Hi Spidy,

Sorry for the late response to your quiz question (I stuck with a babysitting job and reshuffling my two biggest Junior O&G holdings: ARN and SCS). Hopefully you will read this before awards are given away to Brian in the blah, blah category.

Before I start I would like to say that it is good to see CLL SP finally moving up from the very oversold condition, strong support level at $1.1 and extremely negative sentiment level which is usually bullish for the SP. Good start for another trading cycle.

It seems that you can always count on this management to provide few trading opportunity per year.

Operational Cost

As you said, there are two main components in the cost. As per CLL management (consistent with the other SAGD projects) the Variable Cost is the cost of the natural gas burned to generate steam.

In Q1/2011 it cost CLL $6.35 for NG to produce 1 bbl of bitumen.

The main components of the Fixed Cost as reported by CLL(and others) are: personnel, electricity (about $2/bbl), chemicals, facility and evaporator waste disposal.

In Q1/2011 Fixed Cost was about $16 per 1 bbl of bitumen.

Diluent, transportation or Royalties are not a part of the Operational Cost as suggested in some posts. They are subtracted from the Gross revenue to provide the Production Revenue. Diluent cost is minimal as most of purchased diluent is recover.

Production revenue and the operational cost are providing the Netbacks (another fictional dollar number) which is used for the comparison only.

Hope this help.

PS. IMO operational cost is not a big problem. The production number is .