Energy cos: BMO favors Canadian Natural, ConocoPhillips; cites surplus cash flow

Kelt Exploration

14/06/2019 13:06

** BMO Capital Markets says investors should focus on energy
cos with sustainable surplus cash yields, and free cash flow to
support dividend growth
    ** Picks Canadian Natural  CNQ.TO , ConocoPhillips  COP.N 
and Suncor Energy  SU.TO  as top recommendations
    ** Says Cenovus  CVE.TO , Encana  ECA.TO , Kelt  KEL.TO ,
and NuVista  NVA.TO  are among companies that offer a compelling
combination of valuation and growth potential     
    ** Brokerage says despite tremendous value within the group,
investor apathy tempers enthusiasm
    ** Says oil demand could be slowing, but downside risk is
overstated
    ** Says North American energy cos, as a group, are
generating material levels of surplus cash flow that supports
dividend growth and share buybacks
    ** Brokerage expects Alberta's production curtailment
program to extend into 2020, albeit at reduced levels
    ** Sees the price spread between WTI and Western Canada
Select (WCS) to remain tighter over the balance of the year;
expects WCS prices to move toward crude by rail economics in
2020
    ** For North American Large Cap - decreases cash flow
estimates by 1% in 2019; TP slashed by 9%
    ** However, cuts PT on Husky Energy  HSE.TO  by C$1 to C$15;
Vermilion  VET.TO  by $1 to C$35

 (Reporting By Arundhati Sarkar in Bengaluru)
 ((Reuters Messaging: arundhati.sarkar@.thomsonreuters.com))