4 energy stocks hoping for a Keystone XL boost

3:00 PM boost, energy, hoping, Keystone, stocks No Comments

| By Aaron Levitt for InvestorPlace

Approval of the controversial oil pipeline looks increasingly likely, and when the green light comes, these stocks could pop.

The massive TransCanada (TRP) Keystone XL pipeline extension, long in limbo over environmental concerns, might finally get the nod, and soon.

Environmental activists and pundits have pressed President Barack Obama’s hand over 1,179 miles of new pipeline that will cross the border from Canada into North Dakota.

Graphic: The keys to understanding Keystone

This section has been the main bone of contention in a Keystone system that would ultimately carry oil all the way from Canada’s oil sands to the Gulf Coast, and has caused the project to wallow sans approval for roughly five years.

However, Canada gave the U.S. an elbow early this month, with Canadian Foreign Minister John Baird, telling the U.S. Chamber of Commerce that "the time for a decision on Keystone is now."

The prospects for approval are more promising than not. An early March 2013 draft of the final environmental impact study by the State Department said the pipeline didn’t have much influence on climate change or the environment. This was one of the major sticking points in the approval process, and TransCanada estimates that the final draft of the paper will support a similar conclusion..

Once that study is released, the project’s 90-day national interest determination clock begins ticking, and the Obama administration will have to come to a conclusion. That should happen by the beginning of the second quarter.

At the same time, TransCanada isn’t waiting around for the outright OK. The firm has already begun construction on the various southern legs of the Keystone that don’t require presidential approval; those could begin transporting crude oil by 2015, though that timeline could be pushed back. As for crossing the U.S.-Canadian border, TRP has begun exploring using a combination of rail and pipeline. Railways don’t require presidential approval and ironically would actually emit more emissions that the originally pipeline plans.

Either way, the Keystone XL -- in some form or another -- is likely coming to prairie near you. That could mean some big things for several stocks. Here are four of the biggest potential winners.

TransCanada

The obvious play is all of this mess is TransCanada (TRP) stock. The firm has sunk billions into developing the project, and an approval would send shares flying. More importantly, the Keystone’s steady flow of crude oil are just the kind of assets that pipeline owners love -- i.e., they generate huge cash flows.

Cash flows from the completed Keystone XL will be almost immediately accretive to TRP shares because the dragged-out approval process has allowed TransCanada to essentially save up enough cash to fund and build the project outright. Plus, TRP doesn’t plan on issuing too much debt to make it happen.

Aside from the potential capital appreciation, investors could be treated to some hefty dividend increases from the pipeline firm. Already, TransCanada yields a very healthy 3.9%.

Suncor Energy

Canadian heavy oil and tar sands producers have seen their profits diminish as the lack of sufficient infrastructure has curtailed demand for Western Canadian Select (WCS) crude. The fracking boom creating oodles of lighter, easier-to-refine WTI crude oil isn’t helping, either.

The Keystone XL will eliminate many logistics issues, and producers in the oil sands should immediately see a bump in price for their production when it starts flowing.

The biggest winner could be Suncor Energy (SU). The company first pioneered drilling in the oil sands back in the 1960s and has continued to amass a large acreage position in Alberta. Hindering that position has been the huge disconnect between WCS and WTI crude oil, and profits at SU continue to be muted. However, if the Keystone is approved, Suncor should be able to boost profits and see its shares improve.

Exxon Mobil

Integrated giant Exxon Mobil (XOM) actually has a lot to gain by having the Keystone XL approved.

First, XOM’s refineries in the Gulf are equipped to handle the heavy, sour crude that will be pumped downwards from Alberta. And even if the spread between WSC and WTI returns to a more historical range, XOM should still capture plenty of refining profit.

The other ace up Exxon’s sleeve is that it owns 70% of the shares outstanding of Canadian oil sands producer Imperial Oil (IMO). Imperial’s Kearl project in Alberta promises to be a monster and is already pumping out about 110,000 barrels per day from the oil sands. Exxon and Imperial estimate that they should be able to produce roughly 345,000 barrels per day by 2020. That could mean some hefty profits at Exxon as it produces then refines all of that WCS crude oil.

Valero

Already winning big on the margin front, the nation’s largest independent refiner Valero (VLO) could be a big beneficiary of the Keystone XL’s approval.

