Buy here?Right now COS has a market cap of $3 billion. Total COS assets minus liabilities, eg. 37% Syncrude, is around $5 billion. Proven reserves 1.6 billion barrels oil. Contingent reserves 1.7 billion barrels. As a value play it's a no brainer.
I remember when I worked at Syncrude in 1990. At that time oil was ~$13 a barrel and Syncrude breakeven was over twenty. 25 years later Syncrude is still here and chuging along. COS has a line of credit in place until 2019 so survival is very likely. Syncrude is not some start up internet company. They have massive proven assets in place.
So should you buy here? If you have a long term horizon the plain answer is yes. The crazy thing is these lower oil prices are very bullish for longer term oil prices in the future. In North Dakota they are getting ~$28 a barrel at the well head due to transportation costs. A lot of the investment in shale will go up in smoke. Russia has a fair bit of high cost production. High cost offshore is being cut back. Very little new production will come on line in the future. Remember the world needs to replace 4% a year to stay in a steady state due to aging fields. No possible way oil prices stay down here that long. The cost of production is simply higher than $40. The market will rebalance probably with a shortage of supply in next 18 months.
Should you buy here? The absolutely crazy thing about COS is if WTI ticks down COS ticks down. Sometime oil fall by $.20 and COS will fall $.20. Even lately the % losses are growing. When COS lost $.40 at $13 that’s 3%. When COS loses $.40 at 6 that’s 6.6%. The stock seems to drop the same amount at either price. My feeling is if oil goes below $40 COS will go below $6. It doesn't make sense, it probably shouldn't, that’s just the reality.
Should you wait? That’s 50 50. Buying a position here is fine if you have a long term horizon. Buy it put it away and wait. Waiting to buy may work too. You might get considerably more shares if you do eg you can buy more at $5 than at $6.
Still this stock had a high of $55 a share in 2008. It's been $35 in the not too distant past. If oil now goes the other direction at some point and overshoots $100 a barrel COS should see over $20 again. I'll bet within 3 years that will happen.