RE:RE:RE:The company web-siteSherbrook: The $60 estimate is for SCO, not WTI, with taxes and royaly close to zero. Below $60, COS loses money. Note that COS has a high fixed cost, wages etc., and a low marginal cost of around $16 to $18 per barrel. So in a strange way higher production helps to reduce the loss.
I estimate that they will start the year with about $200M in the bank. So the question then becomes, what is the burn rate at various SCO prices. Yesterday they were getting about $52.50/bbl. So if we could get WTI back to $50 and our current Peso stays at $1.27 we would get close to $60 for SCO and we could patiently wait for the price of oil to rise.
Currently COS is taking $3 discount to WTI so that is not helping. As I mentioned in a much earlier post, we are so far from the Q3 guidance numbers that it is difficult to asses the brealk even cost. One of the unknowns is that in Q1 they will post an earnings loss. This will translate into a tax refund. I am not an accountant and so I do not know if a loss in one year can offset a profit in a previous year and as a result get a tax refund. if someone could clarify this more me, i would appreciate it.
Namsoc