25
May

Wrap – Week Ended 5/22/09

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We spent last week slowly adding to positions, but the cash balance in the $10KP remains north of 60%. See Monday's post for wrap comments. Have a good Memorial Day.

 

5 Responses to “Wrap – Week Ended 5/22/09”

  1. 1
    VTZ Says:

    http://www.reuters.com/article/rbssEnergyNews/idUSN2544433820090525?pageNumber=1&virtualBrandChannel=0

    Exxon spending some $$$s.

    Also interesting is the way they are quoting the capital cost as a $/bbl instead of a flowing $/bbl/day.

    For reference, when they are referring to “partial upgrading”, it’s not really upgrading in the sense of Suncor, Syncrude, Albian or Long Lake. They are referring to their froth treatment step as partial upgrading although they are really selling a heavy sour crude.

    The strategy of this project is to avoid playing the light:heavy differential. Rather they focus on reducing the capital cost and cost per barrel of production in order to maximize the margin to a heavy sour crude. The margin is highest in this portion of the business.

    In order to market as a heavy crude they will need some blendstocks: either a synthetic crude (which is conveniently available from Syncrude which they control) or another diluent/condensate.

    Their economics will look something like this with 50$/bbl USD:

    Capital cost: $8 Billion CAD
    Operating Cost: 23-25$/bbl CAD
    Bitumen Price: 43$/bbl USD

    If you’re wondering about blendstock cost, it depends on what you’re using but Syncrude fetches WTI USD + 2% premium but the only thing you really lose is the 2% premium by downgrading a little when you blend.

    Assume 90% utilization:
    110 kbpd*0.9*($43*1.2 CAD/USD-$25)= $2.63M CAD/day = ~950 mill/year

    The payback doesnt look so good, but at 100$ and assuming the $25 high range for op costs and a 25$ light:heavy differential.

    110 kbpd*0.9*($75*1.2 CAD/USD-$25)= $6.43M CAD/day = ~2350 mill/year

    The payback looks a lot better.

  2. 2
    VTZ Says:

    When I say the margin is highest in this part of the business, I mean the mining/extraction process up to the sour heavy bitumen.

    The upgrading margin is much smaller currently.

  3. 3
    VTZ Says:

    http://www.financialpost.com/most-popular/story.html?id=1626748

    Also interesting.

  4. 4
    bill Says:

    Scork on cnbc slamming oil prices. Says demand destruction will lower prices

  5. 5
    bill Says:

    on exm earnings

    http://seekingalpha.com/article/139504-how-to-evaluate-excel-maritime-s-confusing-earnings-report?source=email

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