oil prices

SUNCOR ENERGY INC. $35 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.6 billion; Market cap: $56.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.3%; TSINetwork Rating: Average; www.suncor.com) became Canada’s largest integrated oil company in 2009, when it merged with Petro-Canada. It gets 60% of its production from its oil sands projects in Alberta; the remaining 40% is conventional oil and natural gas. Suncor also operates four refineries and 1,500 gas stations under the Petro-Canada banner.

Thanks to a 27.5% jump in its average realized oil price, Suncor’s earnings rose 12.4% in 2011, to $4.3 billion from $3.8 billion in 2010.

Earnings per share rose 9.9%, to $2.67 from $2.43, on more shares outstanding. If you exclude unusual items, such as gains and losses on asset sales, earnings per share would have jumped 115.0%, to $3.59 from $1.67. Cash flow per share rose 46.0%, to $6.16 from $4.22.

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APACHE CORP. $110 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 384.0 million; Market cap: $42.2 billion; Price-to-sales ratio: 2.5; Dividend yield: 0.6%; TSINetwork Rating: Average; www.apachecorp.com) saw its revenue rise 39.7% in 2011, to $16.9 billion from $12.1 billion in 2010, due to higher oil prices and a 13.8% production increase. Earnings jumped 46.6%, to $4.7 billion from $3.2 billion. Earnings per share rose 32.3%, to $11.83 from $8.94, on more shares outstanding. Apache also raised its dividend by 13.3%. The new annual rate of $0.68 yields 0.6%. Apache is a buy.

CENOVUS ENERGY INC., $38.73, Toronto symbol CVE, spent $2.7 billion on capital upgrades in 2011. That’s up 28.7% from $2.1 billion in 2010. The company used about a third of this money to expand its 50%-owned Foster Creek and Christina Lake oil sands properties in Alberta; U.S.-based ConocoPhillips (New York symbol COP) owns the other 50%. As a result, Cenovus’s oil sands production rose 12.7% in 2011, to 66,533 barrels a day from 59,045 barrels in 2010. That helped offset a 3.5% drop in conventional oil production. Overall oil production rose 3.9%, to 134,239 barrels a day from 129,187 barrels. Natural gas production fell 11.0%, mainly because Cenovus sold some of its gas properties in 2010....

APACHE CORP. $110 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 384.0 million; Market cap: $42.2 billion; Price-to-sales ratio: 2.5; Dividend yield: 0.6%; TSINetwork Rating: Average; www.apachecorp.com) saw its revenue rise 39.7% in 2011, to $16.9 billion from $12.1 billion in 2010, due to higher oil prices and a 13.8% production increase. Earnings jumped 46.6%, to $4.7 billion from $3.2 billion.

Earnings per share rose 32.3%, to $11.83 from $8.94, on more shares outstanding. Apache also raised its dividend by 13.3%. The new annual rate of $0.68 yields 0.6%.

Apache is a buy.

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Ten oil sands operators have already agreed to use Enbridge’s Northern Gateway pipeline, which would let them ship more of their oil to Asia. These companies have also pledged a total of $200 million to fund the new line’s initial development and engineering. Enbridge has not said which oil companies have committed to the pipeline, but this group likely includes Suncor, Imperial Oil and Cenovus. SUNCOR ENERGY INC. $35 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.6 billion; Market cap: $56.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 1.3%; TSINetwork Rating: Average; www.suncor.com) became Canada’s largest integrated oil company in 2009, when it merged with Petro-Canada. It gets 60% of its production from its oil sands projects in Alberta; the remaining 40% is conventional oil and natural gas. Suncor also operates four refineries and 1,500 gas stations under the Petro-Canada banner....

