Canadian Oil Sands Trust lives and dies by the price of oil

Jun 16th, 2010 – 2 Comments

The 7% yield on distributions may keep you invested just watch $26.00 like a hawk. If it breaks below that level there’s not much support till $22.50.


About the Author

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


Read the author's full profile.


Further Research

Read more about Energy.


 

Canadian Oil Sands

What do you think the prospects are for Canadian Oil Sands for the next year?

Please and thanks.

Irene

 

 

Hi Irene,

Canadian Oil Sands Trust ( COS.UN TSX) owns a 36.74% interest in the Syncrude project in Ft. McMoney, Alberta.  The Syncrude project has an estimated 40 year reserve life and is currently undertaking what is being called Stage 3 expansion to boost output.

The trust has reported that it plans to convert to a corporation at the end of 2010 and that it expects reduced distributions post 2010 because of the tax imposed on their earnings. Currently the trust yields 7%. Lets see if we can get some sense of direction over the next year.

cos

The three year chart clearly shows that the units of COS have been range bound since August of 2009 with support at $27.50 and resistance at $29.00. There have been breach’s of both support and resistance but the units have more often traded in the range.

 

 

 

cos2

The six month chart provides an illustration of the support at $27.50. The units are now trading below the 50 and 200 day moving averages which will now provide additional  resistance to an upside breakout. Below $27.00 there is support at $26.00 and above $29.00 resistance comes in at $32.00.

The value flowing to Canadian Oil Sands Trust and after 2010 the corporation will be determined by the price of oil and the growth in output.

 

oil7

The three year chart for oil shows lots of similarities with the three year chart for COS.UN. As goes the price of oil, so goes the value in the units of the trust.

 

At this point the units in the trust have broken the trend line that provided support and its off its highs. The 7% yield on distributions may keep you invested just watch $26.00 like a hawk. If it breaks below that level there’s not much support till $22.50.

 

Happy Capitalism!

Categories: Energy
Content © Relentless Economics - Charts courtesy Stockcharts.com - Employees Entrance - Optimization Media