RE:RE:RE:RE:RE:RE:RE:RE:Q1/2023 COP CC Second Question by Neil Mehta On Surmontmrmomo...Good points my friend...
That said, let's talk about a possible scenario -
1......oil demand stays flat for the foreseable future
2....the price of oil stays in and 85 a barrel in inflation adjusted prices
3....SU does not get approval to extend the Base Plant
By the early 2030s, SU will need to secure sufficient feedstock for the upgrader to offset the production loss from the Base Plant. If the current deal with Total is completed in its entirety, by the company's PR, this will satisfy about 50% of the feedstock needed for the upgrader.
So they will need to find other production. There are two sources - extension of Fort Hills and/or acquisitions. Either one by the company's own admission will cost billions of dollars. If SU is unable to get environmental approval for a big enough extension for Fort Hills then they will have no choice but try and buy out somebody else. If they are in this position, then they will likely have no choice but to pay a premium for such acquistions especially if oil prices stay at 85$ in real terms.