Canaccord Initiates CoverageEnergy -- Oil and Gas, Exploration and Production | Richard Wyman, 1.403.508.3886
• Initiating Coverage of Emerging Oil Sands Companies
Enormous resource potential
Bitumen deposits in Alberta’s oil sands represent the second largest oil reserves in the
world. As investment opportunities in petroleum resources around the world diminish in
the face of State control and ownership, more and more companies are turning to the oil
sands for future growth.
Still a risky business
The process of extracting, treating, shipping and upgrading bitumen is both energy and
capital intensive and therefore requires high commodity prices to get started. Bitumen
developments generally have long lead times to be completed. The technologies applied to
extract bitumen are also evolving, especially as they relate to in-situ recovery schemes.
This research report on the oil sands serves as the basis to launch coverage on a number
of emerging oil sands and/or heavy oil companies and a continuation of coverage of
Suncor, a major oil sands player and the pioneer in the development of oil sands in
Canada.
The companies covered in this report are Suncor (SU : TSX : C$93.86 | BUY,
Target C$103.00), Excelsior Energy (ELE : TSX-V : NA | SPECULATIVE BUY, Target
C$0.90), North Peace Energy (NPE : TSX-V : C$1.72 | HOLD, Target C$1.40), Oilsands
Quest (BQI : AMEX : US$4.30 | HOLD, Target US$4.30), Patch International (PTCH : OTCBB
: US$1.03 | HOLD, Target US$0.90), Pearl Exploration and Production (PXX : TSX-V :
C$3.83 | RESTRICTED), Southern Pacific (STP : TSX-V : C$2.40 | SPECULATIVE BUY,
Target C$3.40) and UTS Energy (UTS : TSX : C$5.40 | HOLD, Target C$5.40).
Since the emerging players are at an early stage of corporate development, a portfolio approach is recommended to mitigate the inherent risk associated with investment in near start-up
businesses.