Opti Canada Inc. (OPC.TO) Buy, Sell or Hold

Opti Canada Inc. (OPC.TO)

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18 watching

DON'T BUY

Lottery ticket. If things work out it's worth $10. If not, it's gone. Long Lake oil sands project is not as good as Syncrude’s and others. Upgrader is being commissioned right now, so is essentially ready to go. Even at $70 oil, there is no chance of them meeting their debt covenants for the first three quarters of next year.

DON'T BUY

Big difficulty with a lot of these small oil sands plays is where do they get their capital. With oil at these levels, it is hard for them to get capital. There are many other plays in the oil sands that are more viable.

COMMENT

A good company but got caught in the crunch with the tar sands. Looks cheap but the cost factor in the tar sands may be much more of a factor than people realized.

HOLD

Operationally it seems to be very interesting. Eventually it will be take-out material. In a general sense, he is negative on the commodities for the time being.

COMMENT

Financial uncertainty with the upgrader being delayed, which increases costs. Also have had a slower ramp up in their SAGD productions. Cash flow has been reduced. Fundamentally, if you can hold through this kind of risk, there is a first-class asset. 45 SAGD wells that are all in production. Risky.

COMMENT

The real risk of their Long Lake project is, does it work. In the oil sands, until it is up and running, you don't know. They don't know what their operating costs will be yet. It's a unique project but you'll have to wait to see if it works.

TOP PICK

Oil sands is everything in terms of oil production in Canada. Will start producing from its Long Lake this year. Trading at a massive discount to its NAV. Highly likely it gets taken out.

TOP PICK

De-risking of Long Lake, their oil sands piece. Thinks it’s an acquisition target. Dirt-cheap. Will be producing by the end of this year.

HOLD

(Market Call Minute.) Just getting production going right at the moment. His short-term outlook for crude is soft.

TOP PICK

An oil sands name that is about to start producing. Trading at a discount to NAV of about 42%. Expects this will be acquired.

BUY

Have the Ormat upgrading technology in the oil sands. She likes to play upgrading technologies as a portfolio in order to spread the risk. These would include Opti (OPC-T) and Petrobank (PBG-T) and Ivanhoe (IE-T).

TOP PICK

Oil sands producer. Been in the penalty box because of disappointing pilot results. Now have 30 well pairs steaming away. 35% discount to net asset value. Will probably get acquired. Cheap.

BUY ON WEAKNESS

In situ oil sands producer. Operates SAG-D and also has a upgrading capacity that it is building with it. Expected to be on production very shortly. Has some unique technology. Rather than purchasing gas to make steam, it will use waste products out of their upgrading facility. Very crude oil price driven.

BUY

Have been putting steam in the ground for quite some time and are starting to turn some of their injectors into producers at Long Lake. Not exposed to natural gas prices as they have technology that allows them to burn their heavy and create a synthetic gas to produce steam. Early stage production. Great long-term hold. If you are bullish on oil, a good stock to own.

BUY

For a play on a small cap name in oil sands, you are better to go with a near term producer such as Opti (OPC-T) or UTS (UTS-T).

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Opti Canada Inc. (OPC.TO)