RE: problems with access to capital.It is anticipated the company's 2008 capital program on conventional oil and gas properties in Canada and its capital program at its Great Falls refinery will be financed from internally generated sources. These programs are anticipated to total approximately $73-million during 2008 and are part of Connacher's previously announced capital plan for next year.
As a result of the foregoing capital raising transactions, Connacher anticipates that it will be able to fully finance all of its new projects and planned 2008 growth programs, in addition to the anticipated completion of Algar in 2009, without the need to raise additional permanent capital, including new equity, for established projects.
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Mr. Tertzakian said major companies in the oil sands will continue to expand, but smaller players face relentless inflation in construction and natural gas, and problems with access to capital.
ARC has an index of seven oil sands producers, whose stock prices have shown little effect from the stunning rise in crude prices over the past year.
“What that tells you is that the equity markets don't believe any extra value is being created right now, even with the higher oil prices,” he said.
Peter Linder of Delta One Energy Fund said he believes the oil sands will remain an attractive place for international oil companies to make investments in order to replenish their reserves.
“I would say I have between zero and no concerns,” Mr. Linder said.
“There's a reason why I think oil won't go under $100 for the rest of this decade, and the reason is it is very difficult to replace production worldwide. And the tar sands is one of the only safe – in terms of geopolitics – risk-free places to grow production.”
Mr. Linder said costs will rise – both as a result of construction inflation and environmental requirements – but that production from the oil sands will remain “very economic.”
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