087 barrels a day a year earlier. Trilogy’s daily production should jump to an average of 30,000 barrels for all of 2011....
GOODYEAR TIRE & RUBBER CO. $13.34 (New York symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 247.0 million; Market cap: $3.4 billion; No dividends paid) is the world’s largest tire maker. The company operates over 60 plants in 25 countries. In the three months ended June 30, 2011, the company’s sales rose 24.1%, to a record $5.6 billion from $4.5 billion a year earlier. North American sales climbed 17.7%. Sales rose 33.5% in Europe, the Middle East and Africa; 21.0% in Latin America; and 36.4% in the Asia-Pacific region. Before one-time items, the company earned $0.65 a share, compared with $0.12 a share a year earlier. The latest earnings were much higher than the consensus estimate of $0.27 a share. The record sales and a shift toward higher-priced items were the main reasons for the higher earnings. The company also cut its costs, including pension expenses....
CALIAN TECHNOLOGIES, $19.10, symbol CTY on Toronto, operates in two areas: the business and technology services division, which accounts for 74% of Calian’s revenue, provides engineers, health-care workers and other professionals to clients on a contract basis. The systems-engineering division contributes the remaining 26% of revenue, and sells hardware and software that is used for testing, operating and managing satellite and other communication systems. In the three months ended June 30, 2011, Calian’s revenue rose 1.7%, to $58.5 million from $57.6 million a year earlier. However, earnings fell 10.2%, to $3.5 million or $0.45 a share, from $3.8 million or $0.49 a share. This was mostly due to a slowdown in government contracts during the spring federal election campaign, and the higher Canadian dollar....
Slowing economic growth and concerns about high U.S. and European debt continue to dampen prices for commodities, like oil, coal and copper. However, rising demand from fast-growing regions, such as Asia and Latin America, should help support resource prices over the long term. The best way to protect the Resources part of your portfolio from volatile commodity prices is with high-quality companies, such as these three. They also trade at attractive multiples to earnings and cash flow. CENOVUS ENERGY INC. $37 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 754.1 million; Market cap: $27.9 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.6%; TSINetwork Rating: Extra Risk; www.cenovus.com) operates three oil-sands properties in Alberta and one in Saskatchewan. Cenovus ships the heavy bitumen from these projects to refineries in Illinois and Texas. ConocoPhillips (New York symbol COP) owns 50% of these refineries, as well as 50% of Cenovus’ two main oil-sands projects. Cenovus also owns conventional oil and natural gas properties....