CANEXUS CORP 6.5 PCT DEBS T.CUS.DB.D

RE:RE:RE:RE:Using Jedi Mind Tricks to Boost Stock Prices

[ocean112]

so here is my comment - take it for what it's worth.  Midstream assets are not dependent on the price of oil, but are dependent on crude VOLUME.  I agree that this spike in oil prices is temporary and we may test $40 or below come April so making some quick profits on the likes of LTS.  However, there is simply way too much supply to work through before prices stabilize. 

What Calgaryrider fails to mention, is that production is still going UP and will continue to in the coming months!  That actually bodes well for midstream companies or mistream assets like NATO.  Suncor, Cenovus, MEG, COS, Athabasca - no one is actually cutting production despite having cut CAPEX substantially.  

Yes - Suncor isn't using crude by rail.  But Cenovus is (up to 20% volumes).  MEG is.  No credible analyst will say crude by rail demand is going away tomorrow.

Yes, rig counts have plummetted because producers have idled low producing rigs while keeping thier cash cows. Every expert is still calling for production to increase in the coming months which is why inventories are building at Cushing and abroad week after week (yes - they have begun to load oil takers as temporary storage bins). 

Enbridge is already apportioning their pipelines because there is too much demand on pipes.  How are they going to move all this crude when storage is already reaching capacity?  The WTS/WTI spread is still hovering around $15/barrell.

That is why TransCanada and other midstreams are STILL discussing options with CUS (otherwise there would have been an announcement weeks ago that CUS is not selling NATO and going to ride out the oil roller coaster).   The fact TransCanada has put it out there that we will likely do a deal in a few months speaks volumes since NATO (apart from Gibson's terminal) is the only asset available for sale in the unit train space as far as I know.  And TransCanada will not build a rail line in a few months when it took Canexus more than 1.5 years to do so. 

You can take Calgaryriders position and kick yourself when this spikes after an announcement is likely made on the sale of NATO, or you can wait for a few more cents of downside despite the few dollars of potential upside.

I'm personally going to ride my position and collect a 15% yield until something more compelling comes along.