Q112 Results + Dividend Increase: COS has reported CFPS of
C$0.92 for Q112, above our C$0.91 estimate and consensus of C$0.90.
The company announced a dividend increase from the current
C$0.30/sh to C$0.35/sh for Q2 2012. This was above our flat C$0.30
estimate and consensus of C$0.30.
Guidance Changes: COS has reduced its 2012 production guidance
to 301 kb/d (range of 290.4 kb/d to 312 kb/d), down from previous
guidance of 309 kb/d (range was 290 kb/d to 320 kb/d). We have
reduced our Q2 production estimate from 253 kb/d to 228 kb/d, in
line with 'notional' company guidance. However, our H212 forecast
for production to average ~320 kb/d remains unchanged (below
'notional' guidance of 336.9 kb/d), but we note Syncrude has only
ever achieved this level of production over a single quarter. Our
2012 production forecast is now 291.8 kb/d (vs 297.3 kb/d
2012 Capex Reduction + Project Estimate Update: In addition,
2012 capex has been reduced by C$241 million (from C$1,460 million
to C$1,219 million) due to timing adjustments of major project
spending. The expected completion dates and estimated costs for the
major projects are not affected. We note, however, that the
'estimated accuracy' for cost estimates on the Aurora North Mine
Train Relocations & Aurora North Tailings Management have been
reduced from '+/- 25%' to '+/- 15%'.
Revising Estimates: Adjusting for Q1 results and changes to
guidance, we have revised our EPS/CFPS forecasts as summarized in
the full report. We are lowering our 2012/2013/2014 EPS estimates
to C$2.51/C$3.78/C$4.00 (from C$2.67/C$3.83/C$4.06).
Valuation: Our C$27.00 target price continues to be based on
5.25x 2013E EBIDAX of C$2,508 million, in line with our C$27.00/sh
NAV. The shares are trading at 4.3x 2013E EBIDAX vs. 4.1x for
Suncor and 7.1x for Cenovus