NEWS on OIL guys:
Canadian Oil Sands Trust -
Canadian Oil Sands trades to enhance exchange rate
Canadian Oil Sands Trust CO.UN
Shares issued 27,000,000 1999-09-30 close $25.15
Thursday Sep 30 1999
Mr. Robert Fotheringham reports
During the past few months, Canadian Oil Sands has significantly changed its long term currency exchange contracts by entering into offsetting currency exchange contracts which eliminate its currency exchange commitments beyond June 30, 2006, and swap the underlying value, estimated at $30-million, into currency exchange contracts which reduce the exchange rate on approximately 35 per cent of its crude oil sales revenue to the end of June 30, 2006, from 69.4 U.S. cents to 65.8 U.S. cents. These changes also reduce the amount of Canadian Oil Sands' currency exchange commitments from $1.3-billion (U.S.) over 17 years to $466-million (U.S.) over the next seven years which coincides with the expansion of the Syncrude joint venture, a $6-billion capital spending commitment. Canadian Oil Sands has an additional currency exchange commitment to settle $5-million (U.S.) per quarter until December, 2002, at a rate of 69.3 U.S. cents with the counter-party receiving an option to extend the contract for a further five years. As of Sept. 28, 1999, the mark-to-market value of Canadian Oil Sands' entire currency exchange position was $32-million while the spot exchange rate was approximately 68 U.S. cents.
Canadian Oil Sands has entered into oil price contracts which provide a floor price of $18.50 (U.S.) and a price cap of $20.50 (U.S.) on 5,500 barrels per day through to September, 2000. In addition, it has entered into oil price contracts which provide a floor price of $16 (U.S.) and a price cap of $22.80 (U.S.) on 3,000 barrels per day through to December, 2000. These contracts ensure that Canadian Oil Sands' cash flow over the next year will be sufficient to maintain its balance sheet, continue distributions to unitholders and fund its 10-per-cent share of the Syncrude joint venture's capital expenditures. The Syncrude joint venture plans to double production from 83 million barrels in 1999 to 165 million barrels in 2008. With an expected reserve life of over 40 years, this increase in production will be sustainable, thereby enhancing the value of Canadian Oil Sands trust units.
Syncrude's production target for 1999 totals 83 million barrels at a unit operating cost of $12.35 per barrel with capital expenditures of $660-million anticipated for the year. Based on these expectations and an annual average WTI price of $18.36 (U.S.) for 1999 (including an average price of $21.75 (U.S.) for the fourth quarter), Canadian Oil Sands currently anticipates that its 1999 cash distributions will total $2 per trust unit. For 2000, a Syncrude production target of 92 million barrels at a unit operating cost of $12 per barrel and capital expenditures of $539-million is expected to yield a cash distribution of $2 per trust unit with an anticipated WTI price of $19 (U.S.).
canada-stockwatch.com
Chucka-they will make money! Nice.
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