NikehurculesNikehucules, the price of oil has dropped so much, that I don’t think we can use the guidance for an indication of cash flow. I'll explain below.
My model for COS shows the following for Q1 using these assumptions
Qtly Production: 9.6M bbls, close to mid-point.
Average SCO for qtr. $55/bbl
SCO revenue $520M
Tot OPEX: $470M, 48.50/bbl
Capex $132M
Qtly deficit $82M or $328M annually.
Why the difference from your estimate? Oil prices are so low that my model is showing no royalty payment and a possible tax refund. The FX loss due to the $Cdn drop will result a negative cash flow in Q1 and consequently no tax. These two items eliminate $300M from the guidance expenses.
If earning losses in one year can offset earnings gains from previous years, then COS might get a tax rebate. Since I am not an accountant, I am not sure if they can claim a rebate. If they can’t, that would add an additional $100M to the $328M deficit noted above.
The guidance numbers are so far off, that I am not sure that my model can deal with it. I will have to recalibrate it when COS puts out their updated guidance. However, I do believe it is correct in indicating that taxes and royalties would be much lower than shown in guidance.
As an aside, a divvy of 5¢ would save COS an additional $70M over the indicated 20¢ in the Q4 press release. They need to keep the $70M and that would make COS cash flow positive for Q4.
Namsoc