December 14, 2018

ARC Resources Ltd (ARX)

 

 

ARC Resources Ltd. (ARX) is one of Canada’s large oil and gas companies.  The company was founded in 1996 and has since purchased numerous properties throughout western Canada (focused within 6 key areas).  Since its inception, ARC has rewarded shareholders with over $4 billion in cash distributions.  The focus of the company has never wavered by becoming a self-proclaimed “Premier blue chip conventional oil and gas trust [the company has since switched over from the energy trust structure] in Canada as measured by quality of assets, management expertise, and long-term investor returns.  ARC is focused on its mantra of “risk managed, value creation” going forward.  Their company vision is as follows:

 

A leading energy producer
Results focused through risk managed value creation
Committed to superior, long-term financial returns

 

We:

Apply unique expertise and discipline
Recognize leadership development as critical to our success
Clearly communicate our strategies

 

Where:

Action and passion are rewarded
Respect of individuals is paramount
Community and environment are core commitments

 

ARC (ARX) first broke onto the scene with the purchase of 21 properties from Mobil Oil in Western Canada.  Their IPO sold off 18 million units at $10 per unit.  In 1997, the company saw $94 million worth of acquisitions.  This focus on buying substantial amounts of property was paramount in the early years.  The company seen its total market capitalization rise to almost a half billion dollars by 1999 as the company purchased Starcor Energy Royalty Fund and Orion Energy Trust.  By 2001, ARC had completed the acquisition of Startech Energy, boosted production to 16,000 boe/per day, and had reached the $1 billion market capitalization level.  In 2003 the company made the largest acquisition in its history when it purchased Star Oil and Gas Ltd., for $710 million, which significantly expand their production capacity to 58,000 boe/per day.  ARC (ARX) has continued its large capital expenditures since then, most notably its $462 million purchase of the Pembina and Redwater fields from Exxon Mobil Canada in 2005.  They also began to pioneer innovative technology in the field of horizontal drilling in that year as well.

 

The most recent news to come out of ARC Resources (ARX) headquarters is their massive 2012 capital expenditure budget.  It includes roughly $760 million dedicated to driving growth on a large scale.  John Dielwart, CEO of ARC stated, “”With a clear focus on value creation, we will continue to invest the majority of our capital expenditures in our oil and liquids-rich natural gas opportunities.  With outstanding opportunities in our portfolio and a $760 million capital budget in 2012, we expect to achieve approximately a 12 per cent year-over-year increase in our total production volumes to 92,500 boe per day, highlighted by an estimated 15 per cent increase in our liquids production.”  Overall, the company looks to drill almost 200 new wells in 2012, with 179 those focusing on oil production.

 

Shares of ARC (ARX) are currently priced at $25, with a 52-week trading high of $28.67 and a low of $19.40.  It’s annual dividend of $1.20 gives the company a dividend yield of 4.8%.  Its current Price-to-Earnings ratio is 22, and that is about average within the sector.  While a 4.8% dividend is certainly nothing to ignore, ARC represents a little more of a growth play than several of its Canadian energy competitors.  If they manage that massive capital expenditures budget advantageously, the company could continue to see substantial growth going forward.

 

 

ARC Resources Ltd. (ARX) Technical Analysis:

ARX trend analysis

ARX is trading on a down trend, Get your Free ARX trend analysis report.

ARC Resources Ltd. (ARX) Stock Graph:

TSE ARX

ARC Resources Ltd. (ARX) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
ARXARC Resources Ltd23.945.01120.210.1111946-11.335980

 

 

Provident Energy Ltd (PVE)

 

 

Provident Energy Ltd (PVE) is a unique company within the natural gas sectors.  The company makes its profits by providing midstream services and marketing businesses.  They offer extraction, gathering, transportation, storage, and fractionation services.  These services included many cutting-edge technologies and strategies for the natural gas sector.  Provident’s headquarters are located in Western Canada, the company also has substantial holdings in premium Eastern markets, and the USA.  Provident (PVE) seeks to continue providing value for shareholders through refining their existing service structure and continuing to develop new advantages through innovation.

