Canadian Oil Sands Ltd. (TSX:COS) is working hard to get its house in order, but every time it looks like the company is making progress, something else goes wrong.

Syncrude troubles continue

The recent fire at Syncrude is just one more setback in a long line of operational problems at the oil sands facility. Canadian Oil Sands owns a 37% stake in Syncrude, the largest of the seven partners, and is therefore responsible for shouldering a significant part of the financial burden.

Syncrude has been a nightmare for the past three years as unplanned maintenance work and production shutdowns have driven up costs and hindered output. The facility has a design capacity to produce 350,000 barrels of oil per day, but 2014 output averaged just 258,000 barrels per day. In its Q2 earnings statement, Canadian Oil Sands said production for the first half of 2015 averaged 250,400 barrels per day.

Low production drives up the operating cost per barrel and Canadian Oil Sands is still a high-cost producer, although expenses are finally coming down.

The Q2 operating cost per barrel came in at $52.63, down from $59.64 a year earlier. For the first six months of 2015, the average cost per barrel was $42.83 compared to $52.33 for the first half of 2014.

Cash flow concerns

In the Q2 report the company said it expects to finish the year with cash flow of $474 million and capital expenditures of $422 million. The numbers of the first half of the year suggest that might be ambitious, especially given the meltdown in oil prices over the past two months. Canadian Oil Sands reported cash flow of $146 million for the first half of the year and capital expenditures of $228 million.

Dividend safety

Canadan Oil Sands already slashed the dividend once, but the trend in the patch is to preserve cash at all costs right now. Investors should consider the current dividend as a bonus when evaluating the stock.

Takeover possibilities

Rumours have been flying around that the other Syncrude partners could buy out Canadian Oil Sands. They certainly have the cash to do it, but I don’t see it happening unless things get so bad that Canadian Oil Sands can’t meet its financial obligations. At that point, investors would already be wiped out.

Should you buy?

Value investors look at Syncrude’s massive reserves and say the stock is a screaming bargain. They might be right, but the company has to survive the oil rout in order for investors to reap the rewards of those reserves.

The company is hanging in there, but the stock is still very volatile. I would look elsewhere for opportunities to deploy some extra cash.

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Fool contributor Andrew Walker has no position in any stocks mentioned.