Stay the courseMy fellow investors,
There are a couple of things I suggest you do prior to any decision.
1) Read the documents and associated arguments that both COS and SU have distributed. From my perspective COS has made far more compelling arguments than Suncor.
2)Review the guidance document provided by COS, in particular the sensitivity of oil prices on free cash flow. Specifically these three scenarios of free cash flow (cash flow after all expenses and capex, essentially what's left for dividends, debt repayment etc.)
A)$50 WTI yields estimated free cash flow per share of $.70
B)$55 WTI yields estimated free cash flow per share of $1.00
C)$65 WTI yields estimTed free cash flow per share of $1.54
I recognize the current oil price is a long way from these levels but many financial and industry analysts have the $50-$65 WTI range forecasted for the second half of 2016, but even if it takes longer the following calculations make clear to me the potential appreciation of the COS share price.
The way I look at it is based on an implicit yield of 6%, and $55 oil and corresponding $1.00 in free cash flow, the value of COS shares ($1.00/.06) could be =$16.66/sh. The scenario gets much better if oil goes to$65, then the $1.54/.06= $25.66/share. You get the point in an improving oil price environment the upside potential of COS standalone is enormous. You may challenge the underlying assumptions but it is clear to me the upside relative to the downside is much stronger.
We have all suffered greatly but if you believe as I, and many others, do that the oil prices will recover then staying the course is a far better alternative.