 

In 2006 Provident successfully merged with Midnight Oil to form Pace Oil & Gas Ltd.  This locked in Provident (PVE) as a business that focused on providing midstream services.  They also appointed Dough Haughey CEO in April of that year.  Haughey quickly oversaw the sale of Western Alberta oil and natural gas properties for almost $200 million.  The following year Provident continued to sell off its oil assets in exchange for capital to fuel the growth of their singular focus to the tune of $300 million.

They the purchased a commercial storage facility in the Sarnia area from Dow Chemical Canada and entered into an agreement with BP Canada to co-purchase more fractionation capability.  In 2008 Provident (PVE) announced the sale of more of its assets, as it relinquished BreitBurn Energy for $345 million.  The company has since reinvested its capital into its current business model and has changed business structures due to Canada’s change of income trust taxation laws.

 

The current strategic focus for the company is to generate revenue through extraction, but also the gathering, transportation, storage, fractionation and marketing of natural gas liquids (NGLs).  They intend to continue purchasing NGLs from various producers and use their fractionation technology to produce finished products.  Provident has made substantial profits through the sale of NGL finished products in Canada and the USA.  Two major advantages that Provident’s Redwayer Facility enjoys is the fact their rail facility is the largest in Western Canada, and they have plenty of room to grow at that location.  Their distribution system provides the company with an unprecedented level of access to markets across North America.

 

A major aspect of the Provident (PVE) business model is their risk management program.  The company actively looks to manage risks that are inherent within the energy sector.  In this manner they have utilized a hedging program that protects much of the company’s cash flow and capital.  It also has an insurance program in place to make sure that the company is protected against systemic risk.  The overall goal is to, “Reduce exposure to commodity price volatility,” and, “maintain a degree of upside price participation.”

 

 

Shares of Provident (PVE) recently closed at $9.71.  This is right near their price ceiling over the past 52 weeks (with a bottom of $6.84).  The company currently has a Price-to-Earnings ratio of 18.67.  Their $0.54 annual dividend means that shareholders enjoy a dividend yield of 5.7%.  The company is has a large market capitalization of over $2.6 billion.  I really like the structure and management of the company over the last few years, and I would like to take a position in the future.  It just doesn’t make sense to me at this price point and with the current natural gas market (oddly, the company’s share price does not reflect the relative weakness of the natural gas sector).  If shares slipped down to $8.50 I would give the stock a buy rating.

 

 

Provident Energy Ltd (PVE) Technical Analysis:

PVE Trend Analysis

PVE is trading on a uptrend, click here to get your PVE free technical analysis report.

Provident Energy Ltd (PVE) Stock Graph:

TSE PVE

Provident Energy Ltd (PVE) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
PVEProvident Energy Ltd8.656.24185.060.234056-14.44679-8.333325

Pengrowth Energy Corp (PGF)

 

Pengrowth Energy Corp. (PGF) is one of the many Canadian energy plays on the TSX. The current version of the company is the product of a restructuring that took play January 1, 2011.  Along with many other energy trusts at the time, the Pengrowth Energy Trust morphed into a dividend-heavy corporation because of the change in taxation rules on trusts and their distributions.  The new corporation combined the former Pengrowth Energy Trust, Pengrowth Corporation, Monterey Exploration Ltd., and Pengrowth Energy Coproation, into the modern conglomerate that you see today.  By combining the former subsidiaries, Pengrowth hopes to streamline their operations for maximum efficiency.  The energy company has a 66% working interest in about 200 properties across Saskatchewan, Alberta and British Columbia.  Pengrowth’s (PGF) current reserves are an estimated 320 million barrels of oil equivalent, and the reserve life index is 11.1 years.  Right now the company is producing approximately 75,000 boe per day (which is an improvement over what experts had predicted earlier in the year).  It’s main assets are in the Swan Hills and Monterey oil formations.  Pengrowth’s (PGF) leap forward to become a legitimate player in Canada’s oil and gas industry cam in 2007 when the company purchased undeveloped properties from ConocoPhillips for a cool $1 billion.  At the time, this was one of the largest acquisitions ever for an energy trust.

