oil prices

CENOVUS ENERGY $18.66 (Toronto symbol CVE; Shares outstanding: 828.5 million; Market cap: $15.9 billion; TSINetwork Rating: Average; Dividend yield: 5.7%; www.cenovus.com) gets 35% of its revenue from its oil sands projects and conventional oil and gas wells in Western Canada.

Refining supplies the remaining 65% of Cenovus’s revenue. The company ships oil to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these operations.

Cenovus has now agreed to sell its royalty lands to the Ontario Teachers’ Pension Plan for $3.3 billion. The company collects royalties from firms that drill for oil and gas on these properties, which total 4.8 million acres in Alberta, Saskatchewan and Manitoba.

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BANK OF NOVA SCOTIA, $64.37, Toronto symbol BNS, is paying an undisclosed sum to Citigroup (New York symbol C) for its retail-banking operations in Panama and Costa Rica, including 27 branches. The bank expects to close the deal in the next few months. The move will nearly triple its customer base in these two countries, from 137,000 to 387,000. It will also make Bank of Nova Scotia the second-largest credit card provider in both nations, with 18% of the market in Panama and 15% in Costa Rica. The bank entered Panama in 1974 and Costa Rica in 1995. This long history cuts the risk of expanding in these countries....

BOMBARDIER INC. (Toronto symbols BBD.A $1.99 and BBD.B $1.90; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $3.3 billion; Price-to-sales ratio: 0.2; Dividend suspended in February 2015; TSINetwork Rating: Extra Risk; www.bombardier.com) is down 52% since the start of 2015, mainly due to rising costs and delays to develop its new CSeries passenger jet. In addition, lower oil prices have diminished the main appeal of this plane—that it’s 20% more fuel-efficient than comparable models. What’s more, Bombardier’s new management team is reviewing its Global business jet program, which could postpone the planned launch of new models in 2016 and 2017. Bombardier recently raised $3.1 billion U.S. by selling new shares and notes. It also plans to sell shares in its transportation division, which makes passenger railcars. These moves should give it enough resources to finish the CSeries. Bombardier expects to begin delivering this new aircraft in 2016....

We continue to like two energy service stocks whose efficient technology helps them profit in spite of current oil prices.

CENOVUS ENERGY $18.66 (Toronto symbol CVE; Shares outstanding: 828.5 million; Market cap: $15.9 billion; TSINetwork Rating: Average; Dividend yield: 5.7%; www.cenovus.com) gets 35% of its revenue from its oil sands projects and conventional oil and gas wells in Western Canada. Refining supplies the remaining 65% of Cenovus’s revenue. The company ships oil to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these operations. Cenovus has now agreed to sell its royalty lands to the Ontario Teachers’ Pension Plan for $3.3 billion. The company collects royalties from firms that drill for oil and gas on these properties, which total 4.8 million acres in Alberta, Saskatchewan and Manitoba....

ARC RESOURCES $21.14 (Toronto symbol ARX; Shares outstanding: 340.0 million; Market cap: $7.4 billion; TSINetwork Rating: Speculative; Dividend yield: 5.7%; www.arcresources.com) produces oil and natural gas in Western Canada. Its average daily output of 120,354 barrels of oil equivalent is 64% gas and 36% oil. In the quarter ended March 31, 2015, ARC’s cash flow per share fell 38.7%, to $0.57 from $0.93 a year earlier. Production gained 13.9%, but its realized oil price fell 49.0% and its gas price declined 45.5%. Like many oil and gas producers, ARC is cutting back on exploration and development spending. This year, it will devote $550.0 million to this purpose, down sharply from $945.5 million in 2014....

Meta Description: Thanks to a key European acquisition and new fleet of planes, FedEx maintains its position as one of our best stocks to buy in the U.S.

CENOVUS ENERGY INC., $19.44, Toronto symbol CVE, has agreed to sell its royalty lands to the Ontario Teachers’ Pension Plan. The company collects royalties from firms that drill for oil and gas on these properties, which total 4.8 million acres in Alberta, Saskatchewan and Manitoba. It also gets some of the oil these drillers recover: in the first quarter of 2015, these wells supplied 7,800 barrels a day, or 3.6% of the Cenovus’s daily oil production of 218,020 barrels. Cenovus will receive $3.3 billion when it completes the sale, probably before July 31, 2015. To put that in context, its market cap (or the value of all of its outstanding shares) is $16.1 billion....

RUSSEL METALS $21.58 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 61.7 million; Market cap: $1.3 billion; Dividend yield: 7.0%) is one of North America’s largest metal distributors, serving 39,000 clients at 53 locations in Canada and 12 in the U.S.

In the three months ended March 31, 2015, Russel’s revenue fell 2.2%, to $903.9 million from $924.0 million a year earlier. The company’s metal-services business saw its sales rise slightly, but the energyproducts division, which supplies pipes for oil and gas drillers, reported a 14% sales decline.

Earnings fell 36.2%, to $18.5 million, or $0.30 a share, from $29.0 million, or $0.47. Russel’s earnings fell faster than revenue because steel prices declined in the latest quarter. That cuts the company’s profit margins and causes it to suffer losses on its inventory.

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Our recommendation on a Canadian oil stock that has promising oil sands projects, but as yet no guarantee of success.