Connacher Oil & Gas Ltd CLLZF

RE: Market going long ?/wellsitter

[strzelin]

Thanks Culvature.
You have got my vote for the most intelligent and educational post on this board in 2010.

It is amazing how individual investors are looking  only on  the Revenue and Earnings as an indicator of company well being.  Nortel Network had $2 billion revenue just before ending up in creditors protection.

Wellsiter,
Company never pay the bills from the net earnings .
Earnings are the product of creativity of your accounting team, fine balance of recording amortization, unrealized gain/losses, capitalization of the interest expenses and tax deferral.

The bills are paid from your net cash flow. Do not get distracted by the other numbers.

As for CLL, unfortunately they are in difficult cash flow position right now. They spend about $2 billion dollars in capex and takeovers (Luke and MRC). Most of the funds came from the public offering and $800 million from the loans. At the present  bitumen prices they need 16,000bbl/d bitumen production just to pay the bills.

Bitumen prices are way down in last two months (forget the WIT prices). Their netbacks dropped below $20 per bbl, much lower then  their projected numbers (see small print on on their corporate presentation slide #47).

In addition their projections are based on the pre-payout 1% Royalty rates. Sometime next year POD1 revenue may drooped as much as 25% due to the post payout rates  they have to pay to good people of Alberta Province.

IMO market is sensing the trouble and thanks to the management the short selling trigger by the last share offerings is pushing the CLL share price the the lowest daily closed of the year 2010 ($1.17).
GLTA

PS. Welsitter, it is never to late  to go back to the technical analysis. If you count on the fundamentals the only hope is the unexpected takeover rumors.