oil prices
Bronco Energy, $0.56, symbol BCF on Toronto (Shares outstanding: 38.2 million; Market cap: $21.4 million), is a Calgary-based junior heavy oil company. It mainly develops, produces, buys and explores for oil in the Alberta oil sands. Bronco first sold shares to the public at $0.75 each, and began trading on Toronto in October 2005. Bronco’s main focus is its 55,000-acre Upper Wabiskaw conventional heavy-oil project in the Athabasca Oil Sands region. The project is a joint venture with the Bigstone Cree Nation, and is located on the Bigstone reserve lands in northeastern Alberta....
Low oil and natural gas prices have prompted Pengrowth to lower production and cut its distributions. However, these moves put the trust in a strong position to quickly increase cash flow and distributions when prices rebound. As well, Pengrowth’s reasonable debt should let it take advantage of depressed energy prices by making acquisitions, probably at bargain prices. Pengrowth has been around since 1988, and is now one of the largest energy trusts in North America. It survived years of low oil prices in the 1990s, and should withstand this recent drop. As well, its high-quality reserves should last well over 10 years. PENGROWTH ENERGY TRUST $7.13 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 256.1 million; Market cap: $1.8 billion; Price-to-sales ratio: 1.0; SI Rating: Average) is one of North America’s largest energy royalty trusts. It owns all or part of several oil and natural-gas properties in Alberta, British Columbia and Saskatchewan....
PENGROWTH ENERGY TRUST $7.13 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 256.1 million; Market cap: $1.8 billion; Price-to-sales ratio: 1.0; SI Rating: Average) is one of North America’s largest energy royalty trusts. It owns all or part of several oil and natural-gas properties in Alberta, British Columbia and Saskatchewan. Properties that Pengrowth operates account for 63% of its production. The remaining 37% comes from minority investments in other energy projects, including an 8.4% interest in the Sable Offshore Energy Project south of Nova Scotia. Natural gas provides 60% of Pengrowth’s production. Oil supplies the remaining 40%. Pengrowth prefers to focus on proven properties with sizeable reserves and predictable production rates. It has interests in six of western Canada’s top nine oil-producing areas....
IMPERIAL OIL $46.70 (Toronto symbol IMO; Shares outstanding: 856.8 million; Market cap: $40 billion; SI Rating: Average) rose recently, partly in response to Suncor Energy’s takeover bid for Petro-Canada. Low oil prices could prompt ExxonMobil Corp. (New York symbol XOM), which owns about 70% of Imperial’s shares, to buy the 30% it doesn’t already own. Imperial’s reserves should last 25 years. It also runs four refineries, which convert crude oil into gasoline and other fuels. This gives Imperial’s operations some diversity, which will help shield the company from low oil prices....
PETRO-CANADA, $34.68, Toronto symbol PCA, jumped 17% this week after it accepted a friendly takeover offer from Suncor Energy Inc. ($29.36, Toronto symbol SU). (Suncor is not related to Philadelphia-based refiner Sunoco Inc., New York symbol SUN.) Under the terms of the deal, Petro-Canada shareholders will get 1.28 common shares of Suncor for each share they own, while Suncor investors will get one share of the new company for each Suncor share they own. Suncor shareholders will own 60% of the combined company, which will be Canada’s largest oil company in terms of market cap. Petro-Canada shareholders will own the remaining 40%. The combined company will operate under the Suncor name. However, the new company will keep using the Petro-Canada banner for its retail gas stations (Petro-Canada has 1,300 stations, while Suncor has roughly 300 that operate under the “Sunoco” banner). It will have proven oil reserves of 3.1 billion barrels, compared to 2.3 billion barrels for Imperial Oil (see below)....
