Welcome to the Connacher Oil and Gas Hub on AGORACOM

Connacher is a growing exploration, development and production company with a focus on producing bitumen and expanding its in-situ oil sands projects located near Fort McMurray, Alberta

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Evaluation as suggested in my previous post
M$ ENCANA ENCANA ENCANA ENCANA ENCANA ENCANA CONNACHER
ENCANA 2005 2006 2007 2008 06/2009 TTM average juin-09
opcashfliow 6731 7924 8429 8830 8885 222
shares 855 778 750 750 750 403
debt 6700 6577 8840 8755 8688 960
share price (*) 50 50 60 50 60 1
EV 49450 45477 53840 46255 53688 1363
EV/cashflow 7.3 5.7 6.4 5.2 6.0 6.2
(*)share price average visually estimated on last quarter as anticipation of year result to be published 4 months later
rough cashflow evaluation example of Connacher algar included Refinery neglected
WTI 70
sell price 60
cashflow 30
prod 20000 including oil& gas
days 360
cashflow 216 000 kUS$
In this cashflow estimate Connacher is well priced by the market because
there is more risk and no discount in ratio wrt ENCANA
I do not know what the cashflow will be You do your own cashflow estimate and you can compute your share price
Remember you have the estimate from the market and that is 222 M$ on plateau production algar included
Taking Encana is doing Connacher a favor
Encana has lower cost of debt and capital
Encana has lower risk due to better finantial security and better risk management
Encana achieves economies of scale
2/3 of Encana is gas and the capex/cashflow for gas is better than in oilsands in situ
The growth rate of a business is not dependant on size but on its freecashflow wrt capex for growth. (see wallmart)
Encana oil and Connacher have stricly the same integrated economics except that scale favors ENCANA

Regards,

Hubisan

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