“The One Oil Stock You Must Own Now”

By Travis Johnson, Stock Gumshoe, March 16, 2007

This one was sent in by a reader. This is from an ad for the “best of the best” from ChangeWave Research, another newsletter company I’ve heard of but don’t really know much about.

One of the things they’re offering to potential investors is a Special Report about “The One Oil Stock You Must Own Now”, which they believe is a $30 value on its own.

Well, I don’t know if their subscription service will help anyone … or if the work they put together collecting their special report is worth $30. But I do know that I can tell you what that one Oil Stock is for free (and if you think that name is worth $30, feel free to send it to me … paypal to oneguysinvestments@gmail.com … but I”ll tell you everything I know about the company first).

Here are the details.

They start out with a nice tease of a promise, of course: “this little company that could be a 5-bagger from here.”

And it’s involved with the oil sands — if you haven’t heard that called the “next Saudi Arabia” by at least a dozen people, you’re not reading your stock spam!

They lay out their bona fides: “this stock is the best oil-sands value we’ve uncovered so far
(and we’ve already doubled our money twice in two others).”

And then they get into some specifics — or as I like to call them, “clues.”

“This company controls 311 million barrels of recoverable reserves”

“hardly anyone in the U.S. follows the stock.”

They are “just beginning to ramp up … oil recovery from its big ‘oil sands’ holdings”

“this company should be extracting 10,000 BOE/day (barrels of oil equivalent) by the end of 2007 … and 50,000 barrels per day by 2009.”

Sounds pretty good, eh?

They also say that this firm has a technology advantage, in that they use Steam-Assisted Gravity Drainage (SAGD) to extact bitumen, and that this is cheaper and quicker. I’m skeptical that this is a competitive advantage for this company in particular, but you can decide for yourself.

And finally, the stock is less than $4.

The close? “Buy it now and watch it double by within 18 months – and it could be a
five-bagger in 3-5 years.”

(And of course, “click here” for the full report)

For those who don’t want to “click here” and subscribe to some newsletter, the Stock Gumshoe is here for you!

The One Oil Stock You Must Own Now is …

Exxon Mobil

Kidding! That would be too easy.

It’s Connacher Oil and Gas (CLLZF.PK for those confined to US markets, CLL in Toronto).

To tell you the truth, this is actually a pretty compelling company, from the little research I’ve done. But why am I sure it’s the one ChangeWave is trying to sell us?

First, the 311 barrels of reserves — that’s not actually the current number reported by the company, as far as I can tell (there are so many confusing levels of reserves that it’s hard to pin any of these guys down, and they’ve just recently bumped up most of their reserve numbers) but you can get there using their numbers, and it’s a number that analysts have used for them before in the recent past. So there’s one.

Second, it’s one of a relatively small number of companies that have current in-construction oil sands projects of any size using SAGD in Alberta. You can see the whole list from the Alberta cheerleaders here. And it’s the only one on that list that’s priced under — or even particularly near — $4, either Canadian or American (the price has actually come down a bit, it’s close to $3 US.

And they are predicting that the first production oil sands project now under construction, which they call Pod 1, will indeed produce about 10,000 BOE/day. And production is just about to start, according to the company’s filings and presentations.

So I’m convinced these are the folks ChangeWave is talking about. Here’s the rest of what I think is interesting about this company:

They own roughly 30% of an oil production company in Peru and Argentina (Petrolifera Petroleum) that has some solid production online. They also have some conventional oil and gas properties in Canada to go along with the oil sands projects, so they already have pretty good cash flow and aren’t just building up debt waiting for the oil sands to start paying off. If you believe Oil will stay in this range and make oil sands production in general feasible, on the straight numbers (and there may be hairy skeletons in the closet, I haven’t looked closely) this does look quite undervalued to me.

They bought a natural gas company nearby (Luke Energy), so that they can control the price of natural gas they use to create steam for their SAGD extraction (which looks a lot more like drilling than mining, in contrast to some of the oil sands projects I’ve seen).

And they bought a refinery nearby as well (across the border in Great Falls, Montana), to help control their supply chain and supply some additional cash flow — refineries, no matter where you are, are pretty good business at the moment. They’re also involved in some very preliminary pipeline hookup plans to get connected to the US networks, which is not something to count on at the moment, but they are in a pretty fast-developing section of oil sands projects so it’s possible.