SONY CORP. ADRs $22 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1 billion; Market cap: $22 billion; Price-to-sales ratio: 0.3; WSSF Rating: Above Average) has struck a new alliance with Internet search engine Google. Sony hopes the new arrangement will spur sales of its Sony Reader electronic book device. Over the past few years, Google has converted several million books into electronic form. Under this new deal, users of the Sony Reader can download titles from Google for free, but only books whose copyrights have expired. Still, that’s over 500,000 titles. This deal should help Sony’s device compete with the popular Kindle book reader from online bookseller Amazon.com. Sony is a buy. FAIR ISAAC CORP. $14 (New York symbol FIC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 48.8 million; Market cap: $683.2 million; Price-to-sales ratio: 0.9; WSSF Rating: Average) is changing its corporate identity to FICO. (FICO is an acronym for Fair Isaac Corp.) Fair Isaac is still the company’s legal name, but it will now be known as FICO. Its ticker symbol is unchanged....
NEWELL RUBBERMAID INC., $6.91, New York symbol NWL, has cut its quarterly dividend by 52.4%, to $0.05 a share from $0.105. The new annual rate of $0.20 yields 2.9%. Newell makes plastic storage bins, tools, window blinds, pens and a number of other household items. Aside from Rubbermaid, Newell’s brands include Sharpie, Paper Mate, Waterman and Levolor. The recession is prompting Newell’s customers to switch to cheaper, generic versions of the company’s products. The lower dividend should save Newell about $61 million a year. (In 2008, Newell earned $338.7 million, or $1.22 a share before unusual items.) The company needs the cash to repay $750 million in debt that comes due during the second half of this year. If you include long-term borrowings, Newell’s total debt was $2.9 billion at the end of 2008....
IMPERIAL OIL LTD. $42 (Toronto symbol IMO; Conservative Growth Portfolio, Resources sector; Shares outstanding: 859.4 million; Market cap: $36.1 billion; Price-to-sales ratio: 1.2; SI Rating: Average) had proven oil reserves of roughly 2.3 billion barrels at the end of 2008. This is a 50% increase over 2007. Imperial’s new Kearl Lake oil-sands project, which added 800,000 barrels to the total, is the main reason for the rise. Kearl Lake should begin operating in 2012. At its current production rates, Imperial’s reserves should last 25 years. This cuts its risk. Another hidden asset is Imperial’s refinery operations, which accounted for 23% of its 2008 earnings. They need oil to make gasoline, so they profit from cheap oil prices. Imperial Oil is a buy.
UNITED TECHNOLOGIES CORP., $40.57, New York symbol UTX, plans to cut 5% of its workforce because of slowing demand for its Pratt & Whitney jet engines and Hamilton Sundstrand aerospace equipment. United Technologies sells its products and services in the construction and aerospace industries. Along with Pratt & Whitney and Hamilton Sundstrand, it sells Carrier heating and air conditioning units and Otis elevators, among other products. Weakness in the construction industry has hurt sales at Carrier and Otis. United Technologies’ management believes the company’s 2009 revenue will fall about $2.7 billion (or 5%) short of its original forecast of $57 billion....
BCE $24.79 (Toronto symbol BCE; Shares outstanding: 791.6 million; Market cap: $19.6 billion; SI Rating: Above Average) earned $1.8 billion in 2008, down 3.9% from $1.9 billion in 2007. Earnings per share fell 3.8%, to $2.25 from $2.34 on more shares outstanding. Revenue fell 0.3%, to $17.7 billion from $17.75 billion. These figures exclude restructuring charges, mainly job cuts, and other one-time items. BCE’s restructuring should cut its annual expenses by $400 million. BCE continues to lose traditional phone customers to cable companies and Internet-based phone services, but these losses are slowing. Meanwhile, BCE’s cellphone business is growing strongly; revenue rose 7.6% in 2008, and its subscriber base grew by 4.5%. The wireless division accounts for 25% of BCE’s revenue and 43% of its profit. Higher demand for BCE’s high-speed Internet and satellite-TV services helped offset lower revenue from its traditional phone services. Despite the lower earnings, BCE raised its quarterly dividend by 5.5%, to $0.385 a share from $0.365. The new annual rate of $1.54 yields 6.2%....