Canadian Oil Sands COS (formerly COS.UN)

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Re: Canadian Oil Sands COS (formerly COS.UN)

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Re: Canadian Oil Sands COS (formerly COS.UN)

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Mike Schimek wrote:Whoever would have thought we'd see COS at 11 bucks a few months back when it was in its 20s

It's amazing how markets are and how something perceived as pretty solid can suddenly go to pieces.

So we're up to double waterfall, let us know when the triple happens and you buy in. After that should we expect the stock to do a quadruple rocket?
Oil price continues to test new lows with last Friday's closing at $52.69 about $7.50 to go to my prediction of $45 oil.
Many oil companies are cutting back their 2015 operating budgets, but the momentum and those with drilling term contracts commitments will have to continue to drill to at lease the spring break. Hence, it is very likely that oil price will continue to tank unless OPEC changes its mind. So it is likely the 3rd waterfall will take place in 2015.

I will buy in COS when the price drops below $8 with stink bit at $6 when that happens.
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Re: Canadian Oil Sands COS (formerly COS.UN)

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Mike Schimek wrote:
'Weird cheap'? But it is not dirt cheap yet.
Not yet nope, maybe it will become dirt cheap. "weird cheap" for me is an odd feeling I get about a stock I'm thinking about buying. 90% +/- of the time when I didn't buy at that time I regretted it later, with the window of opportunity passing.
Like Scomac said it is cheap for a reason. The triple water fall hasn't happened yet for both oil price and O&G stocks and related stocks.
I have no idea what a "triple water fall" is as I don't engage in technical analysis.
Interesting read on this link - http://business.financialpost.com/2014/ ... =0233-21df
Yes it looks like his company could sell oil at $50 and break even prior to interest costs on their debt, $56 after interest. What's also interesting is that their rapid growth has been largely financed by taking on a lot of debt. In Q3 their cap ex was 2x what their profits plus DPN was, with the excess being financed by taking on about 1.5 bil in additional debt during that quarter.

I doubt that debtors will be rushing out to throw money at these companies at this time, and therefore these companies will have nowhere near the same amount of capital available to keep drilling and growing as aggressively as in the past. They can recycle their internally generated cash flow, but tapping debt markets for more capital isn't likely. In this company alone we could see their cap ex go from 3.2 bil in Q3, half of which was financed by new debt, to 1.6 bil a couple quarters down the road, because they can't borrow the 1.6 bil in debt they borrowed to be able to spend 3.2 bil in Q3.
One MSM reported investors, by and large, are not buying yet despite the big drops for O&G shares.
Well a lot of Canadian oil producers rallied today so someone had to be buying them.
So stay calm, don't buy till much bigger drops is my belief.
Yep, good luck with trying to time that perfect bottom. It's sweet when it's possible. Let us know when you see the triple water fall and decide to buy in and what you buy!
Mike, I now see triple waterfall with the 3rd waterfall descending faster than ever for oil price trading around $48 falling almost 10% in 2 days and I also see a dead cat bounce for COS preceding 3rd waterfall. Buy COS below $8 is my take.

Interestingly, I just did a 10 year return using TMX charting (adjusting for split if any) without dividend reinvested and yield the followings:

XIU 66%
SU 79%
COS -32% (yes, minus 32% over 10 years)

This surprises me. Anyway, it pays to know that there is such a thing as triple waterfall when the market crashed. Scomac was right when he 'smell blood' and took his money and ran.

I took 10 year cycle because the stock market crash almost every 10 years though O&G is different because of geopolitical implications.
o
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Re: Canadian Oil Sands COS (formerly COS.UN)

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It is all a matter of timing and what 10 year period you pick. Try 2002 to 2012 and see what the results are, including healthy dividends. Anything can be justified to suit one's argument. Here is mine.....

I did very well with COS over the years, until 4Q14. Bought in 2002, got almost a 5 banger (close to 500% gain), it split 5:1, I sold off 80% of it and retained the remainder until late 2013 when I then sold that portion alone for more than I initially paid. It was only the 4Q14 purchase and then re-sell where I lost some money.

COS lost my trust with their disappointing December guidance and I think Syncrude will be on the ropes for awhile. COS gambled on oil prices by preferring 'lowest cost' operations, i.e. good balance sheet and no hedging, to an expensive hedging program and that is going to leave them in a world of hurt this coming year.
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Re: Canadian Oil Sands COS (formerly COS.UN)

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For interest, the following is what I posted in another forum in response to a post on yesterday's SCO price of C$52.68, which was itself a response to a prior post on Canadian WCS futures being in the $40 range (IOW, one has to pick the right crude to do analyses):
If so, and looking at their 2015 guidance, http://www.cdnoilsands.com/files/Gui...001_g0hh0t.pdf they are only now cash flow positive/barrel IF some of their other costs go down, e.g. current taxes, royalties, etc.

On face value, their document states Operating costs of C$45.69/B with gas fuel at $4/MMBTU. If we assume NG is down to $3, then reduces Op Cost by 64 cents to $45.09/B. If we assume $0.50-1/B transportation charges to Edmonton, their realized SCO price is $51.68-52.18..... let's say $52.09. That is a margin of $7/B.

