oil prices

BONAVISTA ENERGY $8.02 (Toronto symbol BNP; Shares outstanding: 203.8 million; Market cap: $1.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.2%; www.bonavistaenergy.com) explores for oil and natural gas in Alberta, Saskatchewan and British Columbia. Its production is 70% gas and 30% oil. In the three months ended December 31, 2014, Bonavista’s cash flow per share rose 1.6%, to $0.63 from $0.62 a year earlier. The company’s output gained 14.3%, to 85,810 barrels of oil equivalent a day from 75,072. However, lower oil prices mostly offset the production increase and higher realized gas prices....

The Bank of Canada cut its key interest rate to 0.75% from 1.0% in January 2015. The move came after the country’s inflation rate dropped to 1.5%—below the bank’s 2.0% target—reflecting falling oil prices and slowing growth. Inflation has since dropped even further, to 1.2%. Even so, the long-term outlook is for higher interest rates. That’s because heavy deficit spending and the expansion of the money supply in the past few years make higher inflation more likely. We continue to advise against investing in bonds right now. That’s because today’s low interest rates make bonds unattractive, and rising rates would push down their future value....

The most exciting news I heard this past week was Google’s announcement of the launch of its Google Fi project. Google Fi will offer cellphone/smartphone service that uses Wi-Fi networks whenever possible, chosen from a huge list of Wi-Fi hotspots around the U.S. When Wi-Fi is unavailable, it will switch users to one of two existing cell networks (T-Mobile or Sprint—whichever is stronger at the customer’s location). The company plans to add additional cell network alternatives as they become available. The service will initially cost $20 a month, plus $10 for each GB of data. That’s much cheaper than most cellphone plans. Moreover, the service will refund the pro-rata cost of unused data each month, which is unheard of in the cell industry. To top it off, Google Fi will offer service in more than 120 countries, at a far lower cost than you can get by using a U.S.-based cellphone. More important, it will be vastly more convenient for travelers than any current alternative....

Parkland Fuel Corp., $26.35, symbol PKI on Toronto (Shares outstanding: 82.6 million; Market cap: $2.2 billion, www.parkland.ca), operates gas stations, convenience stores and a fuel-distribution business, mostly in Western Canada and Ontario. It was called Parkland Income Fund before it converted to a dividend-paying corporation on December 31, 2010. The company owns 143 rural gas stations and convenience stores. Its brands include Fas Gas Plus, Race Trac Gas and Short Stop. Many of Parkland’s stations sell propane in addition to gasoline and diesel fuel. Parkland also operates Esso stations in Western Canada and Ontario under a licensing deal with Imperial Oil (symbol IMO on Toronto). In addition, it has an agreement to use the Chevron brand in B.C....

CENOVUS ENERGY INC. $22 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 824.5 million; Market cap: $18.1 billion; Price-to-sales ratio: 1.1; Dividend yield: 4.8%; TSINetwork Rating: Average) 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 its oil to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these operations. These refineries help cut Cenovus’s exposure to falling oil prices, as cheaper crude cuts their operating costs.

Cenovus continues to expand its 50%-owned Christina Lake and Foster Creek oil sands operations; ConocoPhilips (New York symbol COP) owns the remaining 50%.

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Oaktree Capital Group LLC, $52.03, symbol OAK on New York (Shares outstanding: 43.8 million; Market cap: $8.1 billion; www.oaktreecapital.com), is an investment management firm that focuses on alternative markets, including the debt of distressed companies and high-yield debt, as well as convertible securities, real estate and stocks. The Los Angeles-based firm was founded in 1995. Its chairman and co-founder is prominent investor and billionaire Howard Marks. As of December 31, 2014, Oaktree had $90.9 billion of assets under management. It’s now looking at aggressively investing in depressed energy assets. Oaktree put $400 million into these assets in the fourth quarter of 2014 and still has roughly $10.3 billion of capital waiting to be invested....

Basic Energy Services Inc., $7.94, symbol BAS on New York (Shares outstanding: 41.8 million; Market cap: $351.1 million; www.basicenergyservices.com), provides drilling and well services to over 2,000 oil and natural gas exploration firms. Most of Basic Energy’s clients operate in shale oil areas, including the Permian and Eagle Ford (Texas), Bakken (North Dakota), Haynesville (Louisiana) and Marcellus (Pennsylvania). The company has four divisions:...

CRESCENT POINT ENERGY CORP. $28.24 (Toronto symbol CPG; Shares outstanding: 443.4 million; Market cap: $12.8 billion; TSINetwork Rating: Extra Risk; Dividend yield: 9.8%; www.crescentpointenergy.com) produces oil and natural gas in Western Canada, with a focus on its Bakken light oil development in southeastern Saskatchewan. Its output is 92% oil and 8% gas.

In the three months ended December 31, 2014, Crescent Point’s cash flow rose 7.4%, to $572.9 million from $533.3 million a year earlier. The company raised its daily output by 20.5%, which offset lower oil prices and increased its cash flow.

Cash flow per share fell 5.2%, to $1.28 from $1.35, because the company issued shares to pay for acquisitions, including $378.0 million for oil properties from Lightstream Resources in September 2015.

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CAMECO CORP., $19.70, symbol CCO on Toronto, rose almost 8% this week after Canada and India signed a uranium-supply agreement that will see the company sell 7.1 million pounds of uranium concentrate to India over the next five years. The concentrate is worth around $350 million at today’s uranium price. The deal is the final step in a nuclear co-operation agreement that took effect in September 2013. Canada had previously banned uranium exports to India after the country used Canadian reactor technology to build a nuclear bomb. The agreement is small compared to Cameco’s annual sales of 31 million to 33 million pounds of concentrate. However, it will likely grow over the next couple of decades as India uses more nuclear power....

BIRCHCLIFF ENERGY $7.73 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Shares outstanding: 152.3 million; Market cap: $1.1 billion; No dividends paid) develops, produces and explores for oil and gas, mainly in the Peace River Arch area near the Alberta/B.C. border. About 85% of its output is gas. The remaining 15% is oil. In the three months ended December 31, 2014, Birchcliff’s cash flow per share rose 17.1%, to $0.41 from $0.35 a year earlier. The company raised its daily output by 32.8%, offsetting lower oil prices and boosting its cash flow. Like many oil and gas producers, Birchcliff plans to cut back on exploration and development spending. This year, it will devote $266.7 million to this purpose, down from $450.0 million in 2014....