Re: Operational Costs
in response to
by
posted on
Jun 02, 2011 10:07AM
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
Sharky
Here's some food for thought. Yes it would appear they're stuck at around 14k a day or as you stated around 70-75% production capacity. The question is why..I've thought of a few reasons.
1-they've overestimated the production capacity of their SAGD projects.
2- They've run into technical problems with the SAGD projects and don't have the cash needed to increase output or are unwilling at this point to spend it as they're focusing on conventional output.
3- Now this one will make you think..MAYBE THEY'RE INTENTIONALLY keeping the production levels at the current rates..Let me explain..The U.S housing market is officially into a double dip recession. Economic numbers from the U.S released yesterday were dismal creating new fears that the U.S is going to double dip.The U.S Congress has yet to raise the debt ceiling and QE2 is ending at the end of the month. In Europe the PIGS are acting up again and the list goes on..The point I'm getting at is this...The possibility of round 2 of major world depression is growing by the day. Oil could drop back down to the point where CLL is again losing money on each barrel produced...
Last time CLL responded to the crash by cutting back production on POD1 ( IMO it was the right thing to do as nobody knew how long it would take for oil prices to recover and no point pumping out oil at a loss) which caused damage and cost millions to recover capacity. In fairness the technology was new and they had no idea what would happen or how the POD would be effected.
SO maybe management is intentionally keeping production levels down in anticipation of another economic downturn, after all no need to cut back production if it isn't there risking damage to PODS.