Can someone help me understand the numbers a bit better:
a) How much in Oil reserves does this company have, I am not talking Tons of Bitumen, I am talking about the actual oil you can get out of the sands and shale.
b) With toda's technology, what's the price of extraction of the oil (I read, something like $70/barrel)
c) How long will it take to extract all reserves
d) What investment is needed to start pumping the oil
Please answer one of these questions at least, maybe we can get several answers from different people and then actually have a better understanding. BTW I am holding the APR 2.50 calls for this, just seems tempting because of the trading activity.
This XOM article shows that oilsands will be an intricate piece of our oil needs in the US. XOM does not do what is revealed in this article without the expectation that heavy oil will be processed from Canada in increasing numbers.
This isn't the only pipeline news and data out there. its clear the US will be using oilsands heavy oil-now we need to get BQI patched into the plans and system. This will occur over the next 3-4 years.
Starting with what happens in the next 5 quarters!
The independent resource reports gives you a starting point on oil in the ground, but it covers only around 10% of the oil sand lands. Further complicating the picture, the resource report is based on SAGD technology. The technology being tested appears to be much more efficient and effective than SAGD based on field and lab test data. The cost of production appears to be significantly less than $70 a barrel, but the cost of production is a moving target as the cost of inputs, labor, steel, energy, etc. fluctuate based on demand. Encana and Husky Oil research and test data to date indicate the recovery rates will be significantly higher than SAGD and the energy inputs per unit of output will be significantly lower. I believe based on the reservoir permeability, porosity, rock properties, oil saturation of the rock (sand) and the chemical properties of the oil/bitumen, recovery rates per unit of energy input will stun wall street.
If anyone actually KNEW the answers to those questions, this would be a different stock valued accordingly.
How much oil is there? Proven reserves are at like 1.7BB up to 7BB. They haven't explored all their lands and they could, of course, buy more to research over time if they have money comming in. It could turn out to be nothing more than 1.7 or it could be 7, 10, 20. Who knows. How much can they actually get out? Another good question. They have this capr rock issue. The answer could be nothing. It could be much higher. I have seen numbers in the 50-70% range. It depends on what technolgoy is used. It also depends on what technology gets developed over the next 50 years. One would hope the percentages would continue to go higher over time.
How long to get it out? depends on how they scale up. The amount of money they can get. THe price of oil.
How much does it cost to extract. $80 is at the extreme high end of the spectrum. Once again it depends on what extraction process is used. I have heard numbers from 50-70. With oil forcast at 100+ in 5 years they can make a profit. I would be happy to make a 40% margin.
Clearly there are some risks. That is what makes this stock a gamble. You could decide to bet against this stock and point out all the risks highlighted above. Alternatively, you can take a gamble on this stock and join with the other investors in the area like petrochina, suncor, south korea. BP and india are also trying to expand in canada.