Q3 Cash Flow and Earnings EstimateCash Flow
Q2 Net Revenue: $993M (SCO Sales minus Crude purchases)
Q3 Estimate Net Revenue: $847M ($146M less than Q2)
Operating Expenses: $520M
CF from Operations: $327M
Change in Non-Working Capital: $75M (Est)
Cash from operating activities: $402M
Capex plus maintenance: $300M
Cash available for distribution $102M
Cash required for distribution $170M
Cash burn for Q3 $68M
Cash in the Bank as of June 30,2013: $1416M
Repaid $US300 Bond in August ~ CDN$310
Estimated cash at end Sept 30: $1038M
Looking ahead to Q4-13 when hopefully production is just 300,000b/d and they get $95/b, the cash draw to cover operating expenses, capex, maintenance and the divvy is approximately $30M. If that quartely average scenario could be maintained throughout 2014, COS would only require an additional $150M to get through to the end of Q4-14. That would leave them with roughly $900M cash in the bank.
I think that completing the improvements on time and on budget are critical. If my cash flow estimate for 2014 is reasonably close, there should be a nice divy increase in late 2014. With a good cash reserve in the bank half way thru next year, maybe the analysts will start to wake up to the potential that this stock has.
Q3 Earnings I’ve also looked at earnings for Q3-13. My estimate is 40¢, which is 4¢ below current consensus of 44¢. Most analysts in the know do not worry about earnings, but that is what the press and S&P report. The critical number for oil stocks is cash flow. One of the tricky numbers in the earnings is guessing the FX loss on US denominated bonds. Regardless here are my numbers for your review.
Revenue $847M
| Expenses |
| Operating Expense (based on Sales) $364 |
| Non Production Cost (R&D and Eng) $37 |
| Crown Royalties $26M |
| Administration $6M |
| Insurance $3M |
| Depreciation $100M |
| Realized FX loss (gain) $40M |
| Financing expanses $13M |
| Corporate Tax $65M |
| Total Operating Expenses $654M |
Net Income $193M
Estimated Earning per share 40¢ |
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Namsoc