 

Pengrowth Energy Corp (PGF) lists their priorities and focus as follows:

 

  1. Focus on large accumulations of oil and gas
  2. Utiliize new technology to squeeze more from existing pools
  3. Utilize unconventional technology to known hydrocarbon accumulations to achieve economic production
  4. Ensure financial strength & flexibility
  5. Strong balance sheet
  6. Sustainable business model
  7. Hedge as required
  8. Strive to be the most efficient operator
  9. Lowest total cost structure
  10. Focus everyday on being low cost

 

The latest news coming out of Pengrowth headquarters is their recent issuing of shares.  With the company’s valuation at a recent high due to rising oil prices, and increased earnings reports, Pengrowth (PGF) sought to raise capital to the tune of $300 million.  The company recently changed its short-term outlook from a conservative stance, to a much more aggressive one; consequently, they recent announced that their 2011 capital expenditure budget would rise by $60 million (hence the additional funding needed).  This is likely a precursor to some acquisitions or increased operations by the energy company.  The offering was led by BMO Nesbitt Burns.

 

 

 

 

 

Pengrowth Energy Corp. (PGF) shares are currently trading around $10.50.  The oil giant has a market capitalization of almost $3.5 billion.  This price is significantly off of the 52-week high ($13.96).  The price is indicative of the recent sector downturn, and the company’s annual dividend of $0.84 is fairly lucrative at that price.  The dividend yield of 8.20 is definitely attractive in this income-starved environment.  That being said, the Performance-to-Earnings ratio of 35 and Forward P/E of 24, scares me a little.  Even at $10.50, the stock is slightly overvalued at this point in my opinion.

 

Pengrowth Energy Corp. (PGF) Technical Analysis:

PGF Trend Analysis

PGF is on a down trend, click here to get your PGF free trend analysis report.

 

Pengrowth Energy Corp. (PGF) Stock Graph:

TSE PGF

Pengrowth Energy Corp. (PGF) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
PGFPengrowth Energy Corp12.516.71101.010.2511329-21.8413-15.15152

PetroBakken Energy Ltd (PBN)

 

 

PetroBakken Energy Ltd (PBN) is a Canadian energy entity that consists of three chief subsidiaries.  The first subsidiary is PetroBakken (the fully Canadian Business unit) of which they own a 59% stake.  The broader entity also owns 100% of Whitesands Insitu Partnership and Archon Technologies Ltd.  PetroBakken Energy (PBN) is a leading producer of light oil properties in Western Canada.  Their Archon Industries branch has patented a new oil extraction technology known as THAI®.  Not only does PetroBakken make money off of this company, they are able to market the proprietary technology worldwide.  The company ended 2012 with a production rate of about 55,000 boe/pd, which is slightly more than it expects to produce next year.  They hedged roughly about a quarter of total production.

 

Going into the new year PetroBakken (PBN) has a capital expenses budget of $700 million for next year.  The main focus of this money will be to increase the efficiency and production of the 185 or so wells that the company has currently developed in the Bakken and Cardium light oil properties.  Capital expenditures have a $34 million dollar budget, and will be focused on the Kerrobert project, and the Dawson project.

 

The company seen its balance sheet tighten up this year, and the CEO, John Wright, has had his proverbial hands full in trying to come up with creative ideas to keep the company profitable.  Options have included cutting the dividend and/or selling certain assets.  Share subsequently fell over 70% this year.  Wright has also publically floated new ideas about issuing new stock and/or re-negotiating $750 million worth of bonds that are currently on the market.  The basement-level prices of natural gas have certainly not helped the company’s fortunes in 2011.

There is certainly the possibility going forward that PetroBakken (PBN) will sell some of its assets, but a greater likelihood in my estimation is that they will be acquired fully by of the other major energy players in the Canadian Energy sector.  They do own several key properties in the Bakken and Cardium regions, and their proprietary technology is a unique part of the package as well.  Mr. Wright has stated in a letter that, “any or all” of PetroBakken’s assets are on the block right now in terms of creating solutions to achieve profitability for the company.  He has went on to publically note that there are, “A number of conventional drilling opportunities which don’t meet our hurdle rates.”  Two industry reports have speculated as to possible buyout options on the table, but so far

Shares of the stock recent closed at $13.02.  PetroBakken (PBN) is a large company with a market capitalization of 2,438 million.  The current dividend figure of $0.96 gives shareholders a yield of 7.4%, but this does not appear to be stable given the current circumstances.  There may be a short-term play available here if merger talks heat up and the stock rises based on speculation.  I believe that there are better, more stable, and less debt-laden companies available on the Canadian energy market.

 

PetroBakken Energy Ltd (PBN) Technical Analysis:

PBN Trend Analysis

PBN is on a uptrend, click here to get PBN free trend analysis report.