That does not include any other cash costs such as Royalties, Current Taxes, Administration, which at $19.29/B will come down as revenue comes down, but does not go to Zero. Maybe they can get those costs down to $10/B. Still puts them underwater on a Cash Flow from Operations basis BEFORE capex of about $3/B at yesterday's SCO price (or $120 million at an annual production level of 40 million barrels assuming reduced royalties, taxes, etc. of $10/B rather than $19.29/B).

Since we know capex can be financed by debt (flexiblity on the balance sheet), the real crunch is how much negative Cash Flow from Operations can be funded from debt, for how long, at current oil prices (or worse).
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Re: Canadian Oil Sands COS (formerly COS.UN)

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AltaRed: Using your numbers above, the SCO price of C$52.68, and ongoing maintenance capex of $14/B, I'm calculating a free cash flow of negative $1.7 billion/yr for all of Syncrude. I realize it's a complex facility, but is there any way they could put the facility on care and maintenance until prices recover?
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Re: Canadian Oil Sands COS (formerly COS.UN)

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COS can fund their share of maintenance and project capex from debt in times of crisis. That is not an issue as they do have a decent balance sheet. That said, I suspect all Syncrude owners will want to high grade the maintenance capex component this year and cut it back by a substantial amount. Nothing can be done about project capex nor capitalized interest (it is sunk). Investors should be looking for COS to address maintenance capex in their 4Q results later this month.

The bigger issue is their $615 million (circa $16.25/B) of Development Expenses/Royalties/Interest Expense/Admin/Current Taxes, etc. How much of that will decrease? Certainly royalties and taxes will be less, but can they cut back on things like Dev Expenses and Administration? COS should be addressing that in their 4Q results as well.

At the very least, they should be suspending all future dividends to minimize debt growth.
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Re: Canadian Oil Sands COS (formerly COS.UN)

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AltaRed wrote:
At the very least, they should be suspending all future dividends to minimize debt growth.
I wonder if that would be wise? I think that a second dividend cut is all but inevitable. However, you might really impair your ability to raise capital (if and when necessary) in the future if the dividend was eliminated. People tend to remember that sort of thing.

Would the market react more or less favourably to a suspension of dividends versus a cut to $.05/qtr? Do you let the share price go completely in the tank and risk becoming a takeover candidate that may not suit IMO/SU? Even at a nickel a quarter there's enough yield to keep income seekers in the name which should put a bit of a floor under the share price.
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Re: Canadian Oil Sands COS (formerly COS.UN)

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Point taken and they may do that, but I think most DIY investors are wise enough to know continuing to pay dividends will increase debt at these oil price levels. The income (GIC refugee) investor is probably already gone. I would be willing to guess their stock price would improve if the dividend went to zero (they have done it before). Survive to fight another day.
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Re: Canadian Oil Sands COS (formerly COS.UN)

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I will buy in COS when the price drops below $8 with stink bit at $6 when that happens.
Did you buy some/more ?
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
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Re: Canadian Oil Sands COS (formerly COS.UN)

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BRIAN5000 wrote:
I will buy in COS when the price drops below $8 with stink bit at $6 when that happens.
Did you buy some/more ?
No. My bid is $6. It is highly possible to get done.
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Re: Canadian Oil Sands COS (formerly COS.UN)

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Justise wrote:
BRIAN5000 wrote:
I will buy in COS when the price drops below $8 with stink bit at $6 when that happens.
Did you buy some/more ?
No. My bid is $6. It is highly possible to get done.
Haha I hope it works out for you and maybe your gains will equal the rest of our losses on this thing. A guy's gotta have a sense of humour about the money game!
Show me the incentive and I will show you the outcome

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Re: Canadian Oil Sands COS (formerly COS.UN)

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AltaRed wrote:It is all a matter of timing and what 10 year period you pick. Try 2002 to 2012 and see what the results are, including healthy dividends. Anything can be justified to suit one's argument. Here is mine.....

I did very well with COS over the years, until 4Q14. Bought in 2002, got almost a 5 banger (close to 500% gain), it split 5:1, I sold off 80% of it and retained the remainder until late 2013 when I then sold that portion alone for more than I initially paid. It was only the 4Q14 purchase and then re-sell where I lost some money.

COS lost my trust with their disappointing December guidance and I think Syncrude will be on the ropes for awhile. COS gambled on oil prices by preferring 'lowest cost' operations, i.e. good balance sheet and no hedging, to an expensive hedging program and that is going to leave them in a world of hurt this coming year.

AltaRed, your talk of 5 bagger at least twice in the recent past and also talk of COS as a cash cow, that is history. Now, the reality is that majority of investors are left holding the bag. Many invested for dividend will be very disappointed with a double whammy loss of both dividend due to cut (and further chance of total cut) and capital loss.

You looked at this stock as a gravy train, I saw it coming as a racking train. Knowing the overall macro situation and learning from the 1987 market crash in triple waterfall in which I made money. I correctly forecasted the triple waterfall for oil price and the level COS is expected to fall to. Going forward, I expect another dividend cut this year to fight for survival.

