Last week we turned to our newsletter on aggressive investing, Stock Pickers Digest, to discuss two energy stocks embarked on big growth projects (see the article here). Today we analyze two high-yielding energy stocks we cover regularly in our newsletter for conservative investing, Canadian Wealth Advisor.
CRESCENT POINT ENERGY CORP. (Toronto symbol CPG; www.crescentpointenergy.com) produces oil and natural gas in Western Canada. Its output is weighted 91% toward oil and 9% to gas.
The company continues to focus on its Bakken light oil development in southeastern Saskatchewan.
In the three months ended December 31, 2013, Crescent Point’s cash flow rose 23.9%, to $533.3 million from $430.4 million a year earlier.
The company increased its production by 18.2%, to 127,641 barrels of oil equivalent (including gas) from 108,007. That was the main reason for the higher cash flow. Cash flow per share rose at a slower rate of 14.4%, to $1.35 from $1.18, because Crescent Point issued new shares to pay for acquisitions.
In 2013, the company spent $1.7 billion on exploration and development, up 15.8% from $1.5 billion in 2012. It aims to spend at least $1.8 billion this year. That would let it end 2014 with output of over 135,000 barrels.
Crescent Point’s monthly dividend of $0.23 yields a high 6.8%.
Energy stocks: Penn West uses proceeds of asset sales to pay down high debt
PENN WEST (Toronto symbol PWT; www.pennwest.com) is one of Canada’s largest oil and gas producers.
Penn West continues to shore up its finances and take steps to boost its value since appointing Rick George as chairman and Allan Markin as vice-chairman. These moves include cutting staff, selling assets and lowering its dividend.
The company sold $486 million worth of assets in the fourth quarter of 2013, and it plans to sell another $1 billion to $1.5 billion worth by the end of this year. Penn West will use the proceeds to further pay down its debt.
In the quarter ended December 31, 2013, Penn West’s cash flow per share fell 29.0%, to $0.44 from $0.62. It ended the quarter with $2.4 billion of long-term debt, which is still high, at 53% of its $4.5-billion market cap.
The company holds a number of oil properties with strong potential and many drilling locations, and it plans to focus on oil rather than gas exploration.
Penn West’s $0.56 dividend yields a high 5.9%.
In the latest issue of Canadian Wealth Advisor, we examine Crescent Point’s cash flow forecast and whether it can sustain its high dividend. We also consider Penn West’s need to replace the cash flow from assets it is selling as it steps up its focus on oil properties. We conclude with our clear buy-hold-sell advice on these two stocks.
If you’re a member of Pat’s Inner Circle and you’d like to ask a question about today’s article, please go to the question page reserved for you (be sure you’re logged in first). Click here to ask your question.
COMMENTS PLEASE—Share your investment knowledge and opinions with fellow TSINetwork.ca members
With Canada’s energy production rising and many companies participating in the industry, do you hold multiple energy stocks in your portfolio? Do you prefer energy stocks that pay a dividend? Is there one Canadian energy stock that has been a big winner for you?
Comments
Ernie
I have owned CPG shares for near 4 years and am quite satisfied with the monthly dividend and the stock price increase over this time period.
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I have owned CPG shares for near 4 years and am quite satisfied with the monthly dividend and the stock price increase over this time period.