Consequences of the 54% decline in the per-barrel price of crude oil since June 2014 and the 41% slide in natural gas prices since April 2014 continue to reverberate through the energy-production industry.

Weaker oil and gas prices will also impact the broader Canadian economy, a fact reflected in increasingly cautious views among the analyst community on Canada’s Big Six banks despite the group reporting generally solid fiscal 2015 first-quarter results.

Portfolio developments are not all dire, as several companies in our Aggressive Holdings and Conservative Holdings announced dividend increases during the current earnings reporting season.

Note that in addition to earnings reports discussed below, How They Rate includes key data for other Portfolio Holdings reported thus far.

Energy Exposure

Reflecting a dramatically changed commodity landscape, Enerplus Corp. (TSX: ERF, NYSE: ERF) cut its dividend 44.4% while announcing fourth-quarter and full-year financial and operating results.

We cut Enerplus to “hold” in the January 2015 issue after management, while issuing its 2015 capital expenditure (CAPEX) estimate, warned that it was “prepared to make adjustments as necessary to the dividend” depending on the severity and duration of the oil price decline.

Management did report an 11.7% increase in funds from operations (FFO), as production grew 15% to 103,130 barrels of oil equivalent per day (boe/d).

The company also announced a further 24% reduction in its CAPEX budget, as it continues to adjust to lower oil and gas prices.

Baytex Energy Corp. (TSX: BTE, NYSE: BTE), which we also cut to “hold” in January, reported similarly strong financial and operating results for 2014. Its long-term prospects, supported by promising results from its Eagle Ford Shale operations, remain bright, despite a debt load that’s a bit heavy relative to our other oil and gas Portfolio Holdings.

Fourth-quarter production was up 53%, while full-year output grew 37% compared with 2013, as the June 2014 Eagle Ford acquisition pushed Baytex past the high end of its guidance range.

FFO per share was up 66% for the fourth quarter to CAD1.47 and 46% for the year to CAD5.91.

Based on the new annualized dividend rate of CAD1.20 per share, the proportion of Baytex’s 2014 earnings paid out as dividends to shareholders was just 20.3%.

Enerplus and Baytex offer a mixed bag to investors.

The former has a track record of making good on a dividend cut, while the latter’s Eagle Ford assets are among the most attractive in the industry.

Both will survive the current malaise in energy markets and thrive over the long term. But both have announced dramatic dividend cuts in recent months.

Reliability and consistency are critical, even among Aggressive Holdings.

Aggressive Holding PHX Energy Services Corp. (TSX: PHX, OTC: PHXHF), a horizontal and directional drilling specialist, reported a 37% increase in 2014 revenue.

Adjusted earnings before interest, taxation, depreciation and amortization were up 47.1% and FFO grew 54.7%, both establishing new company records.

But the CAPEX pullback across the North American oil and gas exploration and production industry has yet to completely filter through to financial results. Rig counts are falling, driving PHX to cut its dividend 50%.

Enerplus, Baytex and PHX remain holds.

New money should be invested in other oil and gas Portfolio Holdings that aren’t as vulnerable to lower commodity prices. Here’s how that group fared during the fourth quarter and over the course of 2014.

ARC Resources Ltd. (TSX: ARX, OTC: AETUF) reported fourth-quarter production of 117,986 barrels of oil equivalent per day (boe/d), an increase of 2.1% versus the third quarter and up 17% from the fourth quarter of 2013.

Annual production was up 15.2% to 112,400 boe/d.

Funds from operations (FFO) for the period were up 5.8% to CAD251.7 million. At CAD0.79 per share, the fourth-quarter payout ratio was 38%.

Full-year FFO per share was CAD3.54, up from CAD2.76. ARC’s full-year payout ratio was 33.9%.

ARC’s efficient, low-cost Tower project in the Montney formation will be the focus of its 2015 and 2016 CAPEX programs, and that should help preserve the company’s strong production-growth rates. The economics of the play are among the best in the sector.

With one of the strongest balance sheets in the oil and gas industry, production-per-share growth that’s tracking to 4% for 2015 and 2016 and a highly respected management team, ARC is a great way for investors of all risk tolerances to play a commodity rebound.

ARC Resources is a buy under USD28.

Vermlion Energy Inc. (TSX: VET, NYSE: VET) reported another strong set of operating and financial numbers that underscores the quality of its asset base and the ability of its management team to execute throughout the commodity cycle.

Average annual production for 2014 was 49,573 boe/d, an increase of 20.9% compared with 2013. Fourth-quarter output was down slightly from the third quarter to 49,571 boe/d.

FFO was up 20.6% to CAD804.9 million, or CAD7.63 per share. Year-over-year growth in FFO was largely attributable to the growth in production as well as a higher liquids weighting compared with 2013, partially offset by weaker prices.

Fourth-quarter FFO declined by 12.6% to CAD185.5 million, or CAD1.73 per share, reflecting substantially lower commodity prices.

Vermilion also reported solid proved reserves growth of 18% compared with 2013.

Vermilion Energy is a buy under USD54.

