Agoracom: Small Cap Investment - Connacher Oil and Gas

Welcome to the Connacher Oil and Gas Hub on AGORACOM

Connacher is a growing exploration, development and production company with a focus on producing bitumen and expanding its in-situ oil sands projects located near Fort McMurray, Alberta

Dear Agoracom Family,

I want to thank all of you for your patience with us over the past 48 hours and apologize for what was admittedly a botched launch of our new site.

As you can see, we have reverted back to the previous version of the site while we address multiple forum functionality flaws that inexplicably made their way into the launch.

To this end:

1.We have identified 8 fundamental but easily fixable flaws that will be corrected in the coming week, so that you can continue to use the forums exactly as you've been accustomed to.

2.Additionally we will also be implementing a couple of design improvements to "tighten up" the look and feel of the forums.

Have a great Sunday, especially those of you like me that are celebrating Orthodox Easter ... As well as those of you who are also like me and mourning another Maple Leafs Game 7 exit ... Ugggh!

Sincerely,

George et al

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jurek

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Connacher Refinery Myth

posted on Jan 27, 2012 12:40PM

Why Refinery is more less irrelevant for Connacher ?

Total CLL refining netbacks from 2008 to 2011 (as per CLL reports) was $68 million.

The same time the Total refinery Capital Expenditure from 2008 to 2011 was $66 million. $2 million net profit in 4 years would barely cover 1 year old-dog total compensation.

Big share of the above capital are related to ongoing new government environmental regulation (like the latest benzine removal program).

Like I said in my previous posts, refining business in high OIL price environment is a very small margin operation. Look at the largest US independent refinery Valero which is trying to unload 30% of their holdings and move to Asia were the margins are much higher.

BP and Marathon are trimming their US downstream portfolio as well. There are dozens of refineries for sale in US including (just a sample) 30,000 bbl/d Texas refinery for asking price of $35millions or Kentucky 5500bbl/d for $15 million.

Fully refurbish refineries asking price is ~$15,000 per 1 bbl/day not including 10% commission sell.

Most Institutional Reports give CLL about $100 million credit to the NAV for 9,500 bbl/d Montana refinery.

Only rebel who never understood the difference between the revenue, refining margin (profit) and free cash flow could get exited about the refining business.

Seriously, if you want to make money on oil you have to buy Albert's Light Oil plays. The hottest properties now, with very high netbacks are Swan Hills were the payout (return of your cost) range from 20 weeks to 1 year.

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