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[NYBob]

BQI To become a major Canadian oil producer -

The rest of the story posted By Bob L. We truly need this
exposure!
Small Cap Spotlight BQI -

Oilsands Quest: To become a major Canadian oil producer

Stephen Mauzy | Feb 26, 2008 6:20am EST | User Rating N/A

For all the chatter surrounding wind, solar, biomass and other
“green” energy sources, the world still runs on old-fashioned
fossil fuel — and will to an even greater degree into the
distant future.
The U.S. Energy Information Administration presages daily
world petroleum consumption will grow to 97 million barrels
in 2015 to 118 million barrels in 2030,
from 83 million barrels today.

Growing demand for petroleum and its distillates is as old
as the industry itself.
In recent years, the demand has quickened a step or two;
hence, the five-fold increase in per-barrel prices over
the past decade.

No one likes to pay higher prices, but higher prices spur
entrepreneurs to bring new oil supplies to market.
One notable entrepreneur actively seeking new supplies
is Oilsands Quest Inc. (AMEX: BQI) -
a Calgary-based energy exploration and development company
whose business is extracting oil from oil sands.

And there's potentially a lot of oil for Oilsands to extract.
Canada's oil sand reserves lie under an expanse of real estate
larger than Florida, putting it on par -
with Saudi Arabia's reserves.
But unlike the Saudi's reserves, which flow relatively freely,
Canada's oil from sand often requires high-pressure steam —
produced by burning vast amounts of natural gas —
that's injected into the ground to separate the viscous
bitumen from the sand to which it adheres.

Oil at $30 a barrel provides little incentive to pressure-wash
sand for oil.
Oil at $100 a barrel is another matter.
Today's prices have inspired oil sands projects valued at
$100 billion, further cementing Canada's position as
the number one crude-oil supplier to the United States.

Oilsands is working to assure that the United States's
petroleum thirst remains well slaked.
The company BQI owns a 100% interest in the Saskatchewan Oil
Shale exploration, as well as lesser projects in the
Alberta oil sands, giving it the largest contiguous
lease on oil sands in Canada, if not the world.

The company has forged ahead with an ambitious winter drilling
program to prove reserves ahead of a 10,000-barrel-per-day
pilot project scheduled to start up in 2009, with a
subsequent target of 100,000 barrels per day.
The company has four rigs turning in Alberta and Saskatchewan
to delineate an estimated 1.5 billion barrels of contingent
reserves.

But in today's incarnation, Oilsands is more exploration
than development, which means it is expending, not
generating, cash flow.
At this juncture its income statement is relatively useless
for extrapolative purposes, but here are the numbers anyway:
in the six-month period ended Oct. 31, 2007, revenue was nil,
resulting in a net loss of $26.6 million.
In the same six-month period in 2006, revenue was also nil,
but the net loss was larger — $35.6 million.
Looking at 2008, revenue will be equally barren and
losses equally pronounced.

At this stage the balance sheet is more revealing than
the income statement.
As of Oct. 31, 2007, Oilsands was sitting on $49.6 million
in cash and no long-term debt, compared with $32.4 million
in cash and no long-term debt at the end of Oct. 31, 2006,
which means the company is sufficiently capitalized to fund
its working capital and exploration and production needs.

Oilsands's value lies in its potential.
The Alberta Energy Utilities Board estimates that oil
extracted from oil sands is expected to grow to 4.6 million
barrels a day in 2015 and then to 4.9 million barrels a day
by 2020.

Saskatchewan is Canada’s second largest oil producer
(after Alberta) and produces about 17% of Canada’s total
oil production.
No one knows for sure how big Saskatchewan's oil sands are,
but early estimates put reserves at one-fifth of
the 300-billion barrels of known bitumen reserves.

In short, Oilsands's potential is tall, and the analysts
who follow the company generally concur.

Desjardins Securities analyst Adam Zive recently
reiterated his $7.50 per share price target based on
the company's oil discovery at its Axe Lake property
in Saskatchewan.

Blackmont Capital analyst Menno Hulshof has a target price
of $7.25 per share, noting "Oilsands Quest has the single
largest, contiguous oil sands acreage position in the
industry, and its shares continue to trade at a sharp
discount to net asset value, making it the least
expensive company in its peer group.”

TD Newcrest analyst Mark Friesen is more circumspect.
He recently initiated coverage with a “speculative buy” and
a 12-month price target of $5.75 per share.
Friesen states that “while this success cannot be
extrapolated over the remaining unexplored land position,
it seems reasonable that much more remains to be discovered
on the company’s leases.”

Here's our distillation of Oilsands's value:
the company has 241 million shares issued and outstanding,
which gives a book value of $2.06 share.
The closing price on Monday was $3.88.
All the known potential —
the Axe Lake reserves in Saskatchewan and projected
annual production — is priced into the shares, with a
discount for the probability of various failure scenarios.

That said, one can convincingly argue that insufficient
premium is given to the difficulties — thanks largely to
the environmentalists — of replacing reserves, which gives
the drilling rights alone the potential to drive
share-price higher.

What's more, the probability of share appreciation
increases as stated goals are met and as oil prices
move higher.

Should both events continue along recent trends,
Oilsands' (BQI) shareholders will get closer to their
quest for a higher share price.

God Bless

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Ps.
Judge for yourself and then decide whether you wish
to join the strike.
WE ARE CHANGE!!!

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Michael Badnarik teaches his famous class about
the Constitution....

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history often repeat itself -

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