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Denbury Resources Inc. Message Board

  • jamesjkl jamesjkl Apr 7, 2008 5:45 PM Flag

    Question for the board re Petro-Canada

    Why is Petro-Canada (PCZ) so cheap?

    Most of the regulars on this board have good financial analysis skills. The challenge is getting them to work for these low message board wages.

    Yahoo shows PCZ's earnings estimates at $7.21 and $7.24 for 2008 and 2009. The stock is trading at about $46.50. It looks super cheap.

    In the game of finance it is often said that if something looks too good to be true, then it probably is. So what is there about PCZ that is too good to be true?

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • I looked at their most recent investor presentation. They appear to be a oil sands, downstream company. Haven't looked at the economics of oil sands recently but I suspect that the breakeven is only going up, $40+ per barrel. They are generating a lot of cash, $5 billion per year but will be spending $6-7 billion a year the next few years to develop their projects. A positive is their debt is currently low but looks like they will be taking it up soon. Potential of 15 billion in reserves but it looks like you have to wait 3+ years for returns to begin. Struck me that returns they mention in the low double digits are somewhat meager considering the long term nature and risks involved, costs continue to go up, labor is hard to find. And several other players are involved. One of my biggest mistakes was not buying Suncor 5 years ago and Encana gives you a more diversified investment with exposure to oil sands. Mcdep values reserves at $72 and I believe he is using a $80 oil price so you have some room for price erosion. Their international plays in Libya and Syria sound high risk me without huge upside potential. So, bottom line, if you have a strong desire for a oil sands investment and are willing to wait a few years, they look attractive and they are building out the refining capacity to handle the future production. They are Canada's second largest refiner/marketer.

    • if you watch money call (on twice a day) on bnn from Canada, that question is asked almost every day of analysts.
      you can watch replays at www.bnn.ca.
      show is on daily at 12:30 and 7:30.

      • 1 Reply to av19096
      • So av, what is the standard answer from these analysts? I continue to hold this in my grandkids accounts but I have been greatly dissapointed. It still looks cheap to me so I will wait. It has been at the same price for two years and I think if it starts to move, it will move to 60 before you know it.
        birdog

    • James,

      I don't know, but I will take a look and tell you what I think at some point in the next 24 hours. The currency currently in use on this board for the payment of wages is common sense and inquiry. So if you get some, it is your obligation to render some up in return.

      Nice to talk to someone with a saint's name. They're disappearing from the landscape in these parts. Normally, if I play golf with a pickup foursome at my local golf course and there are more than 2 saint names the average age of the foursome is >61 which is about how old I am. I have five brothers: John, (I'm Peter), Mark Stephen (two birds with one stone, Richard (Saint Richard of Wych or of Sussex County, England (commie central is Sussex and Middlesex County, MA, USA), David (the patron saint of Wales) and the odd man out is my youngest brother Jonathan, who was named for Jonathan Edwards, the most prominent 18th century Congregational minister of Massachusetts.

      Regards,

      Peter

      Regards,

      Peter

 
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