Scotia Commentary Recent Update Text as of 3SEP14
. MEG refused to grant Canexus permission for the final pipeline tie-in.
. MEG Energy Corp. (MEG) refused to allow Canexus to complete the tie-in of the
Cold Lake (CL) pipeline system from Lamont Station into the MEG pipeline. This
connection is essential for the commissioning and start-up of Canexus'
oil-by-rail terminal because without it no oil will flow from the CL system to
the Bruderheim terminal.
. Canexus believes MEG has no legal justification for its refusal and has taken
legal action against MEG. CUS sees itself as being on "very solid legal footing"
and expects to be "successful in completing the tie-in in the next coming weeks"
. Although there has been no confirmation by MEG, the statement of claim filed by
Canexus on September 2, 2014, states that MEG has "preferred its own interest
and effectively sought to render the NATO Terminal a private terminal for MEG's
exclusive use, or otherwise exploit the vulnerability of Canexus in an
unconscionable manner".
. We are not able at this time, to assess the financial impact on Canexus. Pending
a court decision or resolution of this conflict, we reiterate our SP rating and
$5.60 target but would expect CUS shares to be under pressure today.