This oil sands company became Canada's best stock on the uptrend crude oil

For any investor looking to take advantage of rising oil prices, there may have been no better way to play than MEG Energy Corp.

Up to this year, the Canadian oil sands producer more than doubled in value. Its Toronto stock heads the S & P / TSX Composite Index of 246 companies and sends their peers to the S & P / TSX Energy Index, which has only gone up 3 , 7%. MEG, of Calgary, beats even the best US rivals on the S & P 500 energy index.

"It's perhaps more than any other energy badet in North America, the name most the hard-hitting oil you can imagine, "said Chris Cox, an badyst at Raymond James. "It's probably the preferred name of anyone who wants to become an exhibitor."

The rise of MEG was motivated by its status as a pure-play heavy oil producer, producing about 93,000 barrels a day from the oil sands of the United States. Athabasca, Alberta, at a time when declining production from Venezuela and Mexico has forced American refiners on the Gulf Coast to hunt more heavy crude oil. The situation has pushed up the price of Western Canada by almost 50% this year, about triple the 16% gain for the more expensive West Texas Intermediate light oil.

On the other hand, other large natural gas or have refining operations that dilute their advantage of the rise in heavy oil prices. MEG also carries an above-average debt, which makes it more vulnerable to crude oil prices when it drops, but more dramatically improves its outlook in a rally like this one this year.

Debt Concerns

which had driven many investors to give up the stock, the company has expressed its fears about its indebtedness by selling its stakes in the Access pipeline and the Stonefell Terminal oil storage facility for $ 1.61 billion. Stocks jumped 13% on the day the deal was announced.

Although the company's debt is greater than four times its earnings before interest, taxes, depreciation and amortization – more than its peers, Suncor Energy Inc. and Canadian Natural Resources – Cox stated that badet sales made MEG much more "acceptable" for investors.

"This has given the market the comfort of taking the risk that oil will rise, without the balance sheet being so difficult. The reduction of debt

MEG will start generating free cash flow next year and is expected to reduce its debt to about two times Ebitda, in line with its peers, by 2020, said John Rogers, MEG's Investor Relations Manager. 000 barrels a day by 2020, which will increase its ability to generate cash, he said.

"We will be fundamentally more and more indebted," said Rogers.