oil prices

IMPERIAL OIL LTD. $44 (Toronto symbol IMO; Conservative Growth Portfolio; Resources sector; Shares outstanding: 847.6 million; Market cap: $37.3 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.1%; TSINetwork Rating: Average; www.imperialoil.ca) now estimates that the first phase of its 71%-owned Kearl oil sands project will cost $12.9 billion. That’s up 18.3% from its earlier forecast of $10.9 billion. Exxon Mobil Corp. (New York symbol XOM) owns the remaining 29% of Kearl. Exxon also owns 69.6% of Imperial.

Shipping delays and unusually cold winter weather have slowed Kearl’s development and boosted its costs. Imperial now aims to start production by the end of March 2013.

Kearl’s first phase will produce 110,000 barrels a day (Imperial’s share is 78,100 barrels) by the end of 2013. Kearl’s second phase, which will cost $8.9 billion, will add a further 78,100 barrels to Imperial’s daily production by late 2015. To put these figures in context, the company produced an average of 282,000 barrels of oil equivalent a day in 2012.

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TECK RESOURCES LTD., $33.11, Toronto symbol TCK.B, reported better-than-expected earnings for 2012. However, concerns over lower prices for coal, copper and other commodities caused the stock to fall 10% this week. In 2012, Teck’s earnings fell 38.5%, to $1.5 billion, or $2.60 a share. These figures exclude unusual items, such as gains on asset sales. On that basis, the latest earnings beat the consensus estimate of $2.48 a share. In 2011, Teck earned a record $2.5 billion, or $4.18 a share. Revenue fell 10.2%, to $10.3 billion from $11.5 billion. The company met its production targets for all of its key commodities. However, the slow global economy hurt prices for its coal (down 24.9%), lead (down 13.8%), molybdenum (down 13.3%), silver (down 11.4%), zinc (down 11.1%), and copper (down 9.8%)....

IMPERIAL OIL LTD. $44 (Toronto symbol IMO; Conservative Growth Portfolio; Resources sector; Shares outstanding: 847.6 million; Market cap: $37.3 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.1%; TSINetwork Rating: Average; www.imperialoil.ca) now estimates that the first phase of its 71%-owned Kearl oil sands project will cost $12.9 billion....

BlackPearl Resources, $3.07, symbol PXX on Toronto (Shares outstanding: 295.8 million; Market cap: $908.1 million; www.blackpearlresources.ca), produces and explores for oil, mainly in Alberta and Saskatchewan. The company now operates heavy oil properties, but it aims to expand into the oil sands. BlackPearl’s main properties are Onion Lake, Mooney and Blackrod. Blackrod is a planned steam-assisted gravity drainage (SAGD) oil sands development in northern Alberta’s Athabasca oil sands region. Extracting the tar-like bitumen from oil sands is much more expensive than conventional oil wells. However, new technologies, such as SAGD, are lowering costs in the industry. SAGD systems inject steam into the ground to melt the bitumen. This makes it easier to pump to the surface. BlackPearl believes the Blackrod property has the potential for an 80,000-barrel-per-day SAGD development....

TECK RESOURCES LTD. $37 (Toronto symbol TCK.B;Conservative Growth Portfolio, Resources sector; Shares outstanding: 586.0 million; Market cap: $21.7 billion; Price-to sales ratio: 2.0; Dividend yield: 2.4%; TSI Network Rating: Average; www.teck.com) is a leading producer of metallurgical coal, a key ingredient in steel making. Its six coal mines (five inB.C. and one in Alberta) should last from six to 75 years.

Asian customers buy 60% of the company’s coal. In 2011,coal accounted for 49% of Teck’s revenue and 57% of its earnings.

Teck also produces copper (27%, 28%), which its clients in Asia and Europe use to make electrical wire, auto parts and components for electronic devices. As well, Teck is a major supplier of zinc (24%, 15%), which prevents rusting when added to steel.

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A month ago, we examined one of the energy stocks we cover in our newsletter for aggressive investing, Stock Pickers Digest. Zargon Oil and Gas (Toronto symbol ZAR) has trimmed its commitment to natural gas due to the slump in prices (view the article here). Today, in the wake of a recent rally in oil prices, we look at the prospects for a tech stock that serves the oil and gas drilling industry.
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We’ve chosen Teck Resources as our “Stock of the Year” for2013.

Resource companies are highly cyclical. Teck fell to just $3.35in March 2009 as the credit crisis hurt its ability to refinance the$9.8 billion U.S. in short-term loans it took on the year before as part of its $13.6-billion (Canadian) purchase of Fording Coal....

Suncor and Imperial Oil continue to expand their oil-sands operations. These projects are expensive to build and operate. A lack of pipeline capacity to handle the extra output could also put pressure on oil prices. However, lower prices would also boost profits at their refining operations.

SUNCOR ENERGY INC....

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 (Toronto symbol CVE), which specializes in oil sands.

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In next week’s Successful Investor Hotline, we’ll reveal our #1 stock pick for 2013. Don’t miss this unique opportunity to profit. ENCANA CORP., $20.16, Toronto symbol ECA, is selling its 30% stake in a proposed liquefied natural gas (LNG) terminal in Kitimat, B.C., to Chevron Corp. (New York symbol CVX). The deal includes Encana’s stake in related pipelines and gas properties in B.C. However, Encana will still ship its gas through Kitimat when the terminal is completed. Chevron is also buying a further 30% of this project from EOG Resources Canada Inc. Following these deals, Chevron will sell 10% to Apache Corp. (New York symbol APA). As a result, Chevron and Apache will each own 50%. (Chevron and Apache are recommendations of Wall Street Stock Forecaster, our newsletter that focuses on U.S. stocks.)...