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Goldman's 5 Best Energy Stocks for 2011

Stocks in this article: GS CNQ APA ESV PBR OXY PXP

Canadian Natural Resources (CNQ), a major player in generating oil from oil sands in Canada, as well as a diverse explorer and producer of conventional crude oil and natural gas in North America, the North Sea and offshore West Africa, was on Goldman Sachs' original Conviction List with a $48 price target, worth an 8% premium.

But recent events have resulted in a more uncertain outlook, although Goldman is maintaining its "buy" rating. The investment bank said in a research note that a Jan. 6 fire at the company's Horizon oil-sands production facility in Canada "will likely prove to be a transient event. (It) continues to have a favorable combination of leverage to our bullish crude oil view and expectation for lower discount rates (i.e., higher valuation) as well as visible production and resource growth potential."

But indicative of how important Horizon is to the company, a month before the fire, a Morningstar analyst wrote that the project is a primary driver of the company's growth, "with an anticipated volume increase of 19% due largely to improved reliability. The higher volumes should also result in a decline in per-barrel operating costs for the project. Horizon capital spending could more than double next year, although management has yet to provide a range of potential capital spending for the project."

For fiscal 2010, analysts estimate the company will earn $2.45 per share, which will rise 15% to $2.82 for 2011.

A summary of analysts' ratings by S&P resulted in two "buy" ratings, 13 "buy/holds" and five "holds."

Its shares are down 5% this year. They climbed 24% in 2010.

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