CIBC Executive Summary - Oil Sands Watch - September 19, 2011

The one company most at risk with oil prices below US$80/Bbl is Connacher (CLL-SO). While it faces no maintenance covenants under its recently issued debt, liquidity and spending plans become challenged below US$80/Bbl.

The company currently has approximately $130 million of cash and available credit and at US$80/bbl we would anticipate ~$125 million of spending in excess of cash flow to fulfill our current growth forecasts (or alternatively the company could likely cut back to sustaining capex only, which would be roughly in line with cash flow).

Connacher is pursuing other noncore oil sands asset sales and a JV on its proposed Algar expansion; however, at lower prices, it becomes even less certain whether the company can get good value for these assets.