Our neighbor to the north provides a great deal of the energy we consume -- and opportunities aplenty for investors. Today we touch base with three Canadian companies worth keeping an eye on in the near future.
Suncor (NYSE: SU )
Last year was a banner year for Suncor, as the company broke records for net earnings, operating earnings, cash flow, and oil sands production. And yet its shares dropped 25% over the course of 2011. As of this writing, they are up a mere 0.1% in 2012.
Suncor has the largest oil sands reserves in Canada and expects to increase oil sands production from 304,700 barrels of oil equivalent a day to a range of 325,000 to 355,000 per day. Overall production is expected to fall between 530,000 and 580,000 BOE/D, which may or may not outpace 2011's number of 546,000 BOE/D.
The oil sands are a controversial energy source, and operators in the region are also facing rising cost pressures. When CEO Rick George steps down on May 1, current COO Steve Williams will step up and have his hands full reassuring investors that Canada's biggest energy company is the right investment. If Suncor can continue successful production while demonstrating a low-cost strategy, expect this stock to climb.
Encana (NYSE: ECA )
Encana is trading slightly above its 52-week low right now, and at half of its 52-week high. The company has been punished by the low price of natural gas in North America, and rumors are swirling about a potential takeover.
Petronas, Malaysia's state-owned oil company, is clamoring for natural-gas supplies in Canada. Encana is currently the cheapest of the Canadian producers, worth just $1.50 per thousand feet of cubic gas. Petronas is willing to cough up $5 billion to revamp its production story. The country's reserves are dwindling, and worldwide production has declined for two straight years.
Encana has not commented on the buyout rumors, but in the meantime it is pursuing joint ventures to help offset production costs. The company recently inked a deal with a Contango Oil & Gas (AMEX: MCF ) subsidiary to develop assets in Wyoming's Jonah field.
Talisman Energy (NYSE: TLM )
Talisman Energy has also been included in the Petronas takeover swirl. With assets in Southeast Asia that generate 30% of its production and assets in British Columbia that could be easily exported to Asia in the future, Talisman is a compelling option.
Recently the company has cut spending on its natural-gas assets and focused more heavily on oil. Talisman announced a major oil discovery in Iraq at the end of March, and it will continue extensive testing in the Kurdamir block, where it holds a 40% interest.
The energy industry is rife with potential oil and gas buyouts as producers look to boost reserves in the face of growing demand. Stay up to date on the rumor mill, company insight, and analysis by utilizing Internet tools like Twitter and My Watchlist.