Diana,
Imperial Oil is an enormous, mature company with very measurable growth
potential. By that I mean it is not in the same league as other integrated oils
or with intermediate producers -- it's not going to get bigger fast (if ever).
Because Imperial is majority owned by Exxon, and because Exxon does
not want competition from its subsidiaries, Imperial is confined to working
within Canada (contrast this with CanOxy, which has an exploration program
in the U.S.).
Lots of companies are growing successfully working only in Canada, but
that seems to only work for relatively small companies. People starting up
in Calgary today, if they're drilling their first well, will be thrilled with 100 bbl/d.
A huge company like Imperial Oil literally cannot afford to run fields that small.
With their enormous overhead it doesn't pay. That's where so many of the
juniors got their start -- companies like Amoco and Imperial selling off tiny bits
of production they couldn't afford to keep, but which were company-makers
for people operating out of a garage.
I hold Imperial Oil as part of the dead conservative, rock-solid, income-producing
part of my portfolio, along with Petro-Canada and Shell Canada. Their oil sands
leases should ensure a long-term future for them. But I have no expectation whatever
that it will be an exciting holding, and with a price in the mid 60s, have to reevaluate
whether it has a reasonable chance of market performance. I make up for that lack of
excitement with a series of small holdings in juniors and babies who seem to
have a promising future: Symmetry, Stampeder, Northrock, Upton, Genesis,
and Barrington. The latter may be too exciting for you (they make my heart
flutter from time to time), but there's something in the oil patch for almost everybody. |
