The following appeared yesterday on the Stockhouse Board and was posted by fisherman8 and appears to be from BMO Oilsands' Monthly Update:

"Connacher reported Q3/10 financial results that were above our estimates but in line with consensus, while operating performance was generally in line. Cash flow was .04/share, above our estimate of .02 but on par with consensus. Production averaged 9,103 boe/d (excluding capitalized Algar volumes) compared to our estimate of 9,183 boe/d. In our view, there were several highlights and lowlights in the release. Production from Great Divide continues to improve with the initial ramp-up at Algar, as well as from enhancement initiatives at Pod 1. Recent combined rates have reached 14,000 b/d (versus capacity of 20,000 b/d). Pod 1 has seen some improvement with recent rates around 8,000 b/d compared to the third-quarter average of 6,800 b/d. Several optimization strategies appear to be bearing fruit, resulting in more consistent steam generation and improved steam chamber growth. However, Connacher again lowered 2010 bitumen production guidance slightly to 8,450 b/d from 9,000 b/d to reflect a slower ramp-up at Pod 1 since Q2, as well as extended Q3 downtime at Algar. Rates are expected to exit at 14,500–16,000 b/d, down from 15,500–16,500 b/d previously. We note that recent production rates at Great Divide have already reached near the low end of the new guidance for the year (particularly Pod 1). As a result, we believe the revised guidance is reflecting a decent level of conservatism and that if recent performance continues, fourth-quarter rates could exceed expectations. We continue to caution that it is too early in the production ramp-up to draw final conclusions on the ultimate ramp-up performance at Great Divide and we do not believe that production volumes alone can suggest overall outperformance of Algar relative to other best in class projects as suggested by management.

Connacher released its 2011 budget, highlighting capital spending of $104 million and production guidance of 16,300–18,700 boe/d, which compared unfavourably to our forecasts of $85 million and 19,000 boe/d, respectively. Guidance accounts for the proposed sale of the company’s Battrum oil assets (roughly 750–800 b/d). Given the strong ramp-up in production from Algar thus far, we believe the guidance range seems low; however, on the back of several reductions to guidance in 2010, we believe management is opting for a strategy to under-promise and over-deliver in 2011.

Connacher’s plan is to take a bit of a breather in 2011, reducing capital spending in order to preserve capital for the next stage of oil sands growth. The budget includes $22 million allocated to growth projects, ($8 million in oil sands, $6 million in conventional and $8 million toward the EIA application and Algar expansion engineering), as well as $25 million in exploration and $57 million in sustaining capital and maintenance. Connacher is planning another 80 core-hole drilling program at Great Divide this winter to further define its resource base. We expect that the results of this exploration program could act as a positive catalyst if it results in additional reserve recognition and/or the identification of additional Pods with commercial development potential. The $25 million exploration program is fully funded following a flow-through share offering of 17.5 million shares completed in October."

Cheers; Scott