TRILOGY ENERGY CORP. (Toronto symbol TET; www.trilogyenergy.com) owns oil and gas properties in central Alberta’s Kaybob and Grande Prairie areas. About 58% of Trilogy’s production is natural gas. The remaining 42% is oil.
In the three months ended September 30, 2013, Trilogy produced 31,211 barrels of oil equivalent a day (including gas), down 6.6% from 33,412 barrels a year earlier. Cash flow per share rose 15.0%, to $0.46 from $0.40, on higher oil prices.
The company’s long-term debt is $665.8 million, or 20.2% of its market cap.
The company plans to spend $375 million on exploration and development this year, down 6.3% from the $400 million it likely spent in 2013. As well, it’s now focusing on its shale oil prospects at Kaybob and spending less on its more mature oil pools in the same area.
Energy stocks: Mart re-opens Nigerian oil field after 46-day disruption
MART RESOURCES (Toronto symbol MMT; www.martresources.com) produces oil at its 50%-held Umusadege field in southern Nigeria’s Niger Delta region.
Last year, the company finished building a central processing facility at Umusadege that can process 35,000 barrels of oil a day. That’s enough to handle the field’s current output and all future production increases.
Meanwhile, Mart is reporting steady cash flow and continues to pay quarterly dividends of $0.05 a share, for a high 14.9% yield.
In the three months ended September 30, 2013, the company’s cash flow was $24.0 million, or $0.07 a share, down 46.8% from $45.0 million, or $0.13 a share, a year earlier. The company’s average share of Umusadege’s production was 4,291 barrels a day, down 35.9% from 6,692.
However, that’s mainly because various disruptions, repairs and maintenance forced the company to shut down the field for 46 days in the latest quarter. Those issues are now mostly resolved, and Umusadege is now back near full production.
Offsetting the stock’s high yield and cash flow is the fact that Mart’s exposure to Nigeria entails political risk.
The Niger Delta is home to over 90% of the country’s proven oil and gas reserves. However, it’s also the scene of long-standing ethnic conflicts, including a failed breakaway attempt by the self-proclaimed Republic of Biafra between 1967 and 1970.
In the latest edition of Stock Pickers Digest, we examine the cash flow outlook for Trilogy Energy and whether the company’s greater focus on its shale oil project will improve its average daily output within the next year. We also assess the current political risk for Mart Resources in light of the Nigerian army’s efforts to suppress attacks on oil fields and pipelines and hostage-taking incidents in the Niger Delta. We conclude with our clear buy-hold-sell-advice on these two stocks.
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