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Market reception of Syncrude Sweet Blend was better than management guided. Record volume of 356,000 barrels daily was achieved in the last month of the quarter. Actual and futures prices for Light Sweet Crude oil are now more than US$65 for 2007, up from $60 in management’s new guidance and up from $55 in management’s old guidance.
Though we are confident in our estimate of net present value of US$35 a unit, the stock has been under pressure apparently from Canadian political considerations regarding potential taxation of trusts and carbon dioxide emissions.
We agree as Chief Executive Marcel Coutu courageously urges unitholders to protest in a campaign that may bring down the Conservative government unless different policies are implemented. Canadian Oil Sands Trust remains our top oil recommendation with its highest representation in crude oil production and its double weighting in the illustrative McDep Energy Portfolio concentrated on real assets promising a high return providing clean fuel for global growth.
