This stock teaser comes in from Ian Wyatt’s Growth Report 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 teaser from Matt Badiali on the “Oil Sands Story 60 Minutes Missed” — it was about an oil sands 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).
The stock is still the same — it’s still Oilsands Quest 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, 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 (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 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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A whole lot depends on the SK provincial and Canadian national government and whether they will encourage this type of development or take the position that the environmental damage in Alberta is enough. Maybe those who live in Canada can provide some insight on that.
I know that anybody planning on drilling anywhere in Florida is pretty much screwed.
waiting on pending resource est,sprott mgt got in for $54 million yesterday, bigboys, i guess were in play.
I own and trade BQI as it seems to trade between $4 and around $4.45 on a regular basis. So far it has been easy money to make around $200 per 1000 share trade after commissions. Not much i hear the masses scream but as it is reasonably volatile, one can do this several times a month. I also think it is a chaep stock to own and much like UTS in Alberta in its early days of trading. Still think that UTS have incredible management and one to watch.
They started by saying:
Q: What has happened with your listing on a Canadian stock exchange?
A: It is in the works. We have stated on a number of occasions that we intend to obtain a listing on a major Canadian exchange. That is still our intention. The process of obtaining a listing is ongoing and the details of that process remain confidential at this time.
Regards,
Brian
Hedlin Lauder Investor Relations Ltd.
400, 707-7th Avenue SW
Calgary, Alberta T2P 3H6
Toll Free: 1 (800) 299-7823
Fax: (403) 269-7566
And last March, they said:
Hi Jacqueline,
A listing the TSX is still in the works. I can tell you that the application has been handed in and it is currently in the hands of the lawyers. Keep an eye on Oilsands Quest Inc. news releases for the update.
Regards,
Debra
Hedlin Lauder Investor Relations Ltd.
400, 707-7th Avenue SW
Calgary, Alberta T2P 3H6
Toll Free: 1 (800) 299-7823
Fax: (403) 269-7566
I am waiting to see some more movement in this developpement.
BQI issued a press release today regarding an agreement with a nearby town of La Loche. Superficially it sounds great, but my take is there’s still a lot of bureaucracy to overcome and oil production is still years away.
Thanks for the coments. asafp, I agree with you — if the stock goes up in the near future, it’s not going to be because they’re producing oil and making money, it will be something regulatory or merger/buyout related. Some substantial amount of oil reserves seem quite definitively available from all the testing they and others have done in the area, but it’s going to take lots of money and time to get them out (and maybe lots of polluted water, natural gas, etc., depending).
I believe at one time the S & A folks were either publishing Ian’s Growth Report, or somehow involved in it’s distribution. I once took a 30day trial, but it wasn’t Ian’s best days. He had JADE as his top pic for 2007: http://finance.yahoo.com/q?s=jade
Talk about getting it wrong, in both the industry & this particular stock.
He gets lots of ink on Zach’s & other financial websites, plus he must have nearly a dozen individual market letters going at one time or another.
http://www.zacks.com/experts/search/editor_bio.php?newsletter_id=140&editor_id=124
Hi,
You may be interested to know that the Canadian Environmental Defence charity has recently published a report into the environmental damage that tar sands cause. The report is called Canada’s Toxic Tar Sands: The Most Destructive Project on Earth and can be downloaded from:
http://www.environmentaldefence.ca/reports/tarsands.htm
I was horrified when I read this and realy think we need to be cutting back on our oil addiction rather than trying to prolong the misery and make a few bucks.
Best hopes for a sustainable planet because there is no planet B.
The Sask. government (and people)have learned from Alberta and that is why things are going slowly. They are going to overcome many issues created with the Alberta oilsands. For example; the provincial government has programs in place that offer incentives for homes that are bought for rental purposes. This is a way they hope to alleviate the housing crisis in Fort McMurray. Also, with new technologies strip mining may not be the way they go anyway. I don’t know alot about the technicalities of oil, but basically (from a friend who has a son that does the exploration in the north)the oil tracks (flows) down towards the east. It would most likely be to deep for strip mining and the amount is more than Alberta has. This is all not fact, as I said my knowledge is limited. What I do know is that the province is pushing infrastructure investment up there and driving through the road upgrades and new are extensive. Also the ice road from Fort Mac over to La Loche should be built for year round soon when that happens there will be direct access from Fort Mac over and Alberta has the major highway towards the north. Also, Fort Mac already has the expertise, equipment etc. to operate oil development. The road is done to the Alberta border, but Alberta has no reason to invest in it. Unless there is a major player that pushes it. Therefore one value of takeover or major player involvement is a year round highway to the east from Fort Mac. The highway is not that great right now to the north on the Sask. side. And transport of equipment and of course oil eventually is an issue. CN has also taken over the rail, so that will most likely help.
