WHAT ARE WE LOOKING FOR?
Opportunities to play the potential in Alberta's oil sands now that crude oil futures have surged over $70 (U.S.) a barrel.
The declines in steel and labour costs combined with rising crude prices have brought the oil sands, which are the largest crude reserves outside the Middle East, "back in the black," UBS Securities analyst Andrew Potter said in a report last week.
Alberta's Energy Resources Conservation Board (ERCB) also said last week that it expects the output from the oil sands to rise to three million barrels a day by 2018 from about 1.3 billion last year.
TODAY'S SCREEN
We looked at the stocks in the Claymore Oil Sands exchange-traded fund (ETF), which focuses on Canadian energy companies that are active producers. The ETF has been designed to track the Sustainable Oil Sands Index, which includes companies that are active producers in the oil sands and are expected to increase their oil sands production over the next 10 years.
The weightings in the index, which was created by Calgary-based Sustainable Wealth Management Ltd., are based on a mathematical formula using five factors.
They include current oil sands production measured in barrels per day, projected oil sands production over 10 years. highest proportion of their total production from oil sands, and market liquidity and market capitalization.
The Claymore ETF, which trades under the symbol CLO, was launched at $20 per unit on the Toronto Stock Exchange in October, 2006, when the price of crude was $60 a barrel. But plunging crude oil prices from their lofty highs at about $147 a barrel last summer took the wind out of the sails of its constituent stocks.
The ETF closed yesterday at $15, down 56 cents. Its holdings are rebalanced annually at the end of June. Last year, Baytex Energy Trust and Ivanhoe Energy were added to the index. Petro-Canada, which is being acquired by Suncor Energy Inc., will be deleted once the deal is completed. The cash will be allocated to Suncor and other stocks.
WHAT DID WE FIND?
While Claymore Oil Sands ETF since inception has lost 19 per cent compared with 7 per cent for the oil and gas sector as measured by the S&P/TSX capped energy Index, it has outperformed so far this year. The Claymore ETF was up 45 per cent as of last Friday compared with 32 per cent for TSX energy group.
While some stocks have rebounded, others with lower price-earnings ratios offer interesting entry points.
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| Claymore Oil Sands ETF - constituent stocks | ||||||||||||
| Company name | Symbol | Index weighting (June 12) | $ Price June 12 | 52-wk high $ | 52-wk low $ | Current ('08) prod'n (bar./day) | Forecast oil sands prod'n in 10 yrs (bar./day) | YTD % price chg | 1-yr % price chg | P/E ratio | % Yield | Market cap ($-mil) |
| Imperial Oil | IMO-T | 12.66% | 46.36 | 59.30 | 28.79 | 210,000 | 280,000 | 13.1 | -20.4 | 11.7 | 0.9 | 39,354.2 |
| Suncor Energy | SU-T | 11.84% | 39.05 | 67.40 | 18.80 | 228,000 | 550,000 | 64.6 | -40.4 | 29.6 | 0.5 | 36,577.6 |
| Petrobank En. | PBG-T | 8.46% | 38.75 | 55.42 | 16.26 | 16,000 | 100,000 | 90.8 | -26.8 | 15.5 | 0.0 | 3,239.4 |
| Cdn Oil Sands Tr | COS.UN-T | 8.09% | 29.04 | 55.25 | 16.65 | 40,000 | 150,000 | 37.6 | -44.9 | 11.0 | 2.0 | 14,026.3 |
| Cdn Natural Res. | CNQ-T | 7.71% | 64.71 | 109.80 | 34.19 | 275,000 | 500,000 | 32.7 | -37.8 | 7.7 | 0.6 | 35,068.5 |
| Ivanhoe Energy | IE-T | 7.22% | 1.86 | 4.04 | 0.39 | 2,000 | 25,000 | 220.7 | -38.0 | 0.0 | 0.0 | 519.6 |
| Baytex Energy Tr | BTE.UN-T | 6.57% | 19.92 | 35.37 | 9.77 | 40,000 | 50,000 | 36.0 | -39.4 | 8.7 | 7.2 | 1,961.7 |
| EnCana Corp. | ECA-T | 6.49% | 61.99 | 97.64 | 41.36 | 107,542 | 360,000 | 8.8 | -33.8 | 5.4 | 2.8 | 46,529.7 |
| Husky Energy | HSE-T | 4.92% | 35.15 | 52.00 | 24.78 | 130,000 | 240,000 | 13.9 | -31.4 | 9.3 | 3.4 | 29,856.4 |
| Petro-Canada | PCA-T | 4.84% | 49.33 | 59.47 | 20.01 | 59,900 | 230,000 | 84.6 | -15.9 | 11.9 | 1.6 | 23,918.7 |
| Nexen Inc. | NXY-T | 4.52% | 27.97 | 43.45 | 13.33 | 34,000 | 96,000 | 30.4 | -32.7 | 12.1 | 0.7 | 14,567.2 |
| UTS Energy | UTS-T | 3.67% | 1.72 | 6.11 | 0.67 | n/a | 30,000 | 115.0 | -71.1 | 0.0 | 0.0 | 815.6 |
| Oilsands Quest | BQI-A | 3.13% | 1.24 | 6.95 | 0.59 | n/a | 25,000 | 69.9 | -77.0 | 0.0 | 0.0 | 297.6 |
| Enerplus Res. Fd | ERF.UN-T | 2.95% | 26.78 | 48.65 | 16.75 | 34,581 | 60,000 | 11.8 | -43.7 | 5.4 | 7.9 | 4,440.9 |
| Penn West En. Tr | PWT.UN-T | 2.59% | 15.64 | 35.60 | 8.82 | 27,000 | 80,000 | 15.3 | -55.0 | 5.8 | 11.4 | 6,385.3 |
| Connacher Oil | CLL-T | 2.58% | 1.04 | 4.82 | 0.60 | 10,000 | 30,000 | 40.5 | -77.9 | 0.0 | 0.0 | 219.7 |
| OPTI Canada | OPC-T | 1.76% | 3.35 | 25.40 | 0.61 | 16,000 | 60,000 | 86.1 | -86.5 | 0.0 | 0.0 | 656.4 |
| Source: Globe Investor, Claymore |