Peyto Exploration & Development Corp. (TSX: PEY, OTC: PEYUF), which will release its fourth-quarter and full-year financial and operating results later this month, did report 13% growth in proved developed producing reserves. Peyto’s three-year compound annual growth rate for reserves now stands at 12%.

Peyto lowered its 2015 CAPEX budget to CAD590 million from a prior estimate of CAD700 million to CAD750 million. The company will still be able to drill 130 net wells due to the fact that service costs will be approximately 20% lower this year.

Production for the first six weeks of 2015 averaged 82,000 boe/d, with 3,000 boe/d shut in due to service interruptions. As of mid February, output was back up to 85,000 boe/d.

Peyto is on track for average production of 92,000 boe/d for 2015 and 103,000 boe/d for 2016, implying growth rates well above the industry average.

And natural gas prices are back to levels that will keep the company drilling this year, setting the stage for further output growth beyond 2016.

Peyto’s strong balance sheet and its low-cost production profile equip it to survive and thrive throughout the commodity cycle. A compelling value at these levels, Peyto Exploration & Development is a buy under USD38.

Note that Crescent Point Energy Corp.’s (TSX: CPG, NYSE: CPG) fourth-quarter and full-year 2014 financial and operating results due on March 12, 2015, did not come out in time for the current issue.

Crescent Point, which maintained its dividend during the last steep commodity downturn, is well positioned to weather the current market as well, with a strong balance sheet and a track record of strong production-per-share growth.

Management also has an aggressive hedging program in place that locks in much of 2015 production at levels well above current spot prices.

Crescent Point is a buy under USD28.

The Big Bank

Canada’s Big Six banks countered forecasts of slower earnings growth with surprisingly strong fiscal 2015 first-quarter results. Four of them, including Conservative Holding Bank of Nova Scotia (TSX: BNS, NYSE: BNS), raised dividends.

At the same time, there remain significant headwinds for the group, including weak oil prices.

Scotiabank’s loans to oil and gas companies grew 20.3% during the quarter to CAD15.4 billion as of Jan. 31, 2015. That’s 3.4% of the bank’s total lending, up from 2.9% as of Oct. 31, 2014.

CFO Sean McGuckin told Canada’s Financial Post that management is “quite comfortable” with this exposure, noting that half of the increase was due to converting foreign currency and the remainder represented new loans to investment-grade clients.

Scotiabank’s gross impaired loans to oil and gas companies rose to CAD107 million for the first quarter compared with CAD44 million for the fourth quarter of fiscal 2014, as a 53% decline in oil prices over the past eight months hit the sector hard and clouded the outlook for the Canadian economy.

Management reported adjusted earnings per share (EPS) of CAD1.36, up from CAD1.34 a year earlier but below the consensus forecast of CAD1.38.

Total provisions for bad loans were up to CAD463 million versus CAD356 million for the prior corresponding period, reflecting greater concern about the Canadian macroeconomic picture.

Higher net interest margin and strong wealth management results drive solid growth (excluding one-time items) for the Canadian Banking segment, as global banking and markets profit grew 4.1%.

Despite double-digit loan growth in Latin America and margins stabilizing in the region, Scotiabank reported a 3.1% decline in international banking earnings. Management expects results for the segment to improve during the second half of the fiscal year.

Bank of Nova Scotia, which raised its dividend by 3%, remains a buy under USD69.

Magna International Inc. (TSX: MG, NYSE: MGA), traditionally a shareholder-friendly company, boosted its dividend 15.8% and also announced that it will split its shares on a two-for-one basis.

Shareholders of record as of March 11 will receive one share for each share currently held on March 25.

Magna reported a 5.2% increase in 2014 revenue to USD36.6 billion, as adjusted EPS grew 23.8% to USD8.94.

Management lowered its 2015 forecast for revenue from its core vehicle parts business to a range of USD28.2 billion to USD29.5 billion, from a prior range of USD29.2 billion to USD30.5 billion, due to weakening demand in Europe.

Magna remains a buy under USD120, or USD60 on a split-adjusted basis.

Like Magna, Conservative
Holding Keyera Corp. (TSX: KEY, OTC: KEYUF) is splitting on a two-for-one basis.

Keyera, too, boosted its dividend, 7%.

Management reported a 28.5% increase in 2014 distributable cash flow per share, driven by higher throughput volumes, improved margins and strong iso-octane sales.

The record date for the share split will be April 1, 2015. Each Keyera shareholder will receive one additional share for each share held.

Management doesn’t expect the steep drop in oil and gas prices to materially affect Keyera’s throughput volumes, and its cash flows are largely driven by fee-for-service arrangements. It will continue to benefit from diversifying its facilities, services, customers, revenue streams and growth opportunities.

Management currently expects 2015 growth CAPEX of CAD700 million to CAD800 million. A strong balance sheet and access to capital enable the company to fund CAPEX and also provide flexibility to pursue acquisitions from potentially distressed sellers amid the commodity downturn.

Keyera is a buy under USD80, or USD40 on a split-adjusted basis.