oil prices

Encana took its present form on December 1, 2009, after the old EnCana Corp. split itself into two new companies: the new Encana, which focuses on natural gas, and Cenovus Energy, which specializes in oil sands. Lower gas prices have pushed Encana’s shares down by about 36% since the split....

CRESCENT POINT ENERGY CORP. $36.81 (Toronto symbol CPG; Shares outstanding: 377.5 million; Market cap: $13.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 7.5%; www.crescentpointenergy.com) produces oil and natural gas in western Canada. Its production is weighted 90% toward oil and 10% to gas.

The company continues to focus on its Bakken light-oil development in southeastern Saskatchewan.

In the three months ended December 31, 2012, Crescent Point’s cash flow rose 12.7%, to $430.4 million from $381.9 million a year earlier.

The company raised its production by 33.0%, to 108,007 barrels of oil equivalent (including gas) from 81,210 a year earlier....

PRECISION DRILLING CORP. (Toronto symbol PD; www.precisiondrilling.com) sells contract drilling services to oil and gas producers, mainly in North America. It ended 2012 with 321 active rigs....

INTACT FINANCIAL CORP., $62.25, symbol IFC on Toronto, dropped about 4% this week on reports that Ontario’s minority Liberal party government may vote in support of an NDP motion calling for a 15% reduction in auto insurance premiums. The vote would be in exchange for NDP support on the next provincial budget, which would avoid triggering an election. The NDP points to premiums charged by insurers rising in 2011 even after the Ontario government introduced reforms in 2010 that lowered benefits for drivers and cut payouts on auto accident claims. Intact has enjoyed improved profits from its Ontario auto insurance business since the reforms were put in place, so it has some room to accommodate a rate reduction. And at the same time, the Liberals and NDP may work out a compromise, such as pushing insurers to lower premiums in exchange for the government doing more to combat fraud and clear a backlog of unresolved disputes between insurers and claimants....

When I step back from looking at the market’s day-to-day fluctuations, and instead try to figure out where stock prices might go in the next five or 10 years and beyond, I feel increasingly optimistic. For one thing, the stock market has generally been going sideways or making little progress for much of the past 10 or 15 years. You might say the market mainly stayed within a wide trading range in that time—up in some years, down in others. But starting from the low point of spring 2009, stock prices have generally gone up. They’ve risen in a jagged pattern, and the start of every downturn sparked a burst of pessimism. But after each downturn, the market eventually regained its footing. It then went on to a new, higher peak, above the level where the previous downturn began. These lengthy sideways phases have happened in the past. In the end, they always gave way to a new rise that carried prices far above the previous sideways movement. In my view, this latest sideways movement is likely to end the same way....

CENOVUS ENERGY INC. $32 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.8 million; Market cap: $24.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.0%; TSINetwork Rating: Average; www.cenovus.com) had to write down its natural gas properties in Alberta due to low gas prices. That’s why its earnings fell 30.5% in 2012, to $1.14 a share from $1.64 in 2011. However, cash flow per share rose 11.1%, to $4.80 from $4.32, as it expanded its oil sands production by 35%.

The company’s oil refineries and low production costs should keep pushing up its cash flow, even if oil prices fall. As a result, we’ve upgraded Cenovus’s TSINetwork Rating to “Average” from “Extra Risk.”

Cenovus is a buy.

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TRILOGY ENERGY CORP. $30.03 (Toronto symbol TET; TSINetwork Rating: Speculative) (403-290-2900; www.trilogy.com; Shares outstanding: 116.7 million; Market cap: $3.5 billion; Dividend yield: 1.4%) is up over 18% since it reported improved production and cash flow.

In the three months ended December 31, 2012, Trilogy produced an average of 35,014 barrels of oil equivalent per day (including natural gas)....

DOREL INDUSTRIES, $39.80, symbol DII.B on Toronto, moved up over 8% this week after it reported improved results in the latest quarter. The company makes a wide range of products, including ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; and recreational products, mainly bicycles. In the three months ended December 30, 2012, Dorel’s sales rose 10.9%, to $622.6 million from $561.6 million a year earlier (all figures except share price and market cap in U.S. dollars)....

CENOVUS ENERGY INC. $32 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.8 million; Market cap: $24.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.0%; TSINetwork Rating: Average; www.cenovus.com) had to write down its natural gas properties in Alberta due to low gas prices....

TRILOGY ENERGY CORP. $30.03 (Toronto symbol TET; TSINetwork Rating: Speculative) (403-290-2900; www.trilogy.com; Shares outstanding: 116.7 million; Market cap: $3.5 billion; Dividend yield: 1.4%) is up over 18% since it reported improved production and cash flow.

In the three months ended December 31, 2012, Trilogy produced an average of 35,014 barrels of oil equivalent per day (including natural gas). That was up 23.8% from 28,288 barrels a day a year earlier. Trilogy’s daily production should rise to an average of 41,000 barrels for all of 2013.

Cash flow per share rose 31.4%, to $0.67 from $0.51 a year earlier, due to the increased production and higher oil prices.
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