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NYBob

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NYBob

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Re: NYBob post# 24

Thursday, 04/20/2006 5:42:14 PM

Thursday, April 20, 2006 5:42:14 PM

Post# of 235
Secret Oil Sands -
Saturday, April 15, 2006
By Doug Casey

Everyone is telling you these days that
the Canadian oil sands are the place
to invest.

Some commentators are talking about
how the oil sands could produce more crude
than Saudi Arabia,
warning you not to miss the boat because
investment dollars worldwide are about to
flood to the region, making a fortune
for all involved.

Most analysts will then go on to recommend
stocks like Suncor Energy,
Canadian Oil Sands Trust or UTS Energy
as ways to cash in on the oil sands mania.

The problem: these three stocks-darlings of so many
pundits-have a combined market cap of roughly $60 billion.
There'd better be a lot of investment money coming… because
it's going to take a tidal wave of dollars to move the share
prices of these large-caps.

True, if you had invested in these companies a year ago, you
would have doubled and perhaps even tripled your money. Not a
bad return. But with these stocks having already gained so
much, so fast, it's now going to take a double or triple of
last year's investment influx to achieve the same returns. As
an investor in these companies you're pushing a rock up a hill
that's growing steeper by the day.

That said, I am a believer in the oil sands sector.
Simply put, political problems are looming in almost every
major oil-producing nation around the globe. Iraq is a mess,
with production still below the levels prior to the U.S.
invasion. Iran looks like it may be next on Bush's hit list.
Nigeria has 420,000 barrels of oil production shut in because
of attacks on pipelines and platforms.

Russia is a Jekyll-and-Hyde game: one day happy to share its
petro-riches with the world, the next turning off the taps
to its neighbors.

The Venezuelan government recently seized control of
numerous oil fields, effectively evicting major companies
from the country.

With all this going on, the Canadian oil sands may be
the only significant oil reserve on "friendly" soil.

As such, I'm not surprised to see the region getting a lot
of attention.

If I was U.S. energy secretary, I'd be shopping for a good
townhouse in Fort McMurray.

But as a speculator, I'm always looking for ways to maximize
my profits.

Even though I see the oil sands as a sector whose time has
come, I have a hard time sinking my money into a
multi-billion-dollar company that's on the lips of every
Wall Street lackey.

When everyone's talking about something, you should look
elsewhere.

But where? As speculators, I believe our best bet is to look
for companies that are working oil sands plays in new areas
that haven't been recognized by the street.

Go beyond the boundaries of the Suncors of the world
to find the next big thing.

I'll give you an example.

In February of this year, an unknown numbered company,
1122131 Alberta Ltd, paid C$465 million for a set of
oil sands leases in a part of Alberta that-at the
time-looked to be rank moose pasture.

The land was completely outside of the area where oil
sands are known to exist.

Puzzled, our staff at Casey Research looked at the data
and realized that the area was indeed a bust for
conventional oil sands… but it was perfect for pursuing a
completely new type of play.

You see, the oil sands we usually hear about are hosted in
sandstone that lies at relatively shallow depths.

But many people don't realize that there's a completely
different type of oil sands found deeper down, hosted in
carbonate rock known as the Grosmont formation.
In the March edition of the Casey Energy Speculator,
we postulated this might be what 1122131 Alberta was after.

A few weeks later, our suspicions were confirmed.
Shell announced that it was the player behind 1122131 Alberta,
and it was indeed planning on pursuing the Grosmont.

Although this example of extending the oil sands into
new areas didn't provide a direct investment opportunity,
it got us thinking about what other "new" oil sands plays
might be lurking out there. Looking at a map, one
possibility burned bright: Saskatchewan.

With attention focused on Alberta's oil sands, few analysts
have noted that development abruptly ends at the province's
eastern border with Saskatchewan.

Do the rocks suddenly disappear? Unlikely.

In fact, looking deeper we found historical evidence that
Saskatchewan hosts rich oil sands.

Perhaps even richer than Alberta's.

The problem is politics.

The Saskatchewan government has been all but closed to
development, meaning that almost no companies have
pursued projects here.

I say almost none because it turns out there is one
little-known oil sands developer working in Saskatchewan.

A company it just so happens holds a land package larger than
all Alberta's oil sands projects combined.

With management that has already built one oil sands
company into a billion-dollar player.

But despite these glaring positives, the company has gotten
little love from the market.

So much so that when we came upon it, it was trading
at a $200 million market cap-tiny by oil sands standards.

In December 2005, we jumped on the huge potential here
and within three months saw gains as high as 315%-the
kind of returns you get by going where others haven't.

The best thing is that despite this run, the stock is still
less than half the market cap of the smallest Alberta oil
sands company-with potential for reserves that dwarf
those of most Alberta players.

I can't mention the name here-it would be unfair to Casey
Energy Speculator subscribers-but rest assured this is
a story that will be receiving a great deal of mention
in the pages of our letter.

Bottom line: if you're considering investing in the oil
sands-and I believe there are many reasons you should-or
in any other "hot" sector for that matter, look for ways
to "extend the trend".

Uncover opportunities that are beyond most investors'
radar at the moment, but which have the ability to
benefit from the rising tide once they do break.

Doing so, you'll maximize your returns… and garner a
great deal of pleasure when the talking heads on CNBC
start touting the company you bought months ago as
the next big thing.

***

As a staunch contrarian, Doug Casey rarely goes along with the
investment mainstream… making subscribers of his Casey Energy
Speculator a lot of money in the process.

As a Casey Energy Speculator subscriber, you can expect your
stocks to double or triple (and sometimes much, much more
than that) within a year or two. A return that virtually
no other, reasonably risky investment will give you.

This is not a get-rich-quick scheme. It's a meticulously
researched and carefully selected basket of mostly Canadian
junior energy explorers-companies with huge growth potential
that are so new, or so small, or so little promoted that they
have been completely overlooked by conventional investors.

http://www.investorshub.com/boards/board.asp?board_id=5409

.




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