Like Exxon, Valero’s refiners in the Gulf are some of the best equipped to handle the Canadian crude as they have been typically been fed by imports from Mexico and Venezuela. Valero has already committed to taking at least 100,000 barrels a day -- roughly 20% of initial capacity -- from Keystone XL until 2030 and has begun expanding the hydrocracking capacity at these refineries.

Aside from the profit margin potential, Valero has another reason to win from the Keystone -- its option to purchase a chunk of it. VLO has the right to buy up to 15% of the pipeline. With its recent pipeline master limited partnership spinoff, Valero Energy Partners LP (VLP), Valero could be setting itself up for a nice tax-advantaged dropdown if the project is ultimately approved. That could result in higher dividends for shareholders down the road.

As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.

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6 questions to boost college aid

11:00 AM boost, college, questions No Comments

| By Michael Estrin, Bankrate.com

Paying for college can be a complex business. Here are 6 things to know to get the best student loans.

Paying for college isn't as simple as it used to be. To meet myriad costs, including tuition, student fees and room and board, college-bound freshmen and their families increasingly have turned to financial aid in the form of grants, scholarships and loans that have become more and more complex in recent years.

Between the 2006-2007 and 2010-2011 academic years, the percentage of students receiving some form of financial aid at four-year colleges grew from 75% to 85%, according to the National Center for Education Statistics. But while parents and students may think an offer of financial aid is the ticket to an affordable higher education, experts caution that such letters often can be confusing and misleading.

"It's really a case of buyer beware for both parents and students," says Andy Lockwood, a Plainview, N.Y., college finance consultant.

At the end of the day, colleges are businesses, whether they're public or private, for profit or not. "They want to get you to come for the most money they can get out of you," Lockwood says.

The key to keeping your education costs down is to do your homework after receiving the financial aid offer letter and not get carried away by the acceptance letter. Asking these six questions can help:

A typical offer letter includes a dollar amount and some description of how that money will be distributed. Unfortunately, colleges sometimes obscure the fact that the money will come in the form of loans, Lockwood says.

"If the offer is described as anything other than a scholarship or a grant, it's not free, and that money will need to be repaid," Lockwood says.

But those two words -- whether or not they appear in your letter -- shouldn't end your inquiry. In fact, Lockwood says most students and parents should take the time to ask questions about the offer letter and clarify anything they don't understand.

If possible, Lockwood advises following up with a phone call or by visiting in person. But some financial aid offices may not be responsive. Getting answers may be frustrating, but students and parents shouldn't accept an offer they don't understand.

The type of loan your student takes out can have a huge impact on his finances after graduation. Unfortunately, the terminology surrounding student loan products can be incredibly confusing.

"The irritating thing is that two different financial aid offices can refer to the same loan product differently," Lockwood says. "For example, 'direct loans' is the new term for Stafford loans, but not all colleges have adopted the new nomenclature."

While it's important to get a handle on the lingo, parents and students also need to understand the terms of each loan product. That means understanding the interest rate, when repayment should start and whether the rate is fixed or adjustable, Lockwood says. It's also a good idea to ask what happens if the student is unable to make payments.

While most parents are likely to be involved in their student's financial aid process, they'll want to specify whether they'll be asked to co-sign for a student loan. If the parents do co-sign, they should ask about how they can remove themselves from their co-signing obligation, Lockwood says.

We tend to fixate on the tuition number, but the fact is that college students incur many other costs, including room and board, books and lab fees. Most students need some spending money, too. But if you're looking to compare prices based on an award letter, you might find it difficult.

"Every college publishes a cost-of-attendance figure that includes hard costs like tuition, fees, and room and board, (as well as) soft costs like books, transportation and living expenses," says Joseph Orsolini, the president of College Aid Planners in Glen Ellyn, Ill. "Some colleges will use the hard cost only in their award letters, while others show the full cost-of-attendance figure."

To get an apples-to-apples comparison, Orsolini suggests comparing only hard costs, because every school provides those figures. Still, parents and students shouldn't ignore soft costs.

"Some students look past the other costs, but you will still spend money on books and personal expenses," says Steve Booker, the director of financial aid at Rollins College in Winter Park, Fla. "Knowing what these estimated costs are and what options are available may help you minimize these costs."

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Efforts of the United States get a corporate boost foreign aid

1:04 PM boost, corporate, Efforts, foreign, States, United No Comments

"It’s a little of both but without Donald Trump to fire anybody," Visweswariah said, noting the team had just a few weeks to accomplish many tasks that will help both events succeed.

