March 23, 2019

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