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Connacher Oil & Gas Ltd CLLZF

"Connacher Oil and Gas Ltd is an oil company engaged in the exploration and development, production and marketing of bitumen. Connacher holds two producing projects at Great Divide are known as Pod One and Algar."


GREY:CLLZF - Post by User

Bullboard Posts
Comment by strzelinon Aug 16, 2012 2:36am
324 Views
Post# 20223398

RE: How could their losses double?

RE: How could their losses double?

Declining production (42% below design capacity) , Bitumen prices and unsustainable debt load are the simple answer to your question.

As I telegraphed on this board at the and of June Q2 bitumen prices were below $38/bbl (average Q2 (34/bbl) which is ~$18/bbl below their Total Cost including big brake on the Royalties.

When they go to Post-Payout Royalties (2013/14) they will need ~$64 bitumen prices (~$110WTI) to brake even. Q3 is not going to be much better as July and 1/2 Aug bitumen prices did not improved much.

As an investor in the CLL you have to ask yourself the question: why would I buy money loosing and 2nd worst performing SAGD in Alberta loaded with $900 debt which will require additional $700 million to expend the production to the point of financial sustainability?

Are there better opportunity out there (in light oil) to invest $1.6 to $1.8 billion with much better and more predictable rate of the return on your capital?

PS: refinery initial purchase cost was $55 million. Between 2008 and 2012 CLL added $70.4 million in capital expenditures to upgrade the MRC refinery for the total cost of $125. They sold it for $120 millions + inventory.

 

Bullboard Posts