Crescent Point Energy Corp. (TSE:CPG) profitably produces oil and gas at a high netback, a crucial element for a dividend-paying company like TSE:CPG, making it the largest holding in the Dynamic Energy Income Fund, which is managed by Jennifer Stevenson,
Vice President & Portfolio Manager, Energy, at Dynamic Funds.
“[Crescent Point has] enough cash flow to develop their projects as well as enough money to pay me my dividend. Plus, they have a massive inventory of oil project — they have five separate projects that each has resources of 1 billion barrels.”
The fund’s second-largest holding is Vermilion Energy (TSE:VET), an oil play in the Cardium in Alberta. The company also has oil in Australia, France and other parts of Europe.
“In Europe, you make about $9 on gas; in the U.S., you make about $3. So it all depends on where your gas is as to how profitable it is. [Vermilion Energy has] international oil plays in addition to their Canadian projects. The price of oil they receive on international projects is around $114, and West Texas, WTI, is $95. So their oil that’s not in Canada gets another $15 to $18 a barrel, which is very attractive.”
Stevenson also says Pembina Pipeline (PBA) is a large holding in her portfolio. She says the company “recently bought another company that we owned called Provident Energy. They have oil pipelines, oil-processing units, gas-processing plants, natural-gas-liquids fractionation towers and a marketing division. So oil and gas companies don’t always do these activities themselves. They just give their production to a company like this who charges them a fee to process, market and sell it for them. It’s a very much a fixed-fee type of business with much less volatility than E&P companies that are tied much more directly to commodity prices.”
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