Speculative Buyout Opportunity and Dividends too.

Canadian Oil Sands, symbol COSWF, is the largest holder of Canadian oil sands assets. This company is as pure a play on oil sands as you can buy. The dividend until recently would ride up and down directly tied to the price of oil. However since the conversion of many former oil trusts in Canada to corporations COSWF has pretty well set the dividend at 30 cents per quarter and used the rest of their significant profits to enhance the production of their assets. These oil assets are considerable and at current production will last at least 30 years. Buying COSWF means you get a direct play on the price of oil and 30 years of dividends too if there is no buyout.

 

Now the speculative part is that if the pending Keystone XL Pipeline is approved by Obama you likely could see Exxon Mobile step up to the plate and buyout COSWF.  Exxon is the smartest oil money on the planet and I would expect sees the considerable opportunity in future profits in buying out COSWF. Let's note here that Exxon already owns about 25% of the oil sands assets through it's subsidiary Imperial Oil in Canada, symbol IMO. If they buy COSWF, which holds about 37% of the oil sands they would have controlling interests there.  The building of the Keystone XL Pipeline will allow the oil sands crude to be piped to the USA to be refined and used by USA customers. Of course if you have been reading my postings you know the Keystone XL pipeline is not a given since Obama is being pushed hard by environmental interest to not allow the building of the pipeline.

 

However if the pipeline is not built chances are good that Chinese interests already invested in the oil sands assets will step up and buy COSWF and build a pipeline to the Canadian west coast for shipment to China. So either way the odds are there are some buyout capital gains here in the next year or so. I would expect that buyers of these assets would prefer buying them on the cheap now before the economy rebounds and oil prices move up.

 

In any case owning COSWF at current prices gets you a 5.1% dividend and serious opportunities for capital gains either by price appreciation in the stock or buyout by the Chinese or Exxon.  Finally note the reason COSWF is a buyout candidate is the price has been beaten down due to pressure on oil prices due to worry about a double dip recession. At the current $24 price it is down from a recent $35.  Most analysts believe COSWF is worth around $50 if priced fairly.

 

I do not own COSWF.