It’s been a heavy two weeks for news out of The Energy Strategist recommendations. Here’s a rundown of key developments in the energy patch and my most up-to-date advice.

General Maritime (NYSE: GMR)

General Maritime (Genmar) is a tanker company that focuses on owning midsized crude oil tanker ships; these ships are known as Suezmax and Aframax carriers. Such tankers typically carry crude in and around the Atlantic basin.

Genmar announced Wednesday evening that it will be paying a special dividend of $15 per share. The dividend will be paid around March 23 to all shareholders of record as of March 9. This payout is in addition to the company’s announced 62-cent quarterly dividend declared for the fourth quarter of 2006; that dividend is payable on the same date.

This is an unusual move for a company to make, so it necessitates a bit of background on the tanker business as well as Genmar specifically. Tanker companies own ships and lease those ships for a daily fee known as a day-rate. Basically, the tanker business operates on two levels: the time charter market and the spot market.

Time charters are long-term contracts for tanker ships. Some time charter contracts run 10 to 15 years or more in duration. During the period covered by the time charter, day-rates are typically either fixed or partly fixed with escalation causes tied to inflation, fuel costs or some other index.

The spot market is a short-term market. Rates vary wildly from week to week and month to month and are based on prevailing the supply and demand of ships.

Note, in particular, that tanker rates have little to do with the price of crude oil. For example, when the Organization of the Petroleum Exporting Countries (OPEC) cuts output, that spells less oil that needs to move from the Middle East to distant markets; 90 percent of all oil from the region moves on tankers. Therefore, while OPEC output cuts tend to be bullish for crude prices, such cuts also result in less demand for tankers and falling tanker rates.

The tanker business tends to generate copious cash flows. Once you put up the cash for a ship and cover your ongoing maintenance and crewing expenses, those day-rate fees all drop to the bottom line.

Of course, in the spot market, profitability changes constantly based on prevailing rates; time charters offer more stable profitability. However, there’s a trade-off: The stability of time charters comes at the expense of less upside during strong tanker markets.

I don’t see the tanker business as a growth business but as a cash cow. I prefer companies that actively manage their fleets to generate cash and then pay out most of that cash to shareholders in the form of dividends.

Genmar has been managing its portfolio of tankers well through a difficult period. During the record-strong tanker market of 2004 and 2005, Genmar focused its attention on the spot market where returns were highest.

But in the more-normal tanker market of late 2005 and throughout 2006, Genmar began rationalizing its fleet; the company sold off its older, less profitable ships and put some of its vessels on longer-term time charters. With the fleet now roughly 50 percent time charter committed and 50 percent spot traded, Genmar is far less exposed to the volatile ups and downs of the spot market than it was just a year ago.

And Genmar has also been very generous on the dividend front. During the past two years, the company has adopted a policy of paying out the vast majority of its cash flows as dividends; dividends paid since May of 2005 have totaled $8.28 per share.

In addition to that, Genmar has opportunistically paid down its debt and bought back stock. Right now, Genmar has no net debt and more than $2.60 per share in cash. Last year, the company repurchased close to 20 percent of its outstanding stock; further stock buyback authorizations allow for the repurchase of another roughly 10 percent of the float.

With less than 25 million shares freely traded, Genmar already has a small float for a company of its size.

One of the main criticisms voiced about Genmar in the past few quarters is that it’s underleveraged and has been holding too much cash. Management itself commented that it can’t find attractive acquisition opportunities in the tanker space right now; it prefers to focus on further stock buybacks instead of making a big acquisition.

But management can’t just keep buying back the stock forever. The float is already getting fairly thin.

At the same time, companies with strong free cash flows can support a higher debt burden. With interest rates for loans so low right now, debt financing is extraordinarily cheap; it doesn’t make sense for Genmar to have a totally debt-free balance sheet.

To fund the $15 special dividend, Genmar is going to take an advance against its prearranged credit line. This will bring the company’s debt burden up to a level that’s more normal for a firm with the cash generation power Genmar has. Therefore, the company is normalizing its balance sheet and returning a chunk of cash to shareholders in one stroke.

In addition to the one-off special dividend, management has revised its dividend policy. The company will now target a quarterly payout of 50 cents per share, $2 per year.

