“Last chance to benefit before this oil story goes public…”

We start the week with one that will neither shock nor amaze, though that doesn’t mean it’s not an intriguing investment possibility.

I thought I’d take a look at this one because the latest teaser emails tell us that now is our last chance to subscribe to the newsletter and find out all about this secret, shocking oil story before the story hits the mainstream press and the investors pile in, bringing profits raining from the skies. Or something like that.

It is, of course, simply a rehash of the oil sands story we looked at a couple months back, from Matt Badiali at the S&A Oil Report … if you’ll remember, this was teased as the “oil sands story 60 minutes missed.”

If you like to have the full Gumshoe experience and want to read my endless blather for a bit longer, you can go over and check out the original writeup of this teaser.

It’s OK, we’ll wait. No, go ahead, really!

Back with us?

OK, then this won’t be a spoiler: The teaser is still the same, this is still an email touting our old friends Oilsands Quest (BQI).

They are still owners of a big plot of potential oil sands production area in Saskatchewan — that’s the part the 60 Minutes purportedly “missed” when they ran story a year or two ago about the oil sands and focused on Alberta. Alberta, just to the west of Saskatchewan, is of course where most oil sands production in the world is taking place (assuming you don’t count Venezuela’s heavy crude as “oil sands”). And Saskatchewan, being separated politically but not geographically from Alberta, of course has a lot of the same stuff underfoot, at least in parts. And has been a big energy producing province for some time, though that’s mostly been conventional oil and gas.

So why on earth is this our “last chance” to get in? I own some options on BQI, as I disclosed last time I wrote about them (haven’t sold them yet), but I don’t know that there’s necessarily anything specific that we’re going to hear about the company in the next few months. Others follow this company more closely than I do, but here are a few of the potential things that might happen over the next few months, as far as I know:

They will have some physical progress in September on the next “phase” of their project in Axe Lake, but this will still be very much a demonstration project — they’re aiming to do their first steam injection well in September, essentially to see if the technique works.

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They’ll release more data about prior testing sometime in the next “few months” which will include more details about the bitumen in their various test drilling sites in the area, though they’ve already given the basic update of their Winter drilling program — so far the drilling tests seem positive, they’ve been continually expanding the size of the project.

They might finally get involved with a larger company that has the funding to move their projects into production. This is probably the biggest catalyst that many investors seem to be looking for now, some kind of joint venture, buyout, merger or partnership.

And finally, many folks seem to think that a listing on the Toronto Stock Exchange would be a big step forward for BQI. They’ve applied for such a listing, though that was many months ago, and as far as I know they still are trying to get it, I have no idea why it might be delayed. Though I see no earthly reason why it would make that much of a difference, there can’t be many institutional investors who care that much whether it’s listed in the US or in Canada (unless there are some tax or investment rules for Canadian pension funds that I’m unaware of). If you’ve got another reason why that should make this company more valuable, feel free to let us know.

So … is BQI going to go off like a roman candle? Seems not that terribly likely to me, though I’ve bought a few lottery tickets in the form of options mostly because I think there’s some significant potential — particularly if a larger oil company wants to buy into a (possibly) big oil sands holding, and I think it’s certainly possible that any good news on the partnership front could move the shares significantly, since $120 oil, surprisingly enough, wasn’t able to give the stock much of a boost. We’ll see.

And if you’re one of those who follows this story more closely than I do, feel free to share your two cents. Or even three, what with inflation and all.


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Ponce
Ponce
May 5, 2008 2:08 am

Yeah! I hope Badiali tout this more heavily so I can break-even @ $6. When BQI tanked to $2+ last year on accounting issue I hanged on due to Doug Casey advice that a big institution exercised their option above 2.60, a support level. Since then not much development happened except that the stock move up along with the increase in oil price. Gumshoe option on BQI is a positive sign since his action is always backed by good research. I sure hope he is right. I am staying away from options as mine expired worthless even though they were highly recommended by news letters. I used to subscribe to more than a dozen. Since then I switched to Gumshoe which is an excellent sleuthing service for $50. Good job Travis. Most tease are losers but at least I am saving on subscription fees.

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Investorgirl
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Investorgirl
May 5, 2008 9:34 am

I guess I will try more BIF as they just finally set the date for their rights offering. I bought in the last time, and they pay monthly dividends, and now I am getting about 70 dollars a month. They are doing a 3/4/1 offering. Check it out.

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Ralph
Ralph
May 5, 2008 9:42 am

they must have alot of money behind them with all the buildings, landing strip, oiltanks,roads, equipment etc they have put in place. I cant fiqure out why its taking so long to get to producing oil. You would think if they have this oil their talking about they would have tryed to make one work and productive. Ive played them up and down for years. Still have hope. Sold all mine last week with a 10% trailing stop loss. now waiting for to it to go down far enough to buy again. Isent a note to them recently and they havent answered yet. I dont like that.Not good business.

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Ralph
Ralph
May 5, 2008 9:49 am

Im going to join. I appreciate your straight forward opinions. I do have a question, and recently saw an article about options with some subscribers comments and cant fid them. Is there any reliable Options bulletins that do option reccommendations. and where will I find your answer?