The best investment is to buy property in Buffalo Narrows. Once that road is built there will be serious spikes in housing costs no matter what. Fort Mac is crowded and Buffalo Narrows is a great getaway spot for time off. The drive is only about and hour and half from Fort Mac. So even with no oil it would be a winning investment. Property costs four timed just from the rumour of the road years ago. Still alot cheaper than Alberta and low cost housing away from the Fort Mac hussle is coveted in that area. And don’t forget all the other activities in northern Sask. (metals, minerals etc.). Housing will be at a premium in Buffalo Narrows no matter how you look at it. They are even building a shopping mall.
Thanks folks. SageNot, appreciate the background on Wyatt, haven’t looked into him at all. And I think the government’s development of oil sands infrastructure in Saskatchewan, and the increasing attention paid to environmental consequences, are both very important to any oil sands developer. From what I’ve read BQI will be starting with testing SAGD production, though they may also test the THAI process or other production techniques … I haven’t heard any indication that they’re looking at strip mining the bitumen, but I suppose all things are possible.
Warren, are you by any chance a Buffalo Narrows realtor? 🙂
Interesting points, all. Thanks. As should be clear from my options position, I have no particular conviction about the long term in this name or in oil sands in general, thanks particularly to the possibility of significant environmental pressure, but I think there might be a bump with oil prices this high and some catalysts possible. We’ll see … it would be neither unusual nor out of character for me to be wrong on this.
It’s good to hear what’s on the other side of fence. Keep the good work going.
Thank you very much.
James Saito
Hello Gumshoe.
No not a realtor. Worked in Fort Mac for about a year until it drove me nuts. Took a road trip up to La Loch (a dump). But loved Buffalo Narrows and this is the feedback from locals and observing the developments. Good luck all. Sask. is the next Alberta and if I had the money wouldn’t hesitate buying land up there. Housing is already an issue.
What is the 7 Pibara Profit Secret stocks Stansberry is teasing for his Australia Resource & Mining Report for $495
I’m new at this and if I hit one of these, would like to donate.
It has to do with iron ore I believe Jim. Another Aussie iron ore Jr. already made a huge splash. China w/b their biggest customer, followed by India I’d guess. Why their Aussie analyst, who did the leg work, hasn’t included same in his market letter can be laid to greed, what else? What Porter gives with one hand he takes (or asks for) with his next promotion. Bashful he is not!
Hey guys — I wrote about the Pilbara stuff, you can find it all here, including some responses that I got from Dan Denning: http://www.stockgumshoe.com/category/australia-resource-and-mining-report
StockGumshoe:
I hope your BQI calls (Jul/Oct)are in the money, seeing that there are no LEAPS or DITMs looking beyond 2008. Lots of OpenInterest and Volume though. Good luck. and THANKS for the absolutely great daily treat.
they just sold 13 millions shares in private placement at $4.20/share-i didn’t know what that meant and immediately sold my 30 thousand shares at $4.25-it closed at $4.70 today-what a mistake-what are the implications for this sell-i would still like to buy back in if it makes sense-pokilabut from guam
Richard, private placements are just another way or raising capital — and, like secondary public offerings, they’re almost always made at a small discount to the current share price (otherwise, who would want to buy them?).
They mean something different every time, there’s no rule about the implications of a secondary offering. Clearly, any offering dilutes the current shareholders — but all the current shareholders probably knew that the company would have to raise a lot more money to get very far with their testing plan, and that money would have to be raised by selling equity in the company or by borrowing money. As we’ve all seen, it’s not necessarily so easy to borrow money right now.
Since the company is not profitable there is perhaps less fear that dilution might scare away some novice investors who only look at PE ratios — clearly, each share is now worth a little bit less, but the PE ratio is negative so it won’t suddenly show up as being 20% higher (just an example) and scare people away.
BQI is going to either need to raise a lot more money over the next couple years, borrow a lot of money against their reserves if they get them to be a bit more proven, sell out or merge, or take on some big partners. This won’t be the last of it, in all likelihood, and the shares will probably continue to be driven much more by news (like the political agreement that helped move the shares up by 10%) than by per-share valuation concerns … who knows, at this stage of growth it might even be positive that they had dilution like this, since it proves they can raise money.
thanks stockgumshoe-i wish i understood that yesterday-aloha-your service is fantastic-i will be contributing when i can afford it-pokilabut from guam
For those of us old enough to remember the last great run up in oil prices we are probably in the 7th inning of this one. The new additional reserves are more difficult to bring on stream quickly and we have unintended rent seeking from the federal government with so many sites off limits. Just as with wars that last too long beget civil unrest so too will high oil prices beget a recession just as the new sources come on line or we have a political change. Polypropolene in the chemical industry and sd storage devices are two that come to mind. I’m still invested disproportionately in this sector but am very cautious at this point. Especially when we see reports of $200 a barrel on the horizon and most recently OPEC decision to pump more if they aren’t/haven’t been doing so already.