Energy picks
By Investor's Digest
With the energy sector still booming, Oil/Energy Statistics Bulletin bestows buys on four Canadian oil and gas plays: Chieftain International (TSE-CID, $44.80), Talisman Energy (TSE-TLM, $58.00), Anderson Exploration (TSE-AXL, $33.44) and Rio Alto Exploration (TSE-RAX, $30.30).
Chieftain, long a strong presence in the Gulf of Mexico, merits a buy for increasing its exploration territory in the gulf to 802,000 gross acres.
Talisman gets praises for meeting with "far-above-average success" in gas exploration in Alberta's Foothills. There, the company set records in 2000 both in the number of wells drilled and in the rate of gas production. It also set records in both reserve additions and capital spending. Overall, the new wells increased Talisman's inventory by 130 billion cubic feet — but at a finding cost of only $0.92 per mcf.
Anderson, for which the advisory sets a target price of US$44, gets high marks for its long-range planning. By building up both natural gas reserves and production in the '90s, the company is now in good shape to ride the energy boom.
Rio Alto is singled out for both production and earnings. For the 12 months ended December 31, 2000, its gas production rose 17 per cent to approximately 427 mcf/d from 365 mcf/d in 1999, while its net earnings more than tripled to $217.4 million from $70.4 million. That 80 per cent of Rio Alto's reserves are natural gas doesn't hurt either. The company's target price? US$40.
Oil/Energy Statistics Bulletin
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