There are piles of risks, of course — if oil goes too low, oil sands stop being cost-effective (most people put the number somewhere in the low $30s). Alberta is a gold rush area right now, so it’s hard and expensive to get equipment and people. And their oil projects in Peru and Argentina are subject to some political risk, thanks to the wave of nationalization sweeping South America. And I’m sure there are plenty of risks on top of those, that’s just what comes to the top of my mind.

But you can do the due diligence if you’re interested — I think I might look into this one a bit more too, I’m actually intrigued. They have some solid presentations on their website, and of course they’re a public company so you can read all of their financial statements to your heart’s content. Thanks to your friend the Stock Gumshoe, at least you know where to start …


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13 Comments on "“The One Oil Stock You Must Own Now”"

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Bill
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Bill
March 27, 2007 6:24 am
CLL may be risky because of the chance oil may go below $30 (fat chance), but, on that basis, SU and Exxon shares prices aren’t likely to be rosy as oil plummets to those levels. Another Changewave teaser is about a small company in the Fort McMurray area that will have a virtual monopoly on a boring commodity (namely gravel) The company is BMD.TO or BMD. I do have shares in both CLL and BMD and do not subscribe to Changewave, but appreciate some of their recommendations, even though they haven’t supplied the names. I just discovered your site tonight… Read more »
Anonymous
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Anonymous
May 1, 2007 4:07 pm
BMD: Ft McMurray (Canada) is a boom town based on oil extraction, but has crummy roads! The Canadian gov is planning to spend 10 years (with most of the work being done in the first couple of years) to build roads. While BMD is not the closest gravel supplier, it is the closest (50 mi away) supplier with “reagent limestone,” a green thing to the best of my understanding. Next closest source of “reagent limestone”: 300 mi away. The Canadian gov is said to to be big on this green aspect of BMD. Not looking for a quick double, but… Read more »
Anonymous
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Anonymous
November 12, 2007 3:48 am

Toby has gone to a sell on this stock because the C-gov. wants to tax

Olaf Olafsson
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March 28, 2008 3:50 pm

Why has BMD fallen so much but then why was a “gravel” company so high before ?

I spent a summer in Central Alberta when I was 17 and very exited about the things going on there and would like to invest there and visit again..

Tirex resources has been doing well for me lately but even if they are Canadian they are operating in Albania of all places.

Phil
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Phil
March 29, 2008 5:40 pm

Connacher went to commercial production status on pod 1 the 1st of March 08. They are currently producing 6,000 bbls per day and will ramp up to 10,000 bbls per day on pod 1.
Annual report showd earnings .40 for 2007.
No oil sands were in that number. Q1 in May should be very good. Q2 with 3 months at 6k blls day or more should be great.
The next 10k bbl pod is waiting gvt appovals and equipment is already on order. I am buying now.
There is no hype from the company. You have to go looking to find there info.

William Nowotney
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William Nowotney
April 10, 2008 12:10 am

Connacher is the real deal. I own it for my personal and managed accounts. I bought Petrobank 2.5 years ago and up 400%. I sold last month switched to Connacher. All aboard!

Ralph
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Ralph
April 11, 2008 11:20 am

Do you have the Connacher stock symbol?
Here’s what I’ve found and I may repeat what has already said. EOG, UPL, CLR, KOG, WLL, NOG, SM, BEXP, over to Canada BQI, TPLM, GTMIF, GST, SNG, SSN,and Pennsylvania CHK RRC COG XCO SCY AND Some support companiesALY, BMD, TTES, GMET,RIG, OII, HP and GBRC. dont know how good they are but do your own research I have played BQI ( channeling) back several years and name changes. Started when it was .15 cents.

Ralph
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Ralph
April 11, 2008 11:24 am

Another question. Does anyone know of a firm or person that suggests option trades, when to get in and out? thats actually good and at reasonable cost.

Carol
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Carol
May 12, 2008 10:52 am

I was thinking too that Connacher Oil was the one until I found Oil Oilsands Quest Inc. If you could let me know what you think about this I would really appreciate it. Thank you

William
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0
June 16, 2008 7:32 am

Can anyone shed some light on Agora Financial? They seem to hard sell their subscriptions to their various newsletters. What do you think about it? Thanks.

T. Floyd
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T. Floyd
July 19, 2010 1:24 am

Bullish Stock Report is touting STTN as incredible opportunity. Any comments?

Menke
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Menke
August 15, 2010 5:26 am

I too would like info on SSTN.

jOHN dONATELLI
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jOHN dONATELLI
June 30, 2008 10:55 pm

I’m a very happy subscriber to three of agora’s newsletters. The recommendations provided have more than paid for the yearly subscriptions within the first two months…..

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