01.29
Canadian Oil Sands Trust (COS.UN) – $27.99 – Q4: We’re Staying on the Sidelines
Sector Perform, Average Risk, Price Target: $35.00
Canadian Oil Sands’ fourth-quarter results hit the mark with generally in-line operating CFPU of $0.75 and cash costs of $30.18/bbl. However, a combination of unplanned maintenance and a turnaround at its LC finer, which has been moved up to the first quarter, is sure to weigh on COS’s near-term operating and market performance. COS declared a first-quarter 2010 DPU of $0.35 – shy of the $0.45 RBC CM had estimated, but understandable given its revised outlook. RBC CM has trimmed its 2010 DPU outlook by $0.15 to $1.85, with 2011 unchanged at $2.25. RBC CM’s 2010 production outlook of 115,000 bbl/d of synthetic oil would fall toward the midpoint of COS’s guidance range of 110,000 – 120,000 but is admittedly back-end loaded. RBC CM states that it is remaining on the sidelines for the time being pending improved operating performance visibility. RBC CM maintains its Sector Perform, Average Risk rating on COS with a one-year target price of $35 per unit.
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