 

PetroBakken Energy Ltd (PBN) Stock Graph:

TSE PBN

PetroBakken Energy Ltd (PBN) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
PBNPetroBakken Energy Ltd16.265.9369.290.3903935N/A71.42856

Longview Oil Corp (LNV)

 

 

Longview Oil Corporation (LNV) is another of Canada’s large energy companies that dominate the TSX.  They were created in 2011 in order to acquire the former Advantage Oil.  Their oil and oil-related properties are located in West Central Alberta, Llyodminster area, and Southeast Saskatchewan.  Like the majority of Canada’s energy companies, Longview’s core focuses are to develop their properties as efficiently as possible, and invest in solid acquisitions that hold long-term value for the company.  In this manner they home to provide shareholders with immediate dividend returns, as well as overall growth.  Longview’s (LNV) main strategic initiatives are to conduct low risk drilling, boost their recompletion and enhanced oil recovery activities, target light oil properties for acquisition, make sure all acquisitions have a long life span (whether they are oil or natural gas), explore undeveloped land bases through drilling or farmout, and to maintain a conservative financial structure.

 

Longview (LNV) is looking to develop about 257 separate drilling locations, and has plans in place for over 30 new wells in the next twelve months.  This part of an overall expansion that will see approximately $54 million invested over the upcoming year, with 83% of that figure dedicated specifically to light oil development.

 

The key metrics for Longview in 2011 was their 8% production growth (bring the company up to 6,800 boe/d) and royalty rate of 18-20%.  The operating expenses came in at a cost-efficient $16-$17/boe, while total capital expenditures were listed at $70-$75 million.  Going forward, 100% of capital expenditures will be allocated to oil or oil-based products.  The most important event for Longview (LNV) in 2011 was their IPO which allowed them purchase Advantage Oil and retire bank debt.  Shares debuted at $10 each, and the IPO raised approximately $246 million.

 

Being such a new company, there is a not a lot of information or investor outlooks available for Longview Oil Corp (LNV).  Their stock is currently trading at $10.15, which is very close to their IPO price from earlier this year.  During 2011 the 52-week low for Longview shares was $7.50, and the 52-week high was $12.65.  While they are a fairly new company, Longview (LNV) has managed to accumulate a market capitalization of $474 million.  The company’s annual dividend yield of $0.60.  The stock has a forward Price-to-Earnings ratio of 10.36.  Overall, I believe there are several better established energy companies within Canada.  The relatively low dividend (compared to its competitors) is not what I’m looking for in the sector.

 

Longview (LNV) Technical Analysis:

LNV Trend Analysis

LNV is on a uptrend, click here to get the technical analysis report for free.

 

Longview (LNV) Stock Graph:

TSE LNV

Longview (LNV) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
LNVLongview Oil Corp10.985.48N/AN/AN/AN/A

Crescent Point Energy Corp (CPG)

 

 

 

The Crescent Point Energy Corporation (CPG) is a fairly large Canadian energy company.  They have over six thousand current drilling locations.  Their management team has proven adept at expanding the company, and presenting value to shareholders over a significant period of time.  Crescent Point has an excellent balance sheet that is very conservative in nature.  It has superb cash flow relative to its meagre debt levels, and the quality of their oil properties is high enough that this trend is virtually guaranteed to continue.  Crescent Point (CPG) has an expansion policy in place that sees them target long-life, high-quality oil reserve properties as potential acquisitions in Western Canada.  The energy company is also very conservative in its foreign exposure as they hedge sixty-five percent of their royalty volumes using swaps, collars, and puts.

 

Crescent Point (CPG) began in 2001.  It was originally an amalgamation of several junior mining entities.  Right from the beginning the company was extremely aggressive in pursuing at acquiring potentially lucrative oil-rich properties.  The company was also focused on maintaining a strong balance sheet right from their inception.  In two years Crescent Point grew from a start-up that only produced about 275 boe/d, to a considerable energy producer of 7,000 boe/d by 2003.  Near the end of 2003 the company decided to convert in to a trust business structure (becoming Crescent Point Energy Trust).  The management team, mission statement, and overall strategy stayed in place, the payout structure to unit holders simply improved from a tax management perspective.