As an experienced retired engineer, I know too well the very high cost to maintain/improved ageing plant/infrastructure and this plant is involved in a commodity in general and too many constraints in oil sand in particular.
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Re: Canadian Oil Sands COS (formerly COS.UN)

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COS will have its day in the sun yet again just because of the cyclic nature of commodities. Syncrude itself has an excellent quality ore body that gives it some advantage.

While I agree aging infrastructure has been giving them problems in recent years, this appears to be a result of the owners neglecting to stay on top of a proper maintenance and replacement program. They will overcome that in the next year or two simply because there is just too much money left to be made from these leases. Old facilities need not be a headwind. Oil refineries have dealt with these kinds of issues for many decades.

I believe it is a matter of time when there will be an opportunity again 'someday' for the income investor. It's obviously just not now, nor will COS necessarily ever be the best oilsands investment opportunity going forward. People denigrate the mining projects because of their complexity and enormous front end costs but these projects also do not have to keep drilling and tieing in new wells to keep the treadmill going. We shall see how this (mining) space evolves over the next year or so.
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Re: Canadian Oil Sands COS (formerly COS.UN)

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Any opinions about the future of COS vs CNQ?
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Re: Canadian Oil Sands COS (formerly COS.UN)

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AltaRed wrote:COS will have its day in the sun yet again just because of the cyclic nature of commodities. Syncrude itself has an excellent quality ore body that gives it some advantage.

While I agree aging infrastructure has been giving them problems in recent years, this appears to be a result of the owners neglecting to stay on top of a proper maintenance and replacement program. They will overcome that in the next year or two simply because there is just too much money left to be made from these leases. Old facilities need not be a headwind. Oil refineries have dealt with these kinds of issues for many decades.

I believe it is a matter of time when there will be an opportunity again 'someday' for the income investor. It's obviously just not now, nor will COS necessarily ever be the best oilsands investment opportunity going forward. People denigrate the mining projects because of their complexity and enormous front end costs but these projects also do not have to keep drilling and tieing in new wells to keep the treadmill going. We shall see how this (mining) space evolves over the next year or so.
I had intended to ask for opinions here re COS.
As a speculation play I bought 100 at $14.95 and 200 more at $10.90. Tonight I placed a stink bid for 200 more at $6.85. I decided that if it looked good at the above prices why the hell am I letting this pass me by. This will be my final crack at averaging.Dejavu.
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Re: Canadian Oil Sands COS (formerly COS.UN)

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Earnings come out tomorrow and I don't think they'll be pretty. From what I remember, they had 0% production hedged
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Re: Canadian Oil Sands COS (formerly COS.UN)

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Dejavu wrote:Tonight I placed a stink bid for 200 more at $6.85.
That doesn't sound like a stink bid to me. The low of the day today (Wed) was $6.90. They release quarter results tomorrow (Thu) after the market close. Chances are they will cut the dividend for the second time, or eliminate the dividend altogether. You may see $5.xx on Friday.
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Re: Canadian Oil Sands COS (formerly COS.UN)

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Trading in COS was halted at 3pm ET for "Dissemination". Hmmm.
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Re: Canadian Oil Sands COS (formerly COS.UN)

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Still think the pair of running shoes I bought was the better call.
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Re: Canadian Oil Sands COS (formerly COS.UN)

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Dividend cut to 5 cents
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Re: Canadian Oil Sands COS (formerly COS.UN)

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Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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Re: Canadian Oil Sands COS (formerly COS.UN)

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Just had a quick look at their press release. A couple of comments on their outlook for 2015:

At their assumed realized SCO price of $63/Bbl, they are expecting $368M in cash flow from operations. (This assumes they can realize $294M in operating and capital cost reductions from their December budget.) After maintenance capital ($451M )and dividends ($97M), their net cash flow is minus $180M.

The current realized SCO price is closer the $51.50/Bbl. At todays prices, their cash flow is around minus $600M for 2015. They can use the balance sheet to fund this, but as long as prices remain low, the current operations will continue to erode shareholder value.

I wouldn't recommend investing in COS to play an eventual rebound in oil prices. There are probably other companies that don't have such a sky-high cost structure.
Last edited by Dudsy on 29 Jan 2015 18:52, edited 1 time in total.
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Re: Canadian Oil Sands COS (formerly COS.UN)

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ig17 wrote:
Dejavu wrote:Tonight I placed a stink bid for 200 more at $6.85.
That doesn't sound like a stink bid to me. The low of the day today (Wed) was $6.90. They release quarter results tomorrow (Thu) after the market close. Chances are they will cut the dividend for the second time, or eliminate the dividend altogether. You may see $5.xx on Friday.
Thx.very much for the headsup. Order modified to $5.00. I will monitor.Even at this price my avg.will be $9.38.
Anyone else here buying?
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Re: Canadian Oil Sands COS (formerly COS.UN)

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I will probably look at the price tomorrow morning and may buy about $2K.
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