OIlsands Quest Inc. (BQI)

[rossi]

Casey Research Special Bulletin: Collateral Damage May 17, 2006


CanWest is having a bad day. Here's what we know.

Last Friday we received a call from a reporter from Forbes working
on a story that, reading between the lines, seems to question
whether or not the CanWest concession is, in fact, a legitimate oil
sands play.

The nub of the issue, as we interpret it, has to do with one of the
early investors in the company, back when it was early stage with a
dream and a prayer of finding bitumen in Saskatchewan. (An entity
owned by us, DCDG, LLC., was also an investor at that stage, but
only with an inconsequential position—view the company's SB-2
Registration Statement by clicking on this link:
http://www.sec.gov/Archives/edgar/data/1096791/000114420406014740/v04
0271_424b3.txt)

While it is only conjecture at this point, our interpretation is
that Forbes is about to do one of its famous attack pieces on this
particular financier (who has nothing to do with the day-to-day
running of CanWest, by the way) and by extension CanWest. Looking at
today's price action, we can only surmise that word of the pending
article is getting around and those in the know are trying to get
out while the getting is good. In the same way that CWPC has risen
in near meteoric fashion, it now looks set to come off
substantially. Remember, the reverse side of a hockey stick is just
as steep as the front.

This same individual is more deeply involved with Brownstone
(V.BWN), another CEC pick that has done well. More on that in a
moment, but for now, let's stay with the CanWest story.

What's the smart move here? Run for cover, or view the sell-off as a
buying opportunity?

After listening to the reporter, we believe his initial
understanding of the CanWest property is a misunderstanding.
Starting with the fact that the financier in question is simply just
another investor in the company and has nothing to do with its
management. While many reporters write their stories in their minds
before setting a word to paper and ignore everything except
confirming facts—and that may well be the case here—our sense is
that this particular reporter is doing his homework. Hopefully,
between now and press time he'll get the data he needs to clear up
his concerns. If not, and if CWPC is painted with the same negative
brush as the companies actually managed by this individual, then the
fall-off in CWPC that began today could continue until after the
full impact of the article is felt--that is, after it hits the
stands in a week or so.

While the prudent thing to do is to pull your original investment
out of the stock, and that would be perfectly reasonable, after
double-checking our original work, we remain confident in the
company's new management team and the merits of its underlying
assets. As a result, we're holding on to our shares and will look
upon any continued fallout from the Forbes article as an excellent
speculative opportunity for a second bite at the apple.

Let me stress again that this is still largely in the realm of
conjecture. At press time, the reporter was still very much in
research mode, so there is a good chance he'll discover that the
CanWest story, as attention-grabbing as it has been, is completely
legitimate and will leave it out of his broader story. In which
case, we would expect to the stock to rebound, high and fast.

If you sell now (and some newer subscribers may even be selling at a
loss) and there is no story, then you could well miss the turnaround
and have to buy back in at higher prices. If he persists in putting
CanWest into his story, and the stock takes a further hit as a
result—possibly sending it below the $6.00 mark—then buying more
makes a lot of sense to us.

As with all investments, whether you stay, go, or buy more will be
more a matter of your psychology and personal financial situation
than anything else. As just mentioned, we are confident enough in
our work that we are holding and will look to buy with both hands
once it looks like CWPC has bottomed.