oil prices
PLEASE NOTE: Our next Hotline will go out on Thursday, April 5, 2012. AASTRA TECHNOLOGIES, $21.50, symbol AAH on Toronto, is buying back up to $50 million worth of its 14.0 million outstanding common shares through a Dutch auction process. Aastra develops and markets products and systems for accessing communication networks, including the Internet. Its technology is centred around business telephone systems, and includes products that integrate land lines and mobile phones....
ARC RESOURCES $25.55 (Toronto symbol ARX; Shares outstanding: 288.5 million; Market cap: $7.4 billion; TSINetwork Rating: Speculative; Dividend yield: 4.7%; www.arcresources.com) produces oil and natural gas in western Canada. Its average daily production of 892,021 barrels of oil equivalent is weighted 64% to gas and 36% to oil.
In the three months ended December 31, 2011, ARC’s cash flow per share rose 25.4%, to $0.79 from $0.63. That’s because the company raised its production by 8.7%. It also benefited from higher oil prices.
ARC has $2.4 billion of tax pools that are letting it offset taxes and maintain its 4.7% yield. The company’s long-term debt is $721.2 million, or a low 9.7% of its market cap. The shares trade at 8.5 times ARC’s forecast 2012 cash flow of $2.98 a share.
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In the three months ended December 31, 2011, ARC’s cash flow per share rose 25.4%, to $0.79 from $0.63. That’s because the company raised its production by 8.7%. It also benefited from higher oil prices.
ARC has $2.4 billion of tax pools that are letting it offset taxes and maintain its 4.7% yield. The company’s long-term debt is $721.2 million, or a low 9.7% of its market cap. The shares trade at 8.5 times ARC’s forecast 2012 cash flow of $2.98 a share.
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ENERPLUS CORP. $23.94 (Toronto symbol ERF; Shares outstanding: 181.2 million; Market cap: $4.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 9.0%) produces an average of 77,221 barrels of oil equivalent per day (weighted 55% to natural gas and 45% to oil). Its properties are mainly in Alberta, Saskatchewan, B.C., North Dakota and Montana, as well as the Marcellus Shale, which passes through Pennsylvania, New York, Ohio and West Virginia.
In the three months ended December 31, 2011, Enerplus’ cash flow per share fell 5.4%, to $0.87 from $0.92. That’s mainly due to lower gas prices, which offset gains from higher oil prices.
In 2011, the company sold 91,000 of its 201,000 acres of natural gas properties in the Marcellus Shale for $568 million U.S. It used the funds to continue rapidly expanding its exploration drilling.
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In the three months ended December 31, 2011, Enerplus’ cash flow per share fell 5.4%, to $0.87 from $0.92. That’s mainly due to lower gas prices, which offset gains from higher oil prices.
In 2011, the company sold 91,000 of its 201,000 acres of natural gas properties in the Marcellus Shale for $568 million U.S. It used the funds to continue rapidly expanding its exploration drilling.
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WAL-MART STORES INC. $61 (New York symbol WMT; Conservative Growth Portfolio: Consumer sector; Shares outstanding: 3.4 billion; Market cap: $207.4 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www.walmart.com) is launching a new service that will let its customers upload their DVD and Blu-ray movies to its computer servers. That will let them download their movies from anywhere, and watch them on any device. Demand for this new service could be strong, particularly as more people use tablet computers and smartphones to watch videos online. It will also help draw more customers to Wal-Mart’s VUDU website, which lets users purchase and download movies. Wal-Mart is a buy....
SHERWIN-WILLIAMS CO. $107 (New York symbol SHW; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 103.8 million; Market cap: $11.1 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.5%; TSINetwork Rating: Above Average; www.sherwin.com) is North America’s largest paint producer. It also operates 3,450 paint stores, which account for 55% of its sales.
The company earned $441.9 million in 2011, down 4.5% from $462.5 million in 2010. Earnings per share fell 1.7%, to $4.14 from $4.21, on fewer shares outstanding. If you exclude unusual items, such as costs to settle an income tax dispute, earnings per share would have risen 9.9%, to $4.87 from $4.43. Sales rose 12.7%, to $8.8 billion from $7.8 billion.
The stock has gained over 30% in the past year, and now trades at 18.7 times Sherwin’s projected 2012 earnings of $5.72 a share. That’s a high p/e ratio for a company that is so closely tied to the U.S. housing market. Rising oil prices could also squeeze Sherwin’s profit margins (the company uses oil to make its paint).
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The company earned $441.9 million in 2011, down 4.5% from $462.5 million in 2010. Earnings per share fell 1.7%, to $4.14 from $4.21, on fewer shares outstanding. If you exclude unusual items, such as costs to settle an income tax dispute, earnings per share would have risen 9.9%, to $4.87 from $4.43. Sales rose 12.7%, to $8.8 billion from $7.8 billion.
The stock has gained over 30% in the past year, and now trades at 18.7 times Sherwin’s projected 2012 earnings of $5.72 a share. That’s a high p/e ratio for a company that is so closely tied to the U.S. housing market. Rising oil prices could also squeeze Sherwin’s profit margins (the company uses oil to make its paint).
