John,
What you buying in the Patch?
Imperial Oil, Suncor I like the bigges, lol....
Have a close look at Shell Canada(SHC). The share float on this company is just over 60 million shares. The rest is held by the parent company, Royal Dutch Shell. There is very little retail ownership in SHC. Most of the float is held by pension and mutual funds resulting in a thin market with poor liquidity for large blocks. Unfortunately, fund managers are like day traders as of late. The unusual price moves up and down are due to blocks being bought or sold in a hurry. IMO, this creates opportunities. I have on more than one occasion been filled on my bid well under the market. If you are patient, it means that you can make a good buy on this stock from time to time.
You may have noticed that SHC is now trading at higher prices than IMO. I believe this is due to the fact that SHC production will grow by 300% over the next two years. SHC's resource base(off shore east coast and MacKenzie Delta gas and tar sands-Muskeg Mine project lands) will allow for additional similar scale growth opportunities thereafter. SHC is a core holding in my portfolio. I am not yet sure of a target price for SHC two years down the road, but the stock should be trading at much much higher prices if the volumes have grown by 3 times. In stark contrast, it appears that IMO's volumes will contract over the medium term.
Also, if you are wondering how all those new wells will be cased and how the oil and gas will get to market, have a look at Ipsco (IPS). IPS has had a good move over this week. As of mid January, production has been expanded by 75% going forward from 2.0 million to 3.5 million tonnes per year. Vertical and horizontal pipe volumes and margins should expand with oil and gas well drilling increases and well tie ins to gas plants. Also, IPS will likely get a good chunk of the Alaska-Prudhoe Bay gas pipeline contract. IPS went to CDN$40 on the Alliance high pressure pipeline. IPS could get back to CDN$40.00 over the next two years.
teevee |
