Going Solo

With regards to:

"Takeover is not likely to happen as the assets aren't great (tiny money-losing refinery that nobody wants, sub-par production reserviors and mediocre reserves), and capital will be held back in an environment like this"

Please substantiate your statement with facts backing your allegations.

Based on Connacher's reports and presentations the refinery is profitable, their proved and probable reserves have a present value of 2.9 billion dollars and they are currently producing 14000 barrels a day from what you call their sub-par production reservoir. Their net present value of their revenue stream from their bitumen production has a current net present value at 6% of $1.50 per share, even after discounting it for the 880 million of debt. Only 15% of their bitumen holdings have been drilled so their total reserves are probably much higher. Even at $70 per barrel oil, they should still be making enough money from just their bitumen operations to pay the interest on their debt and cover most of their overhead.

In my opinion, the only scenario that could perhaps justify the current selling price for Connacher is that the world investment community is pricing in a total worldwide collapse of our financial system with the end result, a worldwide depression. If this occurs, most of the major banks and a substantial percentage of the companies in both the Dow and the S&P 500 will also go bankrupt, not to mention the govenments themselfs. Our prime focus at that point will probably need to be on survival rather than making money shorting stocks!

Martin