Who won the trade?It appears that SU got a great price on the assets. Well done.
Riddle me this:
Total are not stupid, so why did they sell at "give away pricing" if oil prices are expected to move higher over the long term?
A. Total wanted out of the oil sands for political reasons
B. Total decided that expensive land locked oil sands didn't meet their investment threshold
C. Total realized that SU had them by the short ones as 'SU was the ONLY buyer
D. All of the above
The transaction reminds me of Suncor's decision to put its PetroCan assets up for sale. The price that potential buyers were willing to pay obviously didn't satisfy SU's investment threshold so Suncor decided to hold.
In the short run, I think the transaction favours Suncor as it supports its strategy to squeeze out free cash flow for as long as it can before extinction.
If I had to pick between Total's management and Suncor's management, I would wager on Total so in the long run, I think Total was smart to get out, even at a give away price.
Which team got the best of the trade? Suncor got the best player in the deal, but time will tell how the draft picks and prospects work out.