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BCE INC. $39.64, Toronto symbol BCE, is buying Astral Media Inc. (Toronto symbols ACM.A and ACM.B). Montreal-based Astral owns 22 TV stations, 84 radio stations and several pay TV and specialty channels, such as The Movie Network, Family Channel and Teletoon. It also owns billboards and sells other outdoor advertising services in Quebec, Ontario and B.C. The purchase price is $3.4 billion, including $380 million of Astral’s debt. BCE will pay roughly 75% of this cost in cash and 25% in common shares. To put this purchase in context, BCE earned $2.4 billion, or $3.13 a share, in 2011....
ZARGON OIL & GAS $14.04 (Toronto symbol ZAR; TSINetwork Rating: Speculative) (403-264-9992; www.zargon.ca; Shares outstanding: 29.4 million; Market cap: $412.8 million; Dividend yield: 8.6%) produces natural gas and oil in Alberta, Manitoba, Saskatchewan and North Dakota. The company’s production is 61% oil and 39% natural gas. In the three months ended December 31, 2011, Zargon produced 9,278 barrels of oil equivalent per day. That’s down slightly from 9.317 barrels a year earlier. However, that was mainly because the company sold some less important properties. Higher oil prices pushed up Zargon’s cash flow per share by 7.4%, to $0.58 from $0.54 a year earlier. The company continues to successfully drill horizontal wells in the Alberta Plains North area. Horizontal drilling involves drilling development wells sideways or at an angle to reach isolated pockets of gas or to follow a reservoir spread out in a narrow layer. This method works well in places where conventional drilling is impossible or too expensive....
ZARGON OIL & GAS $14.04 (Toronto symbol ZAR; TSINetwork Rating: Speculative) (403-264-9992; www.zargon.ca; Shares outstanding: 29.4 million; Market cap: $412.8 million; Dividend yield: 8.6%) produces natural gas and oil in Alberta, Manitoba, Saskatchewan and North Dakota. The company’s production is 61% oil and 39% natural gas.
In the three months ended December 31, 2011, Zargon produced 9,278 barrels of oil equivalent per day. That’s down slightly from 9.317 barrels a year earlier. However, that was mainly because the company sold some less important properties. Higher oil prices pushed up Zargon’s cash flow per share by 7.4%, to $0.58 from $0.54 a year earlier.
The company continues to successfully drill horizontal wells in the Alberta Plains North area. Horizontal drilling involves drilling development wells sideways or at an angle to reach isolated pockets of gas or to follow a reservoir spread out in a narrow layer. This method works well in places where conventional drilling is impossible or too expensive.
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In the three months ended December 31, 2011, Zargon produced 9,278 barrels of oil equivalent per day. That’s down slightly from 9.317 barrels a year earlier. However, that was mainly because the company sold some less important properties. Higher oil prices pushed up Zargon’s cash flow per share by 7.4%, to $0.58 from $0.54 a year earlier.
The company continues to successfully drill horizontal wells in the Alberta Plains North area. Horizontal drilling involves drilling development wells sideways or at an angle to reach isolated pockets of gas or to follow a reservoir spread out in a narrow layer. This method works well in places where conventional drilling is impossible or too expensive.
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ENERPLUS CORP. $23.94 (Toronto symbol ERF; Shares outstanding: 181.2 million; Market cap: $4.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 9.0%) produces an average of 77,221 barrels of oil equivalent per day (weighted 55% to natural gas and 45% to oil). Its properties are mainly in Alberta, Saskatchewan, B.C., North Dakota and Montana, as well as the Marcellus Shale, which passes through Pennsylvania, New York, Ohio and West Virginia. In the three months ended December 31, 2011, Enerplus’ cash flow per share fell 5.4%, to $0.87 from $0.92. That’s mainly due to lower gas prices, which offset gains from higher oil prices. In 2011, the company sold 91,000 of its 201,000 acres of natural gas properties in the Marcellus Shale for $568 million U.S. It used the funds to continue rapidly expanding its exploration drilling....
IMPERIAL OIL LTD. $48 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $40.7 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.0%; TSINetwork Rating: Average; www.imperialoil.ca) is Canada’s third-largest publicly traded oil company, after Suncor and Canadian Natural Resources Ltd. Imperial is a 69.6%-owned subsidiary of U.S.-based ExxonMobil Corp. (New York symbol XOM).
Higher oil prices pushed up Imperial’s earnings by 52.5% in 2011, to $3.4 billion, or $3.95 a share. In 2010, it earned $2.2 billion, or $2.59 a share. Revenue rose 22.4%, to $30.7 billion from $25.1 billion. Cash flow per share rose 33.0%, to $4.70 from $3.53.
Imperial gets most of its oil from its Cold Lake oil sands project in Alberta. In 2011, Cold Lake’s daily production rose 11.1%, to a record 160,000 barrels from 144,000 barrels in 2010. That offset lower production of conventional oil and natural gas.
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Higher oil prices pushed up Imperial’s earnings by 52.5% in 2011, to $3.4 billion, or $3.95 a share. In 2010, it earned $2.2 billion, or $2.59 a share. Revenue rose 22.4%, to $30.7 billion from $25.1 billion. Cash flow per share rose 33.0%, to $4.70 from $3.53.
Imperial gets most of its oil from its Cold Lake oil sands project in Alberta. In 2011, Cold Lake’s daily production rose 11.1%, to a record 160,000 barrels from 144,000 barrels in 2010. That offset lower production of conventional oil and natural gas.
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