At first blush, this looks like less than it’s been paying. But on the conference call, the company elaborated on the rationale for the change: Although the company’s prior policy of paying out the majority of its cash flow made perfect sense, the problem was the extreme seasonal variations in payouts. During the weak summer months, Genmar’s distributions would plummet, only to rise once again in the seasonally strong fourth and first quarters of the year.

The problem with this was twofold: Investors didn’t particularly like that volatility, and banks weren’t pleased with the policy either. Income-oriented investors prefer a more-reliable stream of income from their holdings; many interpreted the summer distribution volatility as a dividend cut. Banks didn’t really like the policy as they felt it overly tied management’s hands as to uses of cash flows.

However, management isn’t now tying itself to a $2 annual dividend. From its comments on the call, it seems that Genmar sees this as a sort of minimal sustainable dividend based on the cash flows from its time charter contracts; the payout looks conservative.

And management left the door wide open to future special dividends, hikes in the 50-cent-per-quarter rate, further stock buybacks and a host of other potential means of returning cash to shareholders. The only thing the company said it isn’t immediately interested in doing is an acquisition. If the tanker market strengthens, Genmar will likely be returning excess cash flows to shareholders; $2 looks like a minimum distribution rate, not a set-in-stone payout.

The market clearly liked the special dividend as the stock soared more than 8 percent this week. I would expect Genmar stock to fall roughly $15 per share after it goes ex-dividend; that fall will simply reflect the cash payout to come later in the month.

However, investors will still be money ahead in the wake of this week’s move. I see this as a shareholder friendly play.

SXR Uranium One (TSX: SXR)/UrAsia Energy (TSX: UUU) Merger

Uranium field bet play SXR Uranium One will be acquiring miner UrAsia Energy. I remain bullish on uranium prices and uranium mining stocks; I recommend that all subscribers check out my uranium field bet, last updated in the January 24 issue of TES, Another Alternative, if you haven’t already done so.

Uranium has long been my No. 1 growth-oriented theme for the next five years. It’s looking increasingly likely I’ll have to upwardly revise my long-term target for uranium prices of $100 per pound.

You’ll likely see more mergers of this type in the future. There are literally hundreds of publicly traded junior uranium mining firms on the Canadian, Australian, American, British and South African exchanges. Many of these firms are exploring or producing from the same basic regions. It makes sense to merge operations and thereby gain considerable economies of scale.

In this case, I see the UrAsia acquisition as a good deal for SXR. UrAsia Energy is one of only a handful of uranium juniors that’s within a year of actual production. The company should begin production in early 2008 with SXR scheduled to start production this quarter. By the end of 2008, the combined firm would be churning out 7 million pounds of uranium production annually, making it among the world’s largest producers.

Because these are both firms with advanced, economical projects, the combined company also looks attractive. The company is also casting a wide geographic net with operations in the US, Canada, Australia, Africa and Kazakstan.

American Commercial Lines (NSDQ: ACLI)

American Commercial Lines split its stock earlier this week 2-to-1. I’ve adjusted the entry and target prices in the Portfolio table to reflect this shift. In addition, I’ve updated the options hedge recommendation outlined in the most recent issue of TES to reflect the split. If you purchased the presplit options, you’ll find that those options have already been adjusted to take account for the split in American Commercial.

Weatherford (NYSE: WFT)

I’ve received a few e-mails inquiring about my take on oil services name Weatherford, a TES recommendation up until May of 2006. I still like Weatherford and have it rated a buy in my coverage universe.

The only thing holding back the stock is its exposure to Canada. The company has more exposure to Canada than any of the other larger services firms thanks to its acquisition of Precision Drilling’s services business back in 2005; because Canada is currently the world’s weakest services market, that’s been hurting the stock.

But I’m increasingly warming up to Weatherford again as a possible future Portfolio pick for two reasons. First, as I noted in the most recent issue, North America gas-related weakness is already priced into the stock; I just don’t see a lot of downside in Weatherford.

And second, investors appear to be ignoring Weatherford’s rapidly growing overseas business. The company has seen some dramatic success from marketing its services in the Middle East and Russia; these markets show no sign of slowing down.

Stay tuned–Weatherford will be one of the first stocks I look to add to the Portfolios amid further evidence in a bottom for North America-related names.