cos value
Really it is worth about 15 billion just for the bitumen production (Plant) and add an upgrader in for another (10 billion upgrader - minus debt). Ask yourself this question, what is a horz well worth after one year producing at 40 dollars a barrel. COS gets synthetic crude pricing, currently about 10 dollars a boe more then WCS. Another way to look at it is this, after a year a horizontal well could be worth almost nothing, and when the prices increase they have exhausted their ability to embrace the original economic profile for the well and get any type of reasonable return. All the sunk costs are lost. This is what Saudi is doing right now, destroying the balance sheets of shale producers, putting them all into a place where they have to reduce drilling, and watch their assets evaporate away, and unless they have an adequate balance sheet to shut in production and wait for a better day they are doomed. Unless they were smart enough to hedge a good portion of their production. I heard another analyst saying the eaglesford needs 80 dollar oil. Cos as long as they can cover their operational costs will have another day, especially when you see companies wanting to build green field oil sands projects.