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Gravity Switch
May 5, 2008 10:10 am

Hi Ralph. Thanks for joining us. I have written about a half dozen or so options trading services, but can’t really tell you which ones are and are not good because I’ve never seen their track records, only their ads. Some of my readers have shared their opinions on these, though — here’s the most recent couple options writeups:
http://www.stockgumshoe.com/2008/05/big-companies-big-gains-with-tier-2-equities-burritt.html
http://www.stockgumshoe.com/2008/04/guest-pass-to-the-millionaires-market.html (futures options)

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👍 7
farley 5
farley 5
May 5, 2008 10:14 am

Raymond James came out with a comprehensive report on the Oil Sands industry. What the newsletters don’t tell you is the following: Oil Sands industry is a huge emmitter of greenhouse gasses, use a significant amount of fresh water 3 water to one oil., huge construction costs, pressure for labor, not much of a market for this thick glop, reliance on natural gas – the single biggest cost for an operator, and finally the need for dilutent to get this thick glop into the pipeline.

RJ likes OPC-T and SYN-T.

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Wayne
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Wayne
May 5, 2008 10:50 am

Here is the loyal opposition again. I own two or three oil sands trusts that make real profits and send me a few Canadian pennies from each- regularly. With my usual nickel or dime investment level, that is fine. (Maybe there is the echo of a giggle with those pennies?) The sources of the references for my oil sands stocks were either free or in low introductory priced letters. I do not and cannot spend much on advice. A teaser like this on BQI just seems to me to be trying too hard to make a buck and generating too little return on the investment?

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stringman (Steve Woloshyn)
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stringman (Steve Woloshyn)
May 5, 2008 11:08 am

I have been following Oil Sands Quest for a couple of years now and I think its land holdings have good potential. I have a habit of jumping into stocks too soon when they are in the burning money phase rather than generating money and I usually become part of the burning process!
I watched a video on BQI’s site about the technology evaluation process for Axe Lake (by Hycal) and I was a bit disappointed that there was no mention of the THAI process (toe to heel air injection process owned by Petrobank). They only talked about SAGD (steam assisted gravity drain) and solvent assisted SAGD (would that be called SASAGD?). I would guess that SAGD and SASAGD would require lots of natural gas to generate the steam (and produce lots of greenhouse gas) and may require the expense of a solvent (propane or butene gas) as well.
The THAI process is said to recover 60% to 80% of the resource (although, I speculate that some of that percentage is involved in the underground combustion process) where they compare it to the normal 40% to 60% recovery of other processes (SAGD?). Another advantage of the THAI process, it appears to me at least, is that the greenhouse gases from the combustion process would become sequestered…I am not sure though. I have emailed irinfo@hedlinlauder.com requesting more info but have not seen anything as of yet.
I also asked, “In addition, is the oil which eventually brought to the surface pumpable, or must it be diluted with a more expensive light oil? If that is the case, is the Wescorp Ellycrack process being evaluated as a possible solution to this problem?”
Both THAI and SAGD type processes seem to have advantages over the systems used by Syncrude and Suncor such as reduced capital costs, much smaller footprint, and perhaps environmental friendliness.
I personally have a small position in Petrobank and I like their technology but they also have holdings in the Bakken area (in Saskatchewan) where their expertise in horizontal drilling will come in handy. They don’t seem to be an “all your eggs in one basket” company.

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Pelican71
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Pelican71
May 5, 2008 11:10 am

I signed up a week or so ago and I think your analysis is great Gumshoe. I’ve realised for some time that the way to make money in the Market is to write a fee based advisory letter – your column makes me realize there is a lot of them out there.
One of the common teasers I’ve noticed is percentage gains. OK 100% gain doubles your money but there has to be a big outlay to make it really worth while. Percentages always have a base number and some teasers push that down with option premia and dividends. it sure makes the % look a lot better. I like to look at absolute gain (or loss) and the front end investment needed. It gives a better perspective. Keep up the good work Gumshoe.

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baguachaun
Guest
May 5, 2008 11:26 am

BQI seems to be a up and down stock for right now depending on the dollar strength. I enjoy your your gumshoe attitude, (can tell you do some homework), Ya need an apprentice? I have a question tho, thru a friend they have suggested that the oil in the CO region is being abandoned, would this be true?, and the Bakkens will this be affected? Thanks keep up the good work. Baguachaun

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jeff
Guest
May 5, 2008 11:29 am

The pitch I read focused on the oil under Alberta, which has infrastructure, eg, roads, in place, where Saskatchewan has the oil sands, but little infrastructure. I’m a small investor (I’m only 3 feet tall)…(okay, I’m lying about that), but I take a gamble now and again. I’m betting that Saskatchewan will follow in Alberta’s footsteps and whether it’s BQI or a co that buys them out, with the price of oil going up, this is a calculated risk. (My calculator is powered by sun and light, which seems to be the only thing green about this one to judge from the water to oil ratio…with water looking to become a biggie.)

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baguachaun
Guest
May 5, 2008 12:11 pm

ADR’s since your investing in foreign companies mainly thru JP Morgan (ADR.com)against the dollar and what-ever world market, since your investing in a multitude of foreign stocks how can this produce gains in a short run? Eg ratio: 100 ADR’s to 1 stock (pink sheet)? Thanks Baguachaun

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WJ
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WJ
May 5, 2008 12:31 pm