3 Canadian Energy Stocks That Are Cheap, Cash Flow Machines

The Canadian energy stocks we’ve identified generate positive free cash flow of at least $0.75 per share

SmallCapPower | November 28, 2019: Oil & gas analysts usually look at cash flow per share when analyzing performance among oil & gas companies. This is because cash flow is a lot harder financial metric to manipulate compared with net income or book value, which rely on accounting assumptions. Additionally, companies that have more free cash are in a better position to pay a dividend, buyback shares, or make capital investments. It has been a pretty messy year for Canadian oil & gas, due to controversy over the Trans Mountain Pipeline and uncertainties with U.S.-China trade negotiations. Financially-prudent companies have managed to cut down expenses, streamline operations, and continue to generate positive cash flow in a poor macro-environment. Today we have drilled down and discovered three Canadian energy stocks that have had positive last-twelve months cash flow per share.

*Share price data as at November 26, 2019, data obtained from S&P Capital IQ

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Canadian Natural Resources Limited (TSX:CNQ) – $37.03
Oil & Gas

Canadian Natural Resources is an oil & gas producer with assets in North America, the U.K. North Sea, and offshore West Africa. The Company is the largest producer of natural gas in Western Canada, with five core drilling sites in British Columbia, Alberta, and Saskatchewan, producing 1,485 Mcf/d. Canadian Natural’s heavy oil production is derived primarily from assets along the Alberta-Saskatchewan border, while assets in the North Sea and Offshore Africa yield light-crude oil. Currently, the Company targets annual 2019 production levels to average between 839,000 bbl/d and 888,000 bbl/d of crude oil and NGLs and between 1,485 MMcf/d and 1,545 MMcf/d of natural gas, before royalties.

  • Market Cap: $43,811.2M
  • 90-Day Return: +15.4%
  • YTD-Return: +12.7%
  • 90-Day Average Trading Volume: 384,960
  • LTM Cash Flow/Share: $3.38

MEG Energy Corp. (TSX:MEG) – $5.49
Oil & Gas

MEG Energy is a Canada-based oil sands company. The Company has the two main properties: the Christina Lake Project and the Surmont Project, both located in the Athabasca oil sands region of Alberta. The Christina Lake Project is situated on over 80 square miles of the oil sands. Additionally, the Surmont Project comprises over 30 square miles of lands in the southern part of the Athabasca oil sands. On October 30, 2019, MEG announced Q3/19 financial results, highlighted by unlevered free cash flow of $443M, and production of 93,278 boe/d with an operating netback of $33.98/barrel.

  • Market Cap: $1,643.1M
  • 90-Day Return: +4.7%
  • YTD-Return: -29.3%
  • 90-Day Average Trading Volume: 308,060
  • LTM Cash Flow/Share: $0.77

Cenovus Energy Inc. (TSX:CVE) – $12.10
Oil & Gas

Cenovus Energy produces and markets crude oil and natural gas resources in Canada and the United States. The Company’s operations include oil sand projects in northern Alberta and natural gas and oil production in Alberta and British Columbia. Through a joint venture with Phillips 66, Cenovus has 50% ownership of two U.S. refineries: Wood River and Borger located in Roxana, Illinois and Borger, Texas, respectively. The Company has an expected production guidance of 481-509 Mboe/d for 2018. On October 30, 2019, Cenovus announced Q3/19 financial results, highlighted by unlevered free cash flow of $834M, and production of 448,496 boe/d.

  • Market Cap: $14,868.8M
  • 90-Day Return: +1.0%
  • YTD-Return: +25.5%
  • 90-Day Average Trading Volume: 760,520
  • LTM Cash Flow/Share: $1.53

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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