Connacher Oil & Gas Ltd CLLZF

Re: The Alberta Royalty Report

[strzelin]

How is this progressive tax per well supposed to work?/RossFAmann Oil sands projects will pay a royalty based on 1% of gross revenue until the project recovers its capital. As you know we have to get the approval for every separate project (POD1,2,etc..). In my estimate we will start to pay 33% of POD1 net revenue (defined as gross revenue minus capital and operating costs) in Q1 of 2010. Every POD will have a different time line for royalty payments. In addition we will pay oil sands severance tax (OSST). The OSST would be payable on every barrel of oil sands produced. The OSST would be sensitive to oil prices. 1% at $40/bbl and increasing 0.1% for each $1/bbl increase . At $80/bbl OSST will be 5%. All in all out of 100mln net profit generated by POD1 the government will take about 40 mln instead 25 mln .This will lower our earnings per sh by 15% and will definitely effect the CLL share price. With positive respond (so far)from the general public and press the government will implement this with maybe minor changes and sell it as the FAIRNES tax. Is the stock market over reacting to this tax? I do not know. All (4) reports from investment houses I read estimating that on average oil sands net asset value would decrease from 9% to over 10% . They lower the target prices for the stock they follow from 5% to 20%. One of them(BMO)said :We estimate if the all of the report’s recommendations are enacted by the government, it will reduce the value of a typical oil sands project by roughly 20%