First quarter 2007 cash flow benefited from higher than normal Canadian oil prices relative to the global benchmark and NPV is concentrated 76% on oil production. Meanwhile, Norwegian
company Statoil (STO)’s purchase announced April 27 of non-producing oil sands leases appears to value recoverable resources in the ground for a dollar a barrel.
Chief Executive Tim Hearn believes Imperial has 12 billion barrels of non-proven resources under its lands. Such opportunity helps explain why Imperial’s stock may have additional appeal at the same time it has a McDep Ratio near 1.0 on the present value we recognize. Moreover, long-term global oil price has resumed an uptrend with the current quote of $69 a barrel above the 40-week average.
IMO has a half weighting in our illustrative energy portfolio concentrated on real assets that promise a high return providing clean fuel for global growth.
Originally published on May 2, 2007.
IMO 1-yr chart: