Connacher is a patient play to 2015

Jun 7th, 2010 – Comment

The MACD clearly signaled a pull back in late April. It looks like CLL is on its way to retesting support on its 200 day moving average which should it hold provide an interesting entry point for a potential trade towards $1.50.


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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.


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connacher

Hi Lou,

May I please have your opinion on CLL-TSX. Connacher seems to be on the right track, but never goes up. They were worth more before they were producing.

Thank-you

Steve

 

Hi Steve,

Connacher Oil And Gas Limited (CLL TSX) has a 98,000 acre land position in the oil sands South East of  Ft. McMoney in Northern Alberta. They have one steam assisted gravity drainage facility on stream called Pod One, with a second, Algar, forecast to begin production in August.  CLL expects to be producing 50,000 barrels of oil per day by 2015. They will be making their case today at the RBC Capital Markets Global Energy and Power Conference in New York.  It looks like deep sea drilling will be in the penalty box as a result of the BP spill putting support beneath the price of oil. All that being said lets look at the charts.

 

cll

The three year chart tells the tale of a stock that has broken the uptrend that started in March of 2009 and is now testing its 200 day moving average. The MACD generated a sell signal in late April as CLL approached resistance in the $2.00 range.

 

 

 

cll2

The six month chart provides a better look at the retreat from $1.85 and the bounce off the 200 day moving average. The MACD clearly signaled a pull back in late April. It looks like CLL is on its way to retesting support on its 200 day moving average which should it hold provide an interesting entry point for a potential trade towards $1.50.

 

Long term it looks like a producer with long lived assets an lots of development potential on its land base. Yes CLL has sold off as it announced better than expected earnings and good news on its progress in bringing Algar into production.  There were rumours in March that CLL was in play as a potential takeover target which probably helped the stock reach its high near $1.85. That chatter has died down but given the global appetite for energy I wouldn’t think there isn’t interest.

Happy Capitalism!

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