IMPERIAL OIL LTD., $47.37, Toronto symbol IMO, reported sharply higher earnings for 2011, mainly due to rising oil prices and higher production. During the year, the company earned $3.4 billion, or $3.95 a share. That beat the consensus estimate of $3.55 a share. The 2011 earnings are also up 52.5% from $2.2 billion, or $2.59 a share, in 2010. Revenue rose 22.4%, to $30.7 billion from $25.1 billion. Cash flow per share rose 33.1%, to $4.70 from $3.53. Imperial gets most of its oil from its Cold Lake oil sands project in Alberta. Cold Lake’s daily production rose 11.1%, to a record 160,000 barrels in 2011 from 144,000 barrels in 2010. That helped offset lower production of conventional oil and natural gas. In all, Imperial produced an average of 297,000 barrels of oil equivalent (including natural gas) in 2011, up 1.0% from 294,000 barrels in 2010....

CENOVUS ENERGY $34.33 (Toronto symbol CVE; Shares outstanding: 757.8 million; Market cap: $26.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 2.3%; www.cenovus.com) reported that its cash flow per share rose 54.4% in the third quarter of 2011, to $1.05 from $0.68 a year earlier. A 9.6% increase in oil prices was the main reason for the gain.

Cenovus continues to expand its Foster Creek and Christina Lake oil sands operations in Alberta. U.S.-based ConocoPhillips owns 50% of these properties. The company now plans to spend between $3.1 billion and $3.4 billion on these and other projects in 2012. That’s up 23% from its 2011 capital expenditures.

These investments will push up Cenovus’s production to between 155,000 and 171,000 barrels of oil equivalent per day (including natural gas), from 135,000 barrels in 2011.

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ARC RESOURCES $25.52 (Toronto symbol ARX; Shares outstanding: 287.6 million; Market cap: $7.3 billion; TSINetwork Rating: Speculative; Dividend yield: 4.7%; www.arcresources.com) produces oil and gas in western Canada. Its average daily production of 85,178 barrels of oil equivalent is weighted 67% to gas and 33% to oil.

In the three months ended September 30, 2011, ARC’s cash flow per share rose 17.5%, to $0.74 from $0.63. That’s because the company raised its production. It also benefited from higher oil prices.

ARC converted from a trust to a corporation on January 1, 2011, in response to Ottawa’s income-trust tax. However, ARC has $2.2 billion of tax pools that are letting it offset the tax and maintain its $0.10 monthly payout (it now yields 4.7%).

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IMPERIAL OIL $46.03 (Toronto symbol IMO; Shares outstanding: 850.5 million; Market cap: $39.1 billion; TSINetwork Rating: Average; Dividend yield: 1.0%; www.imperialoil.ca) is a major integrated-oil company that gets most of its production from its oil sands projects in Alberta. Imperial also has conventional oil and natural-gas operations in western Canada, and it holds interests in offshore projects in Atlantic Canada.

In the three months ended September 30, 2011, Imperial’s earnings jumped 105.5%, to $859 million, or $1.01 a share. A year earlier, it earned $418 million, or $0.49 a share. Imperial increased its oil sands production and benefited from rising oil prices and improved refinery profits. Revenue rose 35.8%, to $7.9 billion from $5.9 billion.

Imperial’s production is set to keep rising thanks to its new oil sands operations, including the $10.9-billion Kearl project, which is more than 80% complete. Imperial owns 71% of Kearl. ExxonMobil Corp. (New York symbol XOM) owns the remaining 29%. Exxon also holds a 69.6% interest in Imperial.

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TEMPUR-PEDIC, $70.09, symbol TPX on New York, reported higher revenue and earnings in the latest quarter. The company makes and distributes therapeutic mattresses and pillows made from its Tempur material. In the three months ended December 31, 2011, Tempur-Pedic’s earnings rose 21.7%, to $56.3 million from $46.3 million a year earlier. The company bought back $365.9 million of its shares in 2011. Due to fewer shares outstanding, earnings per share rose 26.5%, to $0.86 from $0.68. The company spent more on marketing in the latest quarter, but it has done a good job of cutting its costs and streamlining production....