pengrowth
PENGROWTH ENERGY CORP. $4.90 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 511.8 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.6; Dividend yield: 9.8%; TSINetwork Rating: Average; www.pengrowth.com) produced 85,748 barrels of oil equivalent a day (60% natural gas and 40% oil) in 2012. That’s up 15.9% from 73,973 barrels in 2011. However, depressed gas prices pushed down its cash flow by 13.1%, to $538.8 million from $620.0 million. Cash flow per share declined 35.8%, to $1.20 from $1.87, on more shares outstanding.
The stock is down 50% in the past year. That’s because investors are concerned that low gas prices and Pengrowth’s high debt ($1.8 billion, or 75% of its market cap) will force it to cut its $0.04-a-share monthly dividend, for a 9.8% annualized yield.
However, Pengrowth’s rising oil production will cut its risk. It recently began work on its Lindbergh oil sands project, which will produce 12,500 barrels a day by early 2015. That will rise to 50,000 barrels a day by 2018. Moreover, Pengrowth has $4.5 billion in tax pools that it can use to cut its tax bill until 2017.
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The stock is down 50% in the past year. That’s because investors are concerned that low gas prices and Pengrowth’s high debt ($1.8 billion, or 75% of its market cap) will force it to cut its $0.04-a-share monthly dividend, for a 9.8% annualized yield.
However, Pengrowth’s rising oil production will cut its risk. It recently began work on its Lindbergh oil sands project, which will produce 12,500 barrels a day by early 2015. That will rise to 50,000 barrels a day by 2018. Moreover, Pengrowth has $4.5 billion in tax pools that it can use to cut its tax bill until 2017.
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Here are some natural gas producers we recommend: Encana Corp., $20.18, symbol ECA on Toronto (Shares outstanding: 736.3 million; Market cap: $15.0 billion; www.encana.com), is a recommendation of The Successful Investor, our conservative-growth advisory. Encana is one of North America’s largest natural gas producers. The company was a pioneer in the development of unconventional gas reserves (also called “tight gas”). This is natural gas that is trapped in rock formations....
These two resource stocks have strong potential as the global economy recovers. But they’re more volatile than our favourites in the resource sector, such as Teck and Imperial Oil (see box), so they should only make up a small part of your holdings.
PRECISION DRILLING CORP....
PRECISION DRILLING CORP....
PENGROWTH ENERGY $4.49 (Toronto symbol PGF; Shares outstanding: 509.0 million; Market cap: $2.3 billion; TSINetwork Rating: Average; Dividend yield: 10.7%; www.pengrowth.com) plans to spend $770 million on upgrades to its oil and natural gas properties in 2013. That’s up 46.7% from the $525 million it probably spent in 2012.
Of this total, $300 million will go toward its Lindbergh oil sands project in Alberta. As a result, Lindbergh’s first phase will start in 2015, one year earlier than planned.
The company expects its cash flow to rise 14% in 2013, to $680 million. However, that’s 11.7% less than its spending plans. To make up the difference, Pengrowth plans to raise $700 million by selling certain properties. The cash from these sales should also help it maintain its monthly dividend of $0.04 a share. The annual rate of $0.48 yields 10.7%.
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Of this total, $300 million will go toward its Lindbergh oil sands project in Alberta. As a result, Lindbergh’s first phase will start in 2015, one year earlier than planned.
The company expects its cash flow to rise 14% in 2013, to $680 million. However, that’s 11.7% less than its spending plans. To make up the difference, Pengrowth plans to raise $700 million by selling certain properties. The cash from these sales should also help it maintain its monthly dividend of $0.04 a share. The annual rate of $0.48 yields 10.7%.
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PENGROWTH ENERGY $4.49 (Toronto symbol PGF; Shares outstanding: 509.0 million; Market cap: $2.3 billion; TSINetwork Rating: Average; Dividend yield: 10.7%; www.pengrowth.com) plans to spend $770 million on upgrades to its oil and natural gas properties in 2013....
