“The $6.4 Trillion Land Grab” Growth Report

by Travis Johnson, Stock Gumshoe | May 12, 2008 12:44 pm

This stock teaser comes in from Ian Wyatt[1]’s Growth Report[2] newsletter, which I don’t think I’ve written about before.

But the stock? That I have written about before.

Those of you who’ve been around GumshoeLand for a little while might remember a oil[3]-sands-story-60-minutes-missed.html">teaser from Matt Badiali[4] on the “Oil Sands Story 60 Minutes Missed” — it was about an oil sands[5] company that’s not yet producing oil, but that has access to huge potential oil sands reserves in Saskatchewan.

And apparently, the story is good enough that now Ian Wyatt is also using it to sell his newsletter (as far as I know, his publisher is unrelated to Stansberry & Associates, the publisher of Badiali’s S&A Oil Report[6]).

The stock is still the same — it’s still Oilsands Quest[7] that’s being teased, and it’s still a little exploration-phase oilsands company with a big swath of land in Saskatchewan, just over the border from Alberta[8], that they’re hoping to use to bring the next bitumen gusher to the world.

Wyatt describes this company as having “60 billion barrels of oil for just $4 a share” — and, since I know many of you are interested in this company, I thought I’d share his possible catalyst idea … a takeover bid … and what he thinks that might do to the company’s valuation.

So here’s a long excerpt from his ad:

“You see, it’s happened before. So you can get very accurate idea of what a buy-out would be worth to you.

“On April 27th, 2007, North American Oil Sands Company and its 2 billion barrels of proven reserves was bought out by Norway’s Statoil (NYSE:STO). The purchase price broke down to be $0.91 per barrel of proven reserves. In April of 2007, oil was trading for $70 a barrel.

“As I write, oil is trading for $126 a barrel (a new record!). At that price, proven oil sands reserves should be worth $1.39 a barrel in a buy-out situation.

“Now, just to keep things simple, I’m going to use the low-end reserve estimate of 10 billion barrels to calculate a per-share buyout price.

“$1.39 per barrel for 10 billion barrels of oil would price the stock at $64.22 per share. From the current price around $4 a share, that’s a gain of 1,572%.

“Like I said earlier, 2,572% gains is a conservative estimate, based on the low-end estimate of this company’s reserves. If we crunch the numbers using the high estimate of 60 billion barrels, well, the numbers start sounding ridiculous.

“I can’t go out on a limb and say you could make 9,432% gains as this stock gets bought out. But it has happened before.”

I don’t want to give the impression that I’m shilling for Oilsands Quest, since I’ve written about the company a few times now. I do own call options[9] (July and October) on this one, and my position has not changed since I first wrote about them and will not change for at least three days (per my disclosure/trading rules). But I’m not a disinterested party.

Wyatt’s on the right track, in my opinion, that the likelihood of a near-term spike in the share price probably relies on a takeover by a larger oil or oil sands company … whether that will happen in the near future or not, that’s anyone’s guess. I wrote about a week ago with a quick note about this one[10] because it was being heavily touted by Badiali again, and at that time the tease was also a “last chance to benefit, hurry, act now” kind of push, though with less explanation about why the shares might move in the near future.

If you’ve got thoughts to share on BQI or anything else related, please let us know.

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