THE MONEY ISSUE

THE BracKET
Visit Albertaventure.com/stockwatch for special “wild card” picks by Russ, Fabrice and Terry.

Oil & Gas jUNiOrs
TSE:CPG

Oil & Gas MajOrs
TSE:SU

WHY?: Crescent Point takes it in a walk. The company’s innovative extraction techniques and position in the light-oil-rich Bakken play make it a winner. Bonavista’s 60 per cent weighting in natural gas doesn’t help its case for 2012.

VS

TSE:BNP

VS

WHY?: Both are major operators in the TSE:CNQ

oil sands, but Suncor’s superior capital program and better portfolio of properties makes it the pick here. Lingering concerns about CNQ’s safety program create downside risk for the stock.

VS
WHY?: Both are good
companies, but Crescent Point is the best of breed in this class and has the added virtue of being a smaller – and therefore more nimble – company. Its superior dividend doesn’t hurt, either.

TSE:PWT

VS
TSE:CV WHY?: Suncor might be the
safer pick, and if the price of oil drops it won’t fall as far as Cenovus. But if it stays at current levels, Cenovus is the pick. As a smaller company with more room to operate, it has more upside.

WHY?: Once again, the company with the

highest weighting in oil gets the nod. Peyto’s value-oriented management is appealing, but its focus on natural gas and Penn West’s considerable portfolio of oil-oriented assets are both impossible to ignore.

VS

TSE:PEY

VS

WHY?: Better management and the TSE:HSE

lowest-cost capital program of all the oil sands majors (on a per-barrel basis) gives Cenovus the edge. Husky, meanwhile, is in the middle of building Sunrise, and there’s almost never good news that comes out of a capital build program.

SEMi-Final
WHY?: In a positive market,
producers will almost always outperform pipelines. Inter Pipeline has some attractive defensive properties, including its healthy dividend. But so does Crescent Point, and as a low-cost operator, it’s also well positioned to weather a drop in oil prices.

PiPEliNE aNd ENErGy sErvicEs
TSE:TRP

BEsT OF THE rEsT
TSE:AGU

SEMi-Final
WHY?: In 2012, at least, oil
trumps potash and other agricultural commodities. The fact that Cenovus is a smaller and more agile company makes it even more attractive. Enbridge’s decision to reverse the flow on its Seaway pipeline should also help to narrow the gap between Brent and WTI crude, which would be a positive catalyst for Cenovus.

WHY?: Keystone XL will likely be approved

by 2013, but TransCanada’s handling of the debate around it shows that it’s not fully up to speed on the challenges of dealing with environmental concerns. By comparison, Enbridge seems more market savvy. Both have good yields, but Enbridge’s management gives it the edge.

VS

TSE:ENB

VS

WHY?: WestJet is a great company with TSE:WJA

a promising future, but airline stocks are notoriously volatile. Agrium’s in a much more predictable sector with long-term secular growth trends firmly established, and that makes it an easy pick here.

VS
WHY?: Enbridge’s ongoing
headline risks and Inter Pipeline’s involvement in the burgeoning gas plays in northeastern British Columbia give the edge to Inter Pipeline. Its superior dividend and demonstrated ability to outperform in a difficult market seal the deal.

TSE:ALA

VS
TSE:CP WHY?: Potash has more
upside than power generation, and Agrium’s business is less complicated than that of Canadian Utilities. The superior dividend offered by Canadian Utilities is tempting, but it’s not enough to overcome Agrium’s upside edge.

WHY?: AltaGas has made some interesting
acquisitions, but the midstream business is an inherently difficult one. Pipelines are a safer bet, and Inter Pipeline’s focus on the natural gas liquids segment of the market gives it some upside as well.

VS

TSE:IPL.UN

VS

WHY?: If CP improves its operating TSE:CU

margins it could be a positive catalyst, but that may already be priced into the stock. Canadian Utilities offers the combination of safety and growth, and its growing international appetite should keep investors happy. Canadian Utilities wins by a hair.

FiNal

VS

relatively smaller size and position in one of North America’s best plays gives it plenty of room to run, while on the downside it is less exposed than Cenovus to a big drop in oil prices due to its superior cost structure. It also happens to pay a much more robust dividend than Cenovus, which is never a bad thing in a choppy market. They’re both good companies but, in the end, Crescent TSE:CPG Point Energy is Alberta’s best stock for 2012.
ALBERTAVENTURE.COM 37

WHY?: It comes down to horizontal drilling versus the oil sands. On the upside, Crescent Point’s

36 ALBERTAVENTURE.COM F E B R U A R Y 2 0 1 2

FEBRUARY 2012

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