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

To: Cogito Ergo Sum who wrote (17782)	9/22/2007 8:11:59 AM
From: johnlw	Read Replies (1) \| Respond to of 25575

Hey Back cat I am trying to get this royalty rate thing in numbers I can understand..... I own COS I will try them first. From COS's 2nd qtr results: Crown Royalties Under Alberta’s generic Oil Sands Royalty, the Crown royalty is calculated as the greater of one per cent of gross plant gate revenue before hedging, or 25 per cent of net revenues, calculated as gross plant gate revenue before hedging, less allowed Syncrude operating, non-production and capital costs. Crown royalties increased by $60 million to $89 million, or $9.94 per barrel, in the second quarter of 2007 from $29 million, or $3.82 per barrel, in the comparable 2006 quarter. On a year-to-date basis, Crown royalties increased by $149 million to total $183 million, or $9.75 per barrel in 2007, relative to the prior year which reported $34 million, or $2.37 per barrel. The increase in 2007 Crown royalties reflects a larger Syncrude working interest, in addition to the shift to the higher royalty rate, which occurred in the second quarter of 2006, and higher net revenues as a result of incremental Stage 3 production volumes and lower capital costs eligible for Crown royalty deduction. The shift to the higher rate is triggered once a project reaches payout by recovering its costs and a return allowance equal to a Government of Canada long-term bond rate. Call it a $10 barrel in royalty expenses. End of June oil was $70 So I get royalty expenses were 14% of the price per/barrel at the 25% royalty rate. Too tough for me to figure out what the extra 8% means in $/barrel terms for COS, the numbers were too screwed up for me to take a run at it with their loss last qtr. I sent their IR an email to try and get some numbers from them. From SU's 2nd qtr ,pge 8 , they have a table predicting royalty expenses going forward to 2012. However they note there are many variables to accurately predict such. They are using US$40-60/barrel with exchange rates of .8-.9. In any event they predict between 8-12% of total oil sands revenue will be a Crown Royalty Expense. SU net for 2nd qtr was $420M. 8% of that is $33.6M Production was 265k barrel/day Use 90days= 24M barrels So that is an extra $1.4/barrel? Seems like the engineer in the article I posted was a little light. You tell the average guy on the street in Red Deer the Alberta gov't wants another $1.4/barrel out of the oil companies he is going to tell you to go for it. Hell, with oil at $80 that guy is probably going to say grab another $10/barrel and fix the damn roads. JW