A different prespectiveI used 350 kb/d to calculate the performance. The 375 kb/d occurs when all the cokers are running. The 350 kb/d is the result of one coker turnaround every year. When this downtime is worked in, I think it results in a nominal yearly capacity of 350 kb/d. I should have used the 375 kb/d for the first three months. I have added that column.
Yrly Avge % Capacity First 3 Mths % Capacity %Capacity
2007 305,000 87.1 @350 kb/d @375 kb/d
2008 289,100 82.6
2009 280,000 80.0
2010 288,400 82.4 316,000 90.3 84.3
2011 288,300 82.4 321,000 91.7 85.6
2012 286,500 81.9 298,800 85.4 79.7
2013 267,000 76.3 259,700 74.2 69.3
2014 292,500 83.6 78.0
I am pinning my hopes on the production uptick on Q4-13 when they achieved 82% capacity, based on 375 kb/d. Production started heading down in December and continued into Q1-14 because I think Coker 8-2 is in trouble. It will be interesting to see when its turnaround starts. According to guidance, it was supposed to start in June and extend into July. However, reports in Bloomberg say it will start at the end of April. If it is April, that tells me it is Coker 8-2 that is holding up production and they want to get it fixed ASAP. Also the hydrogen units need fixing.
I think that my views on COSs management role are different. As I mentioned earlier, I think that the operational efficiency of Syncrude is the responsibility of XOM and IMO. They were hired to do that. The question is how do COS plus others review their performance.
As for COS management, I think their responsibility is to manage the financial aspects of COS. Personally, I think they have done a good job. They borrowed US money when the dollar was slightly above par to fund the current major maintenance program and the train replacement and moving program. Imagine going into the US market to borrow more money late last year with the dollar at 94¢ to fund this year’s program. I can hear the complaints already, "Why didn't they do it last year?
Look at the smart move they made not to hedge. Do I hear any acknowledgments from those who complained about COS management not hedging a while back. They are currently getting $117.74. Meanwhile the hedgers are getting around $100. Interestingly I think that this is part of the problem the analysts have. They like the idea of hedging because it guarantees the returns and allows them to make more accurate predictions. Most of the analysts, I believe don’t understand the oil market and the difficulties it’s facing. They continue to worry about the flood of US tight oil. COS management I think has a better understanding of the oil market and continue to make the right decision not to hedge, to the consternation of the analysts. Look at how all of the analysts are being forced to raise their target on COS because they got their oil price numbers wrong.
As for COS guidance, it’s a matter of conservatism. Their guidance numbers are to show that the divy is sustainable. If the analysts can’t figure that out, and they cannot, that is their problem. It’s time that they woke up and understand that many of us oldtimers like the idea of companies with increasing dividends which are coming in about six months.
Namsoc