07.29
Maintaining Positive Outlook
With CFPU of $0.05, COS.UN increased its Q3/09 distribution (to $0.25 from
$0.15) reflecting stronger oil prices and expected improved production
reliability in H2/09. The increase was earlier than expected.
With the 8-3 Coker turnaround taking longer than expected and issues with
Coker 8-1 in Q2, COS.UN has reduced 2009 guidance to 105 MBbls/d (from
110 MBbls/d). The 8-1 Coker is scheduled for a turnaround in 2010 but may
occur in H2/09, which would lower production to 102 MBbls/d.
2009 volumes are unchanged at 99 MBbls/d assuming H2/09 volumes of 110 MBbls/d, which compares to implied volumes of 120 MBbls/d from guidance. In addition, we forecast cost to drastically improve
in H2/09 to ~$32/Bbl (from ~$50/Bbl in Q2) vs. guidance of ~$29/Bbl.
Production should ramp up in H2/09 and into 2010 with improved reliability
resulting in lower per barrel costs, which will be viewed positively by the
market.
we believe Canadian Oil sands representing a solid investment with torque to oil.
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