 

Crescent (CPG) grew steadily until 2008 when they began making large-scale acquisitions.  First was Pilot Energy Ltd. with a price tag of around $76 million.  This immediately added 1,000 boe/d to Crescent’s portfolio of holdings.  Next came the trust’s purchase of a 20% interest in Shelter Bay Energy Inc. at a total cost of over $60 million.  Finally, in December of 2008 the company announced a massive takeover of Villanova Energy Corp. for about $120 million that added another 1,250 boe/d to Crescent’s drilling capacity.  These recently acquired assets give Crescent (CPG) a considerable presence in Alberta, as well as in the Bakken oil formation in Southern Saskatchewan.

 

Crescent Energy’s rise in less than a decade from a junior mining entity to a massive oil conglomerate with a market capitalization of over $12.8 billion is amazing.  Unitholders/shareholders (the company reverted back to a corporate structure due to changes in the taxation of trusts in January 2011) have been amply rewarded for their faith in the capable management team over the years.  Right now Crescent Energy (CPG) is trading at around $44 per stock  which is near the top of its 52-week trading range.  Its annual dividend of $2.76 represent a substantial yield of 6.2%.  While there may be higher dividend yields amongst Canadian energy companies, Crescent has a proven track record of responsible, sustainable growth.  I believe this has to put them near the front of any list of options within the Canadian energy sector.

 

Crescent Point Energy Corporation (CPG) Graph:

TSE CPG

Crescent Point Energy Corporation (CPG) Trend Analysis:

CPG Trend Analysis

click here to get the technical analysis report.

Crescent Point Energy Corporation (CPG) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
CPGCrescent Point Energy Corp44.586.193284.150.085330034.0782840

Bonterra Energy Corp (BNE)

 

 

Bonterra Energy Corp (BNE) is one of Canada’s better run energy companies.  It is headquartered out of Calgary, Alberta and has a proven history within the industry.  Bonterra is tightly focussed on their Cardium horizontal drilling operations, and have found that this strategy has rewarded their shareholders with substantial returns over the past couple of years and represents the best value going forward.  Bonterra’s developed and undeveloped assets are concentrated in the central Alberta Pembina field.  The company is in great financial shape with well over $400 million in tax pools.  This gives Bonterra (BNE) a long tax horizon (past 2016 by their estimates) which will free up cash flow for efficient capital expenditures, and most importantly for strong dividend payouts.  Bonterra Energy has targeted properties that are high-quality and low risk.  They are currently operating at 84% of total productions and consequently have a conservative view on capital expenditures.  Bonterra (BNE) spent about $60 million in maintenance and expenditures in 2011, with the majority of the capital funds going towards developing the halo area of the Pembina Cardium, the Willesden Green fields and the main pool of the Pembina Cardium field.  Bonterra’s most recent estimates indicate that they have an approximate average drilling life of 15 years and that this supports the sustainable growth model they have put forward.

 

Going into 2012, Bonterra (BNE) has announced a projected 10% growth rate and $65 million in capital expenditures.  It’s recent Board of Directors press release stated that they will continue to pursued a strategy centred on sustainable and efficient growth which focuses on the further development of their horizontal drilling techniques.  The Cardium light oil properties will continue to be focused on, and a multi-well program within the region is already underway that includes multi-stage frac wells.  All new 2012 wells are expected to be multi-frac wells.  Bonterra (BNE) has 33 wells planned, with 21 targeting the main pool of the Pembina Cardium.  The 2012 target production level is 7,000 boe/per day (2011’s rate was 6,800 boe/per day), and 2012 plans are for the company’s production to be 73 percent light oil and 27 percent natural gas by year end.  Most attractively, Bonterra has dedicated 50-65% of its current cash flow to dividend payouts, and has already established plans to increase the dividend providing that crude oil prices remain strong, or if demand increases.

 

Bonterra (BNE) recently closed at $51.71 per share.  This is close to the middle of its 52-week trading range that seen a high of $63.50 and a low of 39.02.  The company has a massive market capitalization of just over $1 billion.  Its annual dividend of $3.12 gives the company a current dividend yield of 6%.  While the current share price is slightly high for my tastes, I like Bonterra’s conservative growth structure, and their focus on horizontal drilling.  Their concentration on this high-value technique is a great advantage.  I really like the company going forward.

