Buy-recommended Canadian Oil Sands Trust’s 36.7% owned Syncrude, operating at 86% of new capacity, produced a record 302 thousand barrels daily of synthetic crude oil in the fourth quarter of 2006.
The buildup to sustained operations at 100% by late 2007 at current oil futures prices supports our projection of a doubling of the quarterly distribution rate from a current C$0.30 a unit to C$0.60 a unit (see Syncrude Volume chart below).
Considering the size of the project, it can’t be too much of a surprise that achievement of full capacity operations may be as much as a year later than our expectations over the past five years.
Meanwhile estimated net present value of US$35 a unit combined with rising distributions help justify the patience that may be necessary, since both stock price and the futures price for six-year oil deliveries are below their 200-day averages. Canadian Oil Sands Trust remains our top oil recommendation with its highest representation in crude oil production and its double weighting in the illustrative McDep Energy Portfolio, concentrated on real assets promising a high return providing clean fuel for global growth.
SeekingAlpha
Your Ads At Here
