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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Umunhum who wrote (83591)	4/25/2007 4:17:06 PM
From: Wyätt Gwyön	Respond to of 206328

Canadian Oil Sands Trust announces 2007 first quarter results and a quarterly distribution increase to $0.40 per Trust unit Calgary, Alberta (April 25, 2007) – Canadian Oil Sands Trust (“Canadian Oil Sands” or the “Trust” or “we”) (TSX - COS.UN) today announced first quarter 2007 results and a 33 per cent increase in the Trust’s quarterly distribution to $0.40 per Trust unit (“Unit”) for Unitholders of record on May 8, 2007, payable on May 31, 2007. Net income in the first quarter of 2007 increased to $262 million, or $0.55 per Unit, from $91 million, or $0.20 per Unit, during the previous year’s same period. First quarter 2007 cash from operating activities was $202 million, or $0.42 per Unit, compared to $187 million, or $0.40 per Unit, in 2006. Non-cash operating working capital requirements, primarily a result of higher accounts receivable, reduced first quarter 2007 cash from operating activities by $94 million. Net income and cash from operating activities reflect higher revenues as a result of incremental Stage 3 production, less turnaround and maintenance activity compared to the prior year, and a larger Syncrude working interest. As well, net income and cash from operating activities benefited from a 41 per cent reduction in per barrel operating costs quarter-over-quarter, offset somewhat by a higher Crown royalty expense. Crown royalties increased to $9.58 per barrel in 2007 from $0.67 per barrel in 2006 with the shift to the higher royalty rate of 25 per cent of net revenues from the minimum one per cent of gross revenue, which occurred in the second quarter of 2006. In the first quarter of 2007 Syncrude paid royalties totaling $256 million to the Province of Alberta. The Syncrude project began paying the higher rate at roughly the same time as the Stage 3 expansion was completed as a result of robust crude oil prices, which increased revenues from the base plant and accelerated project payout. “Reflecting our constructive view of our free cash flow over the next several quarters and our intention to move to fuller payout of that free cash flow, we are very pleased to announce our third distribution increase since our Stage 3 project funding began to diminish,” said Marcel Coutu, President and Chief Executive Officer. “Reduced capital spending, growing volumes from our recently expanded facilities and a renewed focus on costs and operational reliability are cornerstones of our current operation. These form the foundation upon which our next growth stages will be launched.”

To: Umunhum who wrote (83591)	4/26/2007 5:11:38 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 206328

as you know i am as much of a peak oil clown as anybody, so you don't need to convince me of the bullish prospects for oil (although you did a good job of presenting the facts and i never tire of seeing them :). the thing for me is, how does that translate into investment action? rule number one is: NEVER BLOW UP. the ultimate irony would be to be right about the big picture but wrong about the implementation and end up going BK when you could have gone to the moon. he world is using over 30 billion barrels a year of oil and finding less than 10 billion – that’s not sustainable. these things were no less true last August. back then, June 07 crude printed around $81. then it lost 21% of its value in about five weeks. but it wasn't done there: after going nowhere for a few months it lost another 18% in the first two weeks of January. so the unleveraged holder would have had to endure a drawdown of around 35% (as we'll see below, the leveraged holder endured a much bigger drawdown, often to the point of being wiped out). let's say you need to keep 4K equity per contract to hold a position. in order to avoid a margin call, the buyer would have needed at least 32k of equity at the peak. at the nadir, he would have seen a drawdown from 32 to 4, which is an 87.5% drawdown. everybody with less equity per contract would have been sold out by the margin clerk. and of course, at the nadir, the buyer has been clobbered for almost a 90% drawdown, and is on the brink of being wiped out, and now that it IS a good time to buy (mid-January, when the peak oil doubters are all calling for $35 crude), the guy who had 32K equity at $81 now has ZERO excess buying power. now that crude has come back a bit, this buyer has about 16K equity. so he is still 50% off his value last August. in case anybody thinks they would avoid all this problem with "tight stops", they should be informed (as Umunhum and i know) that the longdated futures are extremely illiquid. although they are priced every day so that the margin clerks can do their jobs, many days they are priced on ZERO volume, based on a "guesstimate" of their worth. where a distressed seller would be able to unload a position in a declining market is anybody's guess. meanwhile, i look at my PF. it has been pretty consistently 50% energy equities for several years now. i did have a peak valuation last August, but i am already a little above that peak, despite paying taxes and living off my PF. the ability to add substantially to positions in the face of drawdowns led to a higher PF now. the drawdowns were "annoying" as opposed to life-threatening. i am pretty sure there will be more such annoyances in the years ahead. i can certainly imagine scenarios where maximum risk will provide superior returns to what i've had. i can also imagine some rich person in the world would pay me $100 million if i "win" a round of Russian roulette. but i can even more easily imagine scenarios where a highly leveraged futures PF results in a BK at worst and subpar returns at best.