 

Bonterra Energy Corp (BNE) Graph:

TSE BNE

Bonterra Energy Corp (BNE) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
BNEBonterra Energy Corp56.75.593.990.070904361.36310737.50002

Versen Inc (VSN)

Versen Inc (VSN) is an income trust that was incorporated when the tax rules shifted at the beginning of 2011.  For those of you that are not familiar with difference in corporate structure, basically, as an income trust in Canada companies were allowed to pay out dividends to their shareholders and circumvent a lot of taxes.  These tax advantages allowed for incredible yields in the double digits.  The Canadian government realized that it was losing a substantial amount of tax revenue as more and more companies began using this income trust structure and closed the option in January, 2011.  The only exception to this rule is Real Estate Investment Trusts (REITs) will still exist in Canada (they were allowed to keep the tax-advantages to encourage new building developments).  This was not the only change for the stock in 2011.  The Calgary-based company was formerly known as the Fort Chicago Energy Partners (FCE.UN-T) and obviously changed their name to Veresen when they entered their new corporate re-structuring.  Apparently the name is a derivative of the Latin phrase “vis vires” and then english “energy” which loosely translated means “with power, force, strength, energy.”

 

Veresen (VSN) is an energy infrastructure company that primarily relies on taking energy from Canada and transporting it to the USA.  They have three primary divisions of business – power generation, natural gas liquids, and pipeline transportation.  This diversification of energy assets give Veresen a strong stability factor that not all energy plays enjoy.  The pipeline segment is the major money-maker for Veresen (VSN) and consists of two major pipeline systems.  The Alliance pipeline is 3,000km of pipe that transports natural gas to the Midwestern USA from Western Canada.  The other pipeline is the Alberta Ethane Gather System, which helps spur Alberta’s petrochemical businesses.  Veresen’s power generation operation has been branching into areas of “greener” energy and they believe that this innovative area will be integral to their long term growth.  They also cite acquisition activity as a large part of their long-term game plan.  Their lengthy contracts in a variety of areas add to the company’s allure as a stable, profitable, dividend player.

 

While many people were concerned about what affect the new taxation rules would have on former income trusts, Veresen (VSN) has done very well since its incorporation.  The tax structure of the company does not change the fundamentals of energy supply and demand, or the company’s solid underlying assets.  Because of this reality Veresen has been able to maintain a solid dividend yield of about 7.5% while trading around $13 per share.  This yield is high despite the relatively expensive price-to-earnings ratio of 25.  This shows just how much faith the markets have in the energy transportation giant, and the future of the industry.  Dividend investors should note that Versen (VSN) offers a great Dividend Re-Investment Plan (DRIP).  If you choose to automatically re-invest your substantial dividends into more Veresen stock, you will automatically receive a 5% discount on the stock price.  This is an immediate return on your investment, and a perfect way to easily dollar cost average over a long period of time.

 

Versen Inc (VSN) Dividend Stock Graph:

TSE VSN

Versen Inc (VSN) Dividend Stock Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
VSNVeresen Inc13.77.3182.040.961.020.00

TransCanada Corp (TRP)

TransCanada Corp (TRP) is one of the largest and most well-established energy infrastructure companies in the world.  With more than 60 years of experience within the industry, the company boasts operations in natural gas, oil pipelines, power generation, and gasoline storage facilities across Canada and the United Sates.  TransCanada’s network of natural gas pipelines consists of over 57,000 kilometres (35,500 miles) and has a supply point at pretty much every major natural gas source in North America.  The company also owns enough storage capacity to safely house 380 billion cubic feet of natural gas.  Although TransCanada Corp (TRP) is not known for its independent power production, it now has ownership shares in companies that produce almost 11,000 megawatts of power in Canada and the USA.  Their Mainline pipeline is the largest in North America and runs underground across Canada.  For over 50 years TransCanada has been responsible for transporting oil and gas from the energy-rich part of the country, across the prairies, to the more heavily industrialized Eastern coasts.

 

TransCanadaThe newest development for TransCanada Corp (TRP) is the mega-sized project that would see crude oil pumped from Saskatchewan and Alberta down through the USA heartland.  With its oil sand production Canada has emerged as the USA’s biggest supplier of oil by far, and TransCanada is looking to cash in on the nervousness that the US government has about relying on oil from Venezuela and the middle-east.  The massive new pipeline that has been proposed is called the “Keystone XL” line and is purported to be engineered to pump over one million barrels of oil per day.  As oil prices climb in the coming decade this pipeline could be a boon for the Canadian economy and TransCanada Corp (TRP) shareholders, as we well as a necessary expense for the oil-started American economy.  That being said, I would definitely recommend paying attention to recent developments where Keystone XL is concerned as many environmentalist lobby groups in the USA are pulling out all the stops to try and stop this purchase of oil-sand produced “dirty” oil.  They have succeeded to a limited extent in disrupting immediate construction, however my guess would be that the need to diversify away from the geo-political nightmare that is foreign oil will be a stronger argument than the one environmentalists put forward.

 

TransCanada Corp’s (TRP) stock is trading right around $40 a share at the moment.  It has stayed fairly consistent given the market volatility the past few years.  It has a 52-week high of $43.72 and a low of 35.49.  I wouldn’t say this is a “no-brainer” buy, as the company is valued at a sizeable price-to-earnings ratio of about 21, but one could do a lot worse if they are looking for stable dividend payer.  TransCanada has a solid history of upping their dividend, and their current annual dividend at 1.68 has a solid yield of over 4%.

 

TransCanada Corp (TRP) Dividend Stock Graph:

TSE TRP

TransCanada Corp (TRP) Dividend Stock Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
TRPTransCanada Corp41.244.0790.380.835.585.19

The Pembina Pipeline Corporation (PPL)

The Pembina Pipeline Corporation (PPL) is another company that has recently seen a corporate restructuring as it went from an income trust, to becoming an incorporated entity.  If you are not familiar with the reasoning behind all these recent moves, the Canadian government switched the taxation rules on almost all income trusts beginning in 2011.  Up until this year, companies had found that the income trust structure had several advantages that allowed them to payout extremely high dividends to their shareholders.  The only industry that was allowed to keep the old advantages was real estate-based trust funds, more commonly referred to as Real Estate Income Trusts (REITs).  While the government is taking a somewhat larger bite out of many of these newly incorporated entities, there are still plenty of profits to go around.

 

Pembina (PPL) became a publically traded company in 1997.  Since that time it has seen extreme growth, and has paid out an extraordinary $1.5 billion dollars to its investors, while at the same time seizing acquisition opportunities.  The company has always sought to be a cost-effective, profitable entity that can pass along substantial cash-flow to their stakeholders.  One of their key strategies has been (and will continue to be) to diversify their asset portfolio in order to provide long-term value for shareholders.  They seek to lessen the risk associated with market volatility in a single sector.  That being said, they will continue to focus on the core of their business – the ultra-profitable crude oil and natural gas transportation industry.  The Pembina Pipeline Corporation (PPL) is also extremely proud of their environmental record within a controversial industry, and their outstanding history of community engagement.

 

Pembina’s two major pipelines are the Nipisi Pipeline and the Mitsue Pipeline.  Nipisi is designed to transport 100,000 barrels per-day of heave oil.  It runs from North of Slave Lake, Alberta, to Swan Hills, Alberta, and from them to Edmonton, Alberta.  Plans for expansion of the pipeline to a 200,000 barrel per-day limit are in place.  The Mitsue pipeline is smaller, but still significant.  It was originally built to transport 20,000 barrels per-day of condensate (which is used to refine the heavy oil) and runs from Whitecourt, Alberta, to Swan Hills, Alberta.  Plans are in place to expand this pipeline as well, taking it up to a capacity of 45,000 barrels per-day.

 

While Pembina (PPL) has plenty of competitors within the huge Canadian energy sector, its fundamentals hold up quite well.  It’s currently trading at around $25 per-share, with a price-to-earnings ratio of 22.85.  Its annual dividend of 1.56 (paid monthly) gives it an attractive dividend yield of 6.2%.  Given the strength and future outlook of the Canadian energy sector, investors looking for strong dividend performers really can’t go wrong with many of the options that are offered.  Pembina Pipelines certainly belongs in the discussion if you’re looking for a high-dividend position with exposure to the energy sector.

 

The Pembina Pipeline Corporation (PPL) Dividend Stock Graph:

TSE PPL

The Pembina Pipeline Corporation (PPL) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
PPLPembina Pipeline Corp23.46.67143.330.427.630.00