Hi VIII
I was approaching evaluating potential share value with perhaps an unconventional approach that I thought did include the cost of financing.
If you look at Connacher?s presentation
at
Orion Securities Emerging Oil Sands Conference ,September 24 , 2007 you’ll find a graphic depicting the value chain of bitumen production. From this graphic you can derive that Connacher’s cost of production, including field operating costs, natural gas costs, pipeline cost and diluent cost of about $21-$22/barrel. If you take the cost of pod 1 at $290000000 and the cost of their new financing of 10.25 percent, the cost of servicing this portion of the note is $29.725 million. The total production from pod 1 at 10000 barrels per day will come to 3.65 million. The cost of financing then is about 8.14 cents per barrel for a total production cost including financing of about $30.00./barrel. If you look at the relative price of bitumen to light sweet crude from Alberta Energy Resources Industries Monthly Statistics you’ll find the YTD ratio averaging about .6. At $90.00 per barrel this translates to $54.00 for bitumen. My numbers may be off some but I do think they illustrate the huge potential for Connacher and its shareholders. Have a nice evening
Martin
