RE:RE:Back to BusinessInvestYoung99 wrote: Whether SU is a better investment then COS going forward, only time will tell.
COS is attractive to SU not for Syncrude itself. I don't think they really care about Syncrude itself. They only have a stake in Syncrude because they inherited it when they purchased Petro Canada in the previous downturn. They also said they will not interfer with Imperial running Syncrude.
I think if SU acquires COS, they will have a better chance of acquiring lease 29. SU has a large mine just beside lease 29 that will be depleted in a decade or so. SU already tried to negociate from the Syncrude partners lease 29. Going after COS at the bottom, is a strategic move for SU, but the Syncrude operation itself is not at the the core of SU's operations.
SU could be good investment, but not a Syncrude savior. I have a hard time seeing the value that SU brings to Syncrude.
COS is simply a way to invest in Syncrude. Nothing more. It's really the only way to get a direct exposure to Syncrude. If SU swallows COS, there will be no direct way to invest in Syncrude's quaity assets.
It would make more sense for COS to acquire SU's 12% stake of Syncrude at this offer price! But I doubt that SU would accept such offer!
Maybe COS should offer the lease 29 to SU in exchange for something like 5-7% SU's 12% share of Syncrude now and remaining share when they commit to mine it . Then COS either buys other owners out for the share % SU gives up or they split it up. As in my opinion, the COS/Syncrude prospective leases lost substantial value after the announced carbon tax and oil sands emissions cap by the AB govt. And the feds are still likely to pile something else on top of that, they have already banned tankers from BC’s northern coastlines. Assumption is by the time this lease would be developed by COS/Syncrude, it faces the full hit on taxes and could be cap restricted. SU will likely end up with it one way or another if they really want it.
But the real truth for oil sands mining, the future is now bleak. The environmentalists have won the PR battle and everything else it seems. After Suncor's Fort Hills mine, it doesn't look promising for any new standalone mine to be constructed for a long time, if ever. Maybe Teck but they have already delayed their project and need $90 oil to even think about it again. In the meantime, their coal operations are going to get hammered shut by low prices and the climate change policies.
The future for oil sands development is in the non-mining extraction methods with lower environmental impact. SU, IMO, CNQ, Shell with substantial SAGD production, COS has none. For smaller companies, MEG Energy is a better bet at this point than COS. MEG's production isn’t far behind COS and growing. Holds higher debt but has the better growth potential, imo.