Visweswariah and his teammates, who worked in Rio as part of an IBM program that encourages employee volunteerism, are the foot soldiers of a growing corporate cadre in the U.S. foreign aid program. And with foreign aid programs increasingly under fire in Congress, they are seen as an increasingly important force that could fuel innovation and greater productivity in the government’s efforts to win friends overseas.

On Tuesday, the U.S. Agency for International Development unveiled a program to make it easier for more companies of all sizes to send professionals abroad to help local governments, small businesses and civic groups in developing nations. The new Center of Excellence for International Corporate Volunteerism was developed with IBM and CDC Development Solutions (CDS), a Washington, D.C.-based nonprofit that manages companies international volunteer initiatives.

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USAID will pay CDS $743,076 over two years to launch the program's website and get it operational. IBM will pay CDS $4.1 million in cash and in-kind donations of technology, materials and expertise and 100 employees.

Sharp increase in corporate volunteerism
CDS estimates that 21 major U.S. companies plan to send nearly 2,000 employee volunteers abroad this year, up from six firms that sent just 280 workers to four countries in 2006. Since then corporate volunteers have worked in 58 countries, CDS estimates, based on company surveys.

Since 2008, IBM has spent $25 million to send 1,100 employees on more than 100 missions in 20 countries through its Corporate Service Corps, said Ari Fishkind, a company spokesman.

Besides Rio, teams have traveled to Ho Chi Minh City, Vietnam, to help the city develop strategies in public transportation, water supply and food safety, and gone on multiple missions to Africa, working with local organizations in South Africa, Tanzania, Nigeria, Ghana and Kenya to support programs that drive economic development. In Ghana, for example, a team worked on a technical school's website and student record database, improved an electric company's computer network and aided in technology to better educate disadvantaged youths.

Each six-to-10 member IBM team spent more than two months in preparation, one month on location and more than two months after their return, wrapping up projects and mentoring other volunteers, IBM said. More than 10,000 employees have applied to participate in the program.

IBM, which has nearly 427,000 employees, acknowledges that projects may occasionally lead to commerce, such as when the government of Cross River State in Nigeria last year hired IBM to assist with two social welfare and health care initiatives. But Big Blue, which last year reported net income of $14.8 billion on revenue of $99.9 billion, said that’s not the objective of its Corporate Service Corps.

Among other companies with new volunteer programs are Dow Corning's Citizen Service Corps, whose pilot project in Bangalore, India, is focused on energy, social enterprises and low-income housing, and drug maker Novartis International, whose Entrepreneurial Leadership Program sent teams to Tanzania and the Philippines to work with NGOs and government agencies on health care initiatives.

USAID says the new program will allow other companies to leverage the expertise of IBM and others to set up or expand international volunteer programs.

The independent federal agency is rooted in the post-World War II European reconstruction program known as the Marshall Plan. With its $21.9 billion budget facing cuts by Congress, USAID is under pressure to spend taxpayers' money more efficiently. Teaming with corporations will mean deploying more high-level expertise faster, cheaper and quicker to USAID's beneficiaries, who in turn eventually may become self-sustainable, agency officials say.

"It is our hope that these resources will drive innovation and allow us to achieve a greater return on investments," Bambi Arellano, counselor to USAID, said in a statement announcing the partnership.

Volunteers will work on food security, sustainable economic growth, global climate adaptation, health, education, information technology and urban development, the agency said.

'Jumping on the bandwagon'
To Ian Vasquez, director of the Center for Global Liberty and Prosperity at the Cato Institute, a Washington, D.C.-based market-liberal think tank that has called for the abolition of USAID, the agency is "jumping on a bandwagon a little too late … to approximate what occurs in the market."

"Corporations already are doing philanthropic and private foreign aid that far surpasses what the agency does itself," Vasquez said. "It smells very much like a development fad. The aid agency has been dogged by problems of effectiveness and accountability — a problem with international aid in general."

But Carol Adelman, who was an assistant administrator at USAID in charge of foreign aid for Asia, the Middle East and central and eastern Europe when the Berlin Wall fell in 1989, said corporate involvement in U.S. foreign aid efforts is nothing new.

"We had a bank of volunteers," she said, referring to the Washington, D.C.-based International Executive Service Corps. "They were invaluable to me in helping on projects when we needed to have that language skill."