PENGROWTH ENERGY CORP. $4.97 (Toronto symbol PGF;Aggressive Growth Portfolio, Resources sector; Shares outstanding: 507.1 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.6; Dividend yield: 9.7%; TSI Network Rating: Average;www.pengrowth.com) has agreed to sell its 10.02% interest in the Weburn oil project in Saskatchewan.
The company will receive $315 million when the deal closes by the end of January 2013. It will use the cash to pay down its long-term debt, which was $1.75 billion on September 30, 2012.That’s a high 70% of its market cap.
Pengrowth is a buy.
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The company will receive $315 million when the deal closes by the end of January 2013. It will use the cash to pay down its long-term debt, which was $1.75 billion on September 30, 2012.That’s a high 70% of its market cap.
Pengrowth is a buy.
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PLEASE NOTE: Next week, Wall Street Stock Forecaster, our newsletter that focuses on the U.S. stock markets, will reveal its #1 pick for 2013. SHAWCOR LTD., $40.88, Toronto symbol SCL.A, plans to convert its class A subordinate voting (one vote per share) and class B multiple voting (10 votes per share) shares into a single class of common shares (one vote per share). The company makes sealants and coatings that keep oil and gas pipelines from rusting. It also manufactures industrial products, such as electrical wire and protective sheaths....
PENGROWTH ENERGY CORP. $4.97 (Toronto symbol PGF;Aggressive Growth Portfolio, Resources sector; Shares outstanding: 507.1 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.6; Dividend yield: 9.7%; TSI Network Rating: Average;www.pengrowth.com) has agreed to sell its 10.02% interest in the Weburn oil project in Saskatchewan.
The company will receive $315 million when the deal closes by the end of January 2013....
The company will receive $315 million when the deal closes by the end of January 2013....
LOBLAW COMPANIES $33.47 (Toronto symbol L; Shares outstanding: 281.5 million; Market cap: $9.4 billion; TSINetwork Rating: Above Average; Dividend yield: 2.6%; www.loblaw.ca) has signed a new long-term deal with Towers Watson, a private firm that helps Canadian companies manage their employees’ health benefits. Under the agreement, Loblaw’s in-store pharmacies will offer special discounts to Towers Watson’s clients, which together employ over 30,000 people. These discounts should draw more shoppers to Loblaw’s stores and more than offset the lost revenue. Roughly half of Loblaw’s 1,000 supermarkets now have in-store pharmacies. Loblaw is a buy....
PENGROWTH ENERGY CORP. $5.59 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 507.1 million; Market cap: $2.8 billion; Price-to-sales ratio: 1.8; Dividend yield: 8.6%; TSINetwork Rating: Average; www.pengrowth.com) has suffered from low natural gas prices, same as Encana. That’s why in May 2012 it bought NAL Energy Corp., which gets roughly half of its production from higher-priced oil. Thanks to this purchase, Pengrowth’s daily production rose 26.4% in the three months ended September 30, 2012, to a record 94,284 barrels of oil equivalent from 74,568 a year ago. Natural gas accounted for 60% of its production, down from 63% a year earlier.
Depressed natural gas prices pushed down Pengrowth’s cash flow by 6.2% in the quarter, to $141.1 million from $150.4 million a year earlier. Cash flow per share fell 39.1%, to $0.28 from $0.46, on more shares outstanding. Even so, the extra production from NAL should let Pengrowth keep paying monthly dividends of $0.04 a share (for an 8.6% annualized yield).
Pengrowth is still a buy.
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Depressed natural gas prices pushed down Pengrowth’s cash flow by 6.2% in the quarter, to $141.1 million from $150.4 million a year earlier. Cash flow per share fell 39.1%, to $0.28 from $0.46, on more shares outstanding. Even so, the extra production from NAL should let Pengrowth keep paying monthly dividends of $0.04 a share (for an 8.6% annualized yield).
Pengrowth is still a buy.
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