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Gold/Mining/Energy : Oil Sands and Related Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Captain James T. Kirk who wrote (6183)	1/28/2006 10:51:39 AM
From: Elliot F	Respond to of 25575

<<Ah, but what happens of oil pulls back under $60? Short term sell off?>> If oil pulls back under $60, which it will probably in March or April, everything will fall. For now, I'm looking for a slight drop of a few $'s next week, but continued gains in the last weeks of February ...and another 10-20% for SU before falling during March-May. Do not underestimate SU!! The stock has a forward PE of only 15 or so ...verrrry low. There's much more for SU this year and beyond. I don't think I'll ever sell SU, but my strategy for short-term pull backs will be to hedge the stock by selling calls ..never selling the stock. A core holding should be treated differently than other plays. ef

To: Captain James T. Kirk who wrote (6183)	1/28/2006 9:46:24 PM
From: Taikun	Read Replies (1) \| Respond to of 25575

SU and COS reported their numbers recently with operating costs of C$20-25/bbl, so we can take a much deeper retracement than $60 and remain profitable. I can even envision a scenario where a deep selloff doesn't affect share price as much as the correct metric used to value these oil sands plays changes from primarily P:CF and PE to a hybrid of metrics that include RLI. Currently SU trades at about a 20-25% premium to other independent E&Ps on a P:CF basis. What if it were valued purely on RLI though? Other major independents have RLIs for 8-12yrs, so SU's 30+ implies a 300% premium. Weighting RLI at 33%% (PE 33%, P:CF 33%) a 88% (.33300%-.33.25-.33*.25) share price premium could be targeted, which means we aren't there yet. A 25% premium implies only 3yrs, or 10% of the RLI of 30yrs, is added to a longest E&P of 12yrs to get 15yrs. So, if lower commodity prices impact the first 2 metrics negatively, it is possible RLI could compensate. At the current share price SU well protects the investor against commodity downside as long as RLI is going to be more highly weighted in the future.