Topic: How To Invest

Hi Pat: What is your view of Connacher Oil & Gas? Thanks.

Article Excerpt

Connacher Oil & Gas, $0.47, symbol CLL on Toronto (Shares outstanding: 448.0 million; Market cap: $210.6 million; www.connacheroil.com), produces bitumen at its Great Divide Pod One and Algar projects in Alberta. It also owns conventional crude oil and natural gas assets in central Alberta, and it operates a heavy oil refinery in Great Falls, Montana. Extracting oil from oil sands is hugely expensive. That makes oil sands profit more vulnerable to a drop in oil prices. In addition, Connacher has built up significant long-term debt by investing in its oil sands projects. It has refinanced its $930.8 million debt at lower rates, but the debt is still a very high 4.4 times its $210.6 million market cap. Connacher has been rumoured to be a takeover candidate for a while, but its low production, high costs and large debt could make it less attractive to potential buyers. Meanwhile, it needs to find a partner to help finance any expansion of its operations…