Barclays Capital started coverage of several Canadian exploration and production companies, including PetroBakken Energy (PBN.TO: Quote), with a positive stance, saying the industry is well-positioned with low-risk growth and attractive dividend yields.

"With the number of companies in the sector having nearly halved in size over the past five years, we believe the survivors are generally of high quality," the brokerage said in a note to clients on November 17.

Barclays initiated coverage of Baytex Energy Corp BTE.TO, Crescent Point Energy (CPG.TO: Quote), PetroBakken, Peyto Exploration and Development (PEY.TO: Quote) and Progress Energy Resources (PRQ.TO:Quote) with an "overweight" rating.

Dividends of Canadian E&P companies will likely remain stable through 2013, said the brokerage, whose top picks include Baytex, Crescent Point and PetroBakken.

"We find that the group is well positioned to fund its growth and dividends - basic payout ratios average 35-40 percent," Barclays said.

It forecast a yearly total return of 18 percent for the sector, including dividends.

In addition, these companies hold strong positions in major natural gas resource plays in Western Canada and the capital to develop them, supporting average production growth of 11 percent in 2012-13, Barclays noted.

The Montney resource area is one of western Canada's largest, low-cost liquids rich resource plays. The Duvernay is also a hot new area in Western Canada.

The brokerage rated ARC Resources (ARX.TO: Quote) and Bonavista Energy (BNP.TO: Quote) as "equal weight.

Stocks of Enerplus Corp (ERF.TO: Quote), NAL Energy (NAE.TO: Quote) were assigned an "underweight."