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

To: Tommaso who wrote (112188)	10/20/2008 11:56:14 AM
From: Dennis Roth	Read Replies (2) \| Respond to of 206200

Canadian Oil Sands Trust (COS_u.TO) Lowering Estimates and Target Price to C$42 (from C$59) on Lower Oil Price and Market Risks B. Dutton · Credit Suisse has reduced its near and medium term WTI price forecast to reflect a lower demand outlook. Global oil demand growth is now forecast at just over 400 KBD (was over 600 KBD) for 2009. As a result of changes to our US$/C$ forecast, we have also made changes to our Canadian dollar based oil and gas price assumptions, including higher AECO prices. In conjunction with changes to macro assumptions, we revised our financial estimates for Canadian Oil Sands Trust. Our 2008E per unit earnings and cash flow estimates go from C$3.96/C$4.86 to C$3.62/C$4.55 and 2009E go from C$4.93/C$5.96 to C$3.04/C$4.05. We now assume a C$4.00/unit distribution in 2008E, C$3.25/unit in 2009E and C$4.00/unit 2010E+. · Given the ongoing global financial crisis, wherein the deterioration of the credit market has resulted in unusually wide credit spreads, our net asset values for our universe of Large Cap Canadian Oil & Gas companies is now based upon a 10% AT discount rate compared with an 8% AT discount rate that we used previously. Given the established nature of Syncrude's operations we had been using a similar 8% AT discount rate to value Canadian Oil Sands Trust within a net asset value framework. We have revised this assumption to a 10% AT discount rate and thus our C$50/unit NAV falls to C$39/unit. · In setting our target, we consider historical yield and yield spreads in determining an appropriate valuation for our estimate of the trust's sustainable distribution. Given abnormally wide credit spreads, extreme volatility within equity markets, and lower forecast oil prices, we now apply a 9.5% (was 8.5%) yield to our C$4.00/unit (was C$5.00/unit) estimate of the trust's sustainable distribution. Thus, we have revised our target price from C$59 to C$42. Outperform CP: C$26.33 TP: C$42 CAP: C$12.6b