Sunday, February 19, 2012

"The oil in the Alberta Tar Sands needs to go somewhere. Whether it goes south or whether it goes west , Enbridge (Symbol ENB), will be involved"

Dow Jones Industrial Average  12,950 (Up) Week Ending 02-17-2012

First a report from Bloomberg NEWS:

"Feb. 17 (Bloomberg) -- Enbridge Inc. fell the most in almost three year after disclosing that Noverco Inc., which owns 8.9 percent of the Canadian pipeline company, plans to sell a third of its stake.

Enbridge, the largest transporter of Canadian crude to the U.S., fell 4.1 percent to C$37.58 at the close in Toronto, the biggest decline since Feb. 23, 2009.

Noverco, a holding company that’s 61 percent-owned by Caisse de Depot et Placement du Quebec, Canada’s largest pension fund, plans to sell 22.5 million of its 69.4 million Enbridge shares. Enbridge owns the other 39 percent of Montreal-based Noverco. The sell off will result in $300 million for Enbridge, the Calgary-based company said in a statement.
Noverco is selling the shares to rebalance its asset mix, Enbridge said in the statement. The sale represents 2.9 percent of Enbridge’s outstanding shares, according to data compiled by Bloomberg."

This news should create and opportunity to buy some Enbridge (Symbol ENB, $37.73) here in the next few weeks at some discounted pricesEnbridge owns some of the premier oil pipelines of the world with 2 more projects planned that could really expand them.
One, the TransCanada's Keystone XL pipeline which is an expansion of the existing Keystone pipeline has been initially stalled on the US end by President Obama. Stephen Harper ,Canada's Prime Minister ,says "if we can't send the oil south then we will send it west to countries that want to buy it." 

Which is the second project:   

Enbridge Northern Gateway project. There is opposition to this project by the Regional Districts and the Indian Coastal First Nations. Under the current proposal, the controversial pipeline  $5.5-billion would carry 525,000 barrels of oil sands-derived crude from Edmonton to Kitimat, B.C. One concern is the environmental impact of tankers coming in and out of northern coastal waters with risk of a spill in the major fishing areas along the coast.

I believe that Apache Corp. (symbol APA) is getting ready to start mid-2012 a Kitimat LNG project and terminal for Liquified Natural Gas. So there will be tankers coming in and out of this port already anyway. The Canadian government will need to plan this well and have a sophisticated traffic scheme in place to avoid any accidents that would effect the local fishing industry and ecosystems. I believe that both of these projects will eventually get approved and built.

Enbridge, symbol ENB, should earn $1.65 per share in 2012 and $1.86 per share in 2013. Enbridge pays out a 3% dividend yield and has a 12 month Total Return of 29.4% and a 3 year Total Return of 170.8% . This is why Caisse de Depot needs to rebalance their portfolio! 

So look to buy this in the $34-$37 range and be patient for it to come in.

My thoughts and prayers are with my brother-in-law, George Zwicker, who we lost this week on Valentines Day, Feb 14th to a heart attack during a hospital procedure. George lived in Berlin, New Hampshire, USA and grew up in Springfield, PA. and he will be greatly missed.

 Zwicker is certainly a recognized last name in Nova Scotia and the eastern coastal areas of Canada.


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