“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).

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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 conventio