Adelman is now director of the Center for Global Prosperity, tracking private-sector philanthropy at the Washington, D.C.-based Hudson Institute, a nonpartisan research organization.

She called USAID's new program "a smart move because of the battle over the budget" in Congress. Teaming with corporations will save money and boost peer-to-peer relationships that will help build understanding of America and its principles.

Companies know that donating human resources now to efforts around the world may not immediately improve their bottom lines, but long term these efforts could help grow their supply chains and increase the global marketplace for their products, officials said. Also, both government and private-sector officials said they follow the presumption that prosperous democracies tend not to go to war with one another, thereby creating environment where commerce can flourish.

That concept was touted as long ago as 1957, when Secretary of State John Foster Dulles told Congress that the Eisenhower administration would prefer to see private capital eventually replace foreign-aid funds in overseas economic development, according to a Time magazine report at the time.

New form of capitalism
"The reality is that to be able to achieve Millennium Development Goals — to improve the well-being in the poorest places on Earth — requires a partnership of government, corporations and non-profits," said Samuel A. Worthington, president and CEO of InterAction, an alliance of 190 U.S.-based international nongovernmental organizations (NGOs).

"With individuals going into long-term projects, you are in essence getting a private Peace Corps, and the technical expertise that comes with it, and increased mutual understanding between two countries," Worthington said of the new USAID program.

The USAID partnership will offer structure and training needed to make sure volunteers also seen as citizen-diplomats are aware of cultural sensitivities while delivering help, Worthington said.

"The new face of America overseas, often privately funded, can be very positive," he said.

In some cases, corporate engagement also can be tied to promoting social welfare that advances companies' needs, Worthington said, citing a PepsiCo program in Ethiopia that assists farmers growing chickpeas, a nutritious supplement for undernourished children and the foundation for snacks and meals the corporation can sell.

This form of responsible capitalism improves the well-being of citizens while allowing the company to gain value, Worthington said.

"This is better than spending money to improve a corporate image after creating a negative impact you might have caused," he said.

Pierre Ferrari, chief executive officer of nonprofit Heifer International, told msnbc.com he doesn’t begrudge the corporate newcomers.

"It makes sense to work together … At Heifer we work with the poorest of the poor, small-holder farmers, producers who need a market for their goods," said Ferrari, a former Coca-Cola USA vice president and a member of the board of Ben & Jerry's ice cream. "(But) everyone brings a separate and complementary expertise. NGOs have expertise in community development at a grassroots level; governments can assist with infrastructure and laws; companies like IBM provide financial resources and intellectual property, even market demand for emerging markets in the same field, such as dairy. A partnership can include corporations as both buyers and mentors."

And the personal touch of the volunteers is essential, Ferrari said.

"The fact that these corporate volunteers are prepared to travel and stay in countries where, frankly, it's not very comfortable or convenient, that they're prepared to help for an extended period, speaks highly to their commitment to the mission and meaningful participation," he said.

On the ground in Rio
Providing that corporate perspective was a key accomplishment for IBM's Visweswariah, whose engineering expertise lies in designing computer chips. In Rio, he focused on a personal interest that is also a requirement for the International Olympic Committee: sustainability.

Visweswariah and his wife own a zero-carbon-footprint home 60 miles north of New York City. In Rio, sustainability meant helping officials focus on how to meet promises made to the IOC on environmental standards for new buildings, ethanol for vehicles, solar power for pools and handling waste and recycling.

"We spent three weeks carrying out consultant projects," Visweswariah said of his team, comprised of executives from India and Australia as well as the U.S. “… We did not do the work for the client, but set up a framework so they could do their own work."

The team tapped other Olympic host cities — including Vancouver, London and Beijing — to consult about best practices and reached into "the far corners of IBM" for information technology help with traffic, security and crowd control. Members also advised Rio's maintenance department in setting up adopt-a-space programs for public parks and squares, connected with citizens to use social media to express pride in their city and worked with Rio's job-attraction agency to ensure that a properly trained workforce would be available.

The experience of working in Brazil also benefited those who participated, Visweswariah said, adding that he came back to IBM with what he said are deeper, broader and valuable management, consulting and networking skills.

"For the team of people you send, it's a marvelous opportunity to grow skills and grow an understanding of the global nature of work," Visweswariah said.

© 2011 msnbc.com Reprints

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