Replies to post #5879 on The Rising Influence of Rising Affluence

[DewDiligence]

That makes sense and Canada seems especially touchy about these kinds of things (example: the attempted takeover of POT by BHP).

[DewDiligence]

Last week’s Barron’s touted IMO, the Canadian subsidiary of XOM:

http://online.barrons.com/article/SB50001424053111903911904579348941635082908.html

"Imperial now represents 6% to 7% of Exxon's production, but should account for two-thirds of its production growth over the next five years," Cheng points out. Yet, the stock, which once traded at a premium to Exxon shares, now changes hands at a slight discount, fetching 10.7 times projected 2014 earnings, while Exxon, at $94, commands about 12 times.

So why is it languishing? The company's reputation for operational excellence has been hurt by cost overruns on the first phase of the Kearl project, which is now projected to cost 12.9 billion Canadian dollars (US$11.6 billion), C$5 billion more than originally estimated. And the ramp-up of Kearl production has been slower than expected… There also are concerns about transporting increased amounts of Canadian crude, given the delay in the Keystone XL pipeline and recent oil-train accidents. And there is environmental opposition to the oil sands as a dirty, carbon-heavy source of crude.

…Imperial is less well known in the U.S. than the two other major Canadian energy producers, Suncor (SU) and Canadian Natural Resources (CNQ), because of the large Exxon stake and Imperial's low profile. Imperial doesn't hold earnings conference calls and has only limited contacts with investors.

...Why hasn't Exxon bought the remaining 30% of Imperial? Cheng thinks it doesn't feel a need to do so, because it already controls Imperial and would have to pay a sizable premium to buy out minority holders. Others say that Exxon is wary of resource nationalism in Canada and wants to preserve Imperial as a Canadian company.

Similar to what Charlie said in #msg-80639114.