December 10, 2018

Pacific Northern Gas Ltd (PNG)

 

Pacific Northern Gas Ltd (PNG) was incorporated in 1965, and went public in 1968.    Unlike some of its competitors, Pacific is a fairly focused company, with the vast majority of its business in the natural gas industry.  They own natural gas pipelines of various sizes throughout Western Canada.  It currently has about 1200 km of pipeline in all.  Pacific Northern (PNG) currently supplies 40,000 residential, industrial, and commercial clients.  They are the main supplier of natural gas throughout all of British Columbia, and have notably large clients such as West Fraser Mills Ltd, Rio Tinto Alcan, and B.C. Hydro.  Together, those three giants accounted for about 30% of the company’s total gas deliveries and six percent of their operating revenues.

 

Pacific Northern Gas Ltd. (PNG) basically started out in 1968 as a single transmission line that ran from a spot north of Prince George at Summit Lake, through Prince Rupert and Kitmat on the coast.  It was mainly a line meant for large commercial companies.  In 1993 PNG saw a major expansion as they bought out Northland Utilities Limited, including their Tumbler Ridge and Dawson Greek Operations.  They expanded their industrial footprint again in 1997 when they acquired three more regional natural gas companies in Fort St. John, the Granisle, and the Peace River Transmission Company.  The company saw a corporate restructuring in 2000 in response to liquidity issues which have now been rectified.  The most recent news for the company is their recent plan to purchase enough shares of Pacific Trail Pipelines (PTP), to connect their system with the Kitmat export terminal which would mean huge dollar is liquefied natural gas business.

 

Pacific Northern Gas (PNG) is a regional natural gas play, and does not have the stability of some of the other large scale energy companies listed on the TSX, although it may have more room for growth.  One of the advantages of being so focused within single industry is that when that industry is doing well, your profit percentages, and rapid growth can be very attractive to potential shareholders.  The entire natural gas sector has been rising for months now and shows no signs of slowing down.  With the USA and Canada investing large sums of money in energy transfer infrastructure, PNC could be the next company to broker a deal that sees them take advantage of the massive American market that lies just to the South of their already established pipeline system.

 

With energy costs skyrocketing around the world, natural gas will likely be profitable in both the short and long terms.  Pacific Northern Gas’ (PNC) stock is currently trading around $26 per share, and this is right in the middle of its trading range over the last couple of years.  It has a relatively small market cap of just under $100 million.  It is paying an annual dividend of $1.20, which gives the stock a dividend yield of 4.6%.  This is a great deal for shareholders in that they get healthy cash flow, while at the same time owning a company that has substantial growth prospects.

 

 

Pacific Northern Gas Ltd (PNG) Dividend Stock Graph:

TSE PNG

Pacific Northern Gas Ltd (PNG) Dividend Stock Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
PNGPacific Northern Gas Ltd30.13.9960.850.8839.06311.88

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