June 14, 2019 / 12:10 PM / 5 months ago

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

** 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, ConocoPhillips and Suncor Energy as top recommendations

** Says Cenovus, Encana, Kelt, and NuVista 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 by C$1 to C$15; Vermilion by $1 to C$35 (Reporting By Arundhati Sarkar in Bengaluru)

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