08.04
SU becomes Canada’s largest energy company ($54B mkt cap) with
enormous oil sands resources of 22B barrels, which we believe will drive
growth and value creation going forward. Pro forma production (Q2/09) is
~695 MBbl/d with ~50% from oil sands (total oil/liquids weighting of 80%).
High debt levels, year low commodity prices in Q1 and high operating costs
are all in the rearview mirror as SU emerges stronger. With PCA’s free cash
flow generating assets, clean balance sheet and SU’s improving operations,
we project SU will exit ‘09 with available capital of $7.8B (incl. w.c. adj.).
Looking into 2010, we expect SU to resume Firebag 3 and potentially begin
rationalizing its non-core assets (in our opinion, U.S. gas, Libya, Syria and
Trinidad & Tobago). We forecast production of 706 MBbl/d and CFPS of
$4.81.
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