COS - Canadian Oil Sands

[Viking]

COS has sold off pretty aggressively the past few months (compared to big oil). Q1 earnings will come out later this week. Looks to me like a very good core, long term holding (in place of a bond).

 

Regarding valuation, Conoco sold their 9% stake in Syncrude to Sinopec in 2010 (COS owns 36% interest in Syncrude). COS is currently trading at just over 50% of the value Conoco realized. Oil continues to trade over $100. Argentina just nationalized a large player. The middle east remains volatile - Iran has not been resolved.  There are lots of catalysts out there. There is also lot's of pesimism regarding COS; hence, the low share price. Yes, Syncrude/COS will be spending an enormous amount of money the next 2.5 years to upgrade the business and if oil prices crater then COS will likely need to cut the dividend. Royalty payments to Alberta will also increase materially the next few years. The oil sands are currently an out of favour investment due to environmental concerns. There is also a lack of pipeline capacity.

 

COS April 3rd Presentation: http://www.cdnoilsands.com/Theme/COS/files/Presentations/COS%20presentation_handouts_v001_d09ep6.pdf

Good summary: http://seekingalpha.com/article/492581-canadian-oil-sands-a-stable-6-yielder-with-plenty-of-upside

Kurt Wolf (McDepp): http://www.mcdep.com/mr120327.pdf

[mountboney]

I like COS.  The market seems to be pricing in what will be a long running battle with the enviros who's number one goal is to try and land lock oil sands crude.  Several Keystone size pipelines will be needed over the next 7 years or so, the entire battle over Keystone has nothing to do with aquifers in Nebraska and everything to do with land locking the oil sands.  It helps that COS sells syncrude and not Bitumin but the pipeline issue will be a battle for a decade depressing Canadian crude price all along.

 

I think there will be ongoing opportunities to buy on dips when the news is bad and sell when there is a pipeline/permit breakthrough of some sort.

[netnet]

I was in this name I guess about 8 years ago.  Out of curiosity, is Seymour Schulich still in this?

[KinAlberta]

Is anyone looking at COS these days? 

 

Beyond their high break even cost, debt, etc. the dividend cut and the potential for further dividend cuts is likely causing some degree of selling pressure by the yield chasing folks and funds. 

[Guest 50centdollars]

I was in this name I guess about 8 years ago.  Out of curiosity, is Seymour Schulich still in this?

 

I don't think he is. I know he owns a lot of Birchcliff.