oil prices

PEYTO EXPLORATION & DEVELOPMENT CORP. $39.25 (Toronto symbol PEY; Shares outstanding: 153.7 million; Market cap: $6.1 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.1%; www.peyto.com) produces and explores for oil and natural gas in Alberta. Its average daily production of 72,209 barrels of oil equivalent is 90% gas and 10% oil.

In the quarter ended March 31, 2014, Peyto’s cash flow rose 53.6%, to $1.06 a share from $0.69 a year earlier. That’s because the company raised its production by 30.4%. Gas prices also gained 27.5%, to an average of $4.45 per thousand cubic feet from $3.49, while oil prices rose 6.1%, to $80.49 a barrel from $75.88.

Peyto plans to spend $625 million on exploration and development in 2014, which will let it drill 110 to 125 wells. To put that in context, the company spent $578 million to drill 99 wells in 2013.

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PEYTO EXPLORATION & DEVELOPMENT CORP. (Toronto symbol PEY; www.peyto.com) produces and explores for oil and natural gas in Alberta. Its average daily production of 72,209 barrels of oil equivalent is 90% gas and 10% oil. In the quarter ended March 31, 2014, Peyto’s cash flow rose 53.6%, to $1.06 a share from $0.69 a year earlier. That’s because the company raised its production by 30.4%. Gas prices also gained 27.5%, to an average of $4.45 per thousand cubic feet from $3.49, while oil prices rose 6.1%, to $80.49 a barrel from $75.88. Peyto plans to spend $625 million on exploration and development in 2014, which will let it drill 110 to 125 wells. To put that in context, the company spent $578 million to drill 99 wells in 2013....

PEYTO EXPLORATION & DEVELOPMENT CORP. $39.25 (Toronto symbol PEY; Shares outstanding: 153.7 million; Market cap: $6.1 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.1%; www.peyto.com) produces and explores for oil and natural gas in Alberta....

QUAKER CHEMICAL CORP. $75 (www.quakerchem.com) has increased its quarterly dividend by 20.0%, to $0.30 a share from $0.25. The new annual rate of $1.20 yields 1.6%. However, the company uses oil to make its industrial lubricants and other chemical products, and higher oil prices could slow its earnings growth. Hold. BUCKEYE PARTNERS L.P. $78 (www.buckeye.com) has raised its quarterly payout by 1.5%. The new annual rate of $4.40 yields 5.6%. Distributions accounted for a high 1.03 times of Buckeye’s cash flow, net of capital expenditures, in the latest quarter. Hold. T. ROWE PRICE GROUP INC. $81 (www.troweprice.com) continues to benefit from rising stock markets, which are spurring demand for its mutual funds. Assets under management rose 15.2%, to a record $711.4 billion as of March 31, 2014 from $617.4 billion a year earlier. The company’s fee income rises and falls with the value of the securities it manages, so its revenue and earnings also gain when the price of these assets rises. Earnings per share jumped 15.4% in the first quarter of 2014, to $1.05 from $0.91 a year earlier. Buy....

p>SUNCOR ENERGY INC. $43 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $64.5 billion; Price-to-sales ratio: 1.5; Dividend yield: 2.1%; TSINetwork Rating: Average; www.suncor.com) is Canada’s largest integrated oil company by market cap (or the value of all its outstanding shares). Suncor gets 40% of its revenue and 65% of its earnings from producing crude oil and natural gas. Its 7.7 billion barrels of proven and probable reserves should last 35 years, based on current production rates.

The oil sands account for 70% of the company’s output. It also operates offshore platforms in Atlantic Canada and the North Sea, as well as conventional wells in Libya. However, political unrest has shut down some of Libya’s ports, limiting Suncor’s crude exports from the country.

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ARC RESOURCES $32.52 (Toronto symbol ARX; Shares outstanding: 314.9 million; Market cap: $10.4 billion; TSINetwork Rating: Speculative; Dividend yield: 3.7%; www.arcresources.com) produces oil and natural gas in Western Canada. Its average daily output of 100,883 barrels of oil equivalent is weighted 59% to gas and 41% to oil.

In the three months ended December 31, 2013, ARC’s cash flow per share rose 11.8%, to $0.76 from $0.68 a year earlier. Production gained 5.4%, and the company’s realized gas price rose 8.7%. Oil prices increased 2.9%.

ARC’s long-term debt is $859.2 million, or a low 8.3% of its market cap. It trades at 9.7 times its forecast 2014 cash flow of $3.34 a share.

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Too much investor attention tends to be focused on economic forecasts. The fact is, forecasts provide little, if any, advantage when it comes to helpful stock market advice. Most experienced, successful investors feel skeptical, if not downright cynical, about economic forecasts, for three reasons....

Suncor’s shares rose from $35 after it merged with Petro-Canada in August 2009 to a peak of $46 in March 2011. After that, the stock fell and stayed between $30 and $35 for most of the past three years. That’s mainly due to setbacks at its Alberta oil sands operations, which pushed up its operating costs and forced it to write down some of its projects.

The company has now solved many of these problems, which should improve its future earnings and cash flow....

Natural gas prices are now at $4.72 U.S. per thousand cubic feet, up 159% from their low of $1.82 in April 2012. The best low-risk way to profit in natural gas is to invest in companies that are steadily increasing their production and cash flows. Here are two producers we cover in our newsletter on safety-conscious investing, Canadian Wealth Advisor. Note: ARC Resources has just released its first-quarter results and these will be reviewed in an upcoming issue of Canadian Wealth Advisor....

Natural gas prices are now at $4.72 U.S. per thousand cubic feet, up 159% from their low of $1.82 in April 2012.

The long-term outlook for gas remains positive, but prices could move sideways, or even downward, in the short term. The best way to profit with less risk is to invest in companies that are steadily increasing their production and cash flows.

Here are two producers with strong growth prospects and attractive dividend yields.

ARC RESOURCES $32.52 (Toronto symbol ARX; Shares outstanding: 314.9 million; Market cap: $10.4 billion; TSINetwork Rating: Speculative; Dividend yield: 3.7%; www.arcresources.com) produces oil and natural gas in Western Canada....