Oilsands Quest: What's in a Name?

On May 5th, Oilsands Quest (BQI) put out a press release detailing 6 new names for various parts of its acreage. Prior to the press release, the company primarily spoke only about its focus, in-situ oil sands project, Axe Lake, which resides on its Saskatchewan acreage. But now, the company has 6 new names, three of which further break down its Axe Lake project (Axe Lake 1, Axe Lake 2 and Axe Lake 3) and three names that refer to different areas of its Alberta acreage (Raven's Ridge 1, Raven's Ridge 2 and Wallace Creek).

On the surface, some may argue that the press release may not seem like a big event. However, I beg to differ. After more than 2 years of exploration and delineation drilling work, Oilsands Quest is on the cusp of securing its first joint venture partner on its Axe Lake project. The signing of a JV partner is a significant event in that a successful partnering would validate BQI's business model (which, in a nutshell, is to explore, delineate and partner various parts of its massive 753,000 acres of oil sands-bearing land). Perhaps more importantly, it would validate the attractiveness of BQI's oil sands acreage, which straddles the Alberta/Saskatchewan border.

So let's get to the question at hand and the title of this article, "What's in a Name?" Given that BQI has recently drilled 25 holes and shot 33 miles of seismic data on its Alberta acreage over the 2007/2008 winter drilling season, I believe that the new names signal that the company believes that it has material amounts of bitumen, or oil sands, on some of its newly-named land parcels. That could result in the company officially announcing a 2nd or 3rd discovery (in addition to Axe Lake) very shortly.

To add to that, I believe that the new names imply that the company will soon be providing investors a positive update from its recent drilling efforts, in particular, on its Alberta acreage (in its Raven Ridge 1 or Raven Ridge 2 areas). Up until now, the company has talked about only one particular oil sands project, Axe Lake, which resides on the Saskatchewan side of the border. That project received its name in January 2007, about a year after BQI began drilling the area and only 2 months before it was deemed by management to be holding about 1.3 billion barrels of oil sands resource (which was confirmed later by third party consultant, McDaniels in November 2007). Given that management has preliminarily estimated that its total Alberta acreage could hold up to 4.5 billion barrels, I would not be surprised to see a more specific estimate for the Raven Ridge area sometime soon.

So "What's in a Name?" My opinion is that it could be newly-identified discoveries and increases in oil sands resource estimates near term.

Disclosure: Long

Comments

[lnh:]

It would be an improvement to be able to forward such articles using traditional E-Mail methods. Having to fiddle around with "G" mail is frustrating and not worth the effort (even if you can cause it to work).

2008 May 07 11:11 AM

[PLP:]

"Oilsands Quest" It's really fits - they're on a neverending quest for oilsands but never take 1 drop out from the ground.

One year from now they'll be renaming their oilfields, releasing more meaningless announcements, drilling more test holes, and people like the author of this article will be writing articles just as meaningless articles as the above posting.

2008 May 07 04:24 PM

[resourceman:]

My position in BQI is a real spec. & I,m still under water--hope you,re correct , Here,s some better Oilsand ideas that I,m in that all are in the black for those who believe this sector will shine more brightly in years to come : CLL.TO , OPC.TO , & UTS.TO.

2008 May 07 11:54 PM

[bowman711:]

The value of BQI will be realized when one of the super-big oil companies buys it to add to their oil reserves. Read these articles mentioned in this quote:

'Valuation

So what is BQI worth? For that, I turned to two Seeking Alpha articles, "Oilsands Quest Inc.: Undervalued Canadian Oilsands Play" and "Three More Compelling Reasons To Like Oilsands Quest". Taking the average of the two target prices in those articles ($18 and $26 per share), I arrive at a valuation of $22 per share, or over 400% higher than the current price of $4.32 per share.

Following the Norwest estimate catalyst, I believe that, BQI's stock will move upwards towards $22 per share as investors speculate on the potential economics of a joint venture with a big oil company. Helping the stock get to $22 per share will be all or some of the catalysts listed above."

2008 May 08 05:01 AM

[bowman711:]

The links didn't come through above, so here they are:
seekingalpha.com/artic...

seekingalpha.com/artic...

2008 May 08 05:02 AM

[OJO Zafado:]

I am in the same boat as Resource man. I continue to take off partial positions above $6 and buy partials at +/-$4. This $22 valuation was floated out by a Louis Navallier news letter as teaser bait, more than two years ago while never actually naming the former Can West Petroleum that has now morphed into BQI. This seems like a good stock to put in your teenager's IRA. Development is years away. However, Can Pac railway has announced that they are expanding track into the oil sands regions to provide freight in and syn crude out in tanker cars. Still a long way to go for BQI shareholders. There is even the issue of Canada continuing to raise taxes on energy as Brasil and Russia have just announced once again. There are going to be plenty of cycles in this stock over the next few years as it will continue to trade as a "channelingstocks.com " favorite. Good luck to all longs!

2008 May 08 11:47 AM

[doubtful:]

The commentaries are worth more (better) than the articel.
Look at their cash position and figure how long they will last.

2008 May 08 03:09 PM

[CEO Steve:]

This author's point of view, names of the various parts of BQI's acreage being significant, is absurd. Sounds like an infomercial to me, and I own BQI in my portfolio!

2008 May 08 09:47 PM

[Paula Johnson:]

Glad to see you are investing in the Canadian Oilsands!
Seymour Prophet you stated last June "I believe that, upon the company’s September-October update, BQI’s stock will be propelled upwards towards $22 per share as investors speculate on the potential economics of a joint venture with a Big Oil company."
Instead of holding out for their partnership or their TSX listing promise you should have been playing companies in the Oilsands and Natural Gas that are profitable and would have made you $. Then you could have taken those profits and invested in this spec stock.
Wish BQI the best of luck living up to their shareholders quest.

2008 May 10 12:45 AM

[copper80:]

Here goes..this is the first stock I have boughten on the hopes that my kids will benefit from it..wish me luck

2008 May 10 09:38 AM

[Canuck Inve...:]

This is a serious but long-term play. Some investors won't have the patience to see this through to production, revenue and profitability. But in 10 years I believe this firm will likely be quite valuable.

2008 May 11 03:53 PM

[Dwight:]

Maybe they will quit talking and start pumping OIL, MAYBE

2008 May 12 11:32 AM

[Sing Investor:]

Lastest news about private placement of 11,904,761 treasury shares to Sprott Asset Management Inc. and 1,072,000 shares to a number of other accredited investors at US$4.20/share. Anyone knows about any sweetener to the deals?

2008 May 12 01:12 PM

[resourceman:]

This is good news for BQI longs that Sprott Asset Mangt. has taken a ~10% position, despite the potential dilution. This means that BQI has passed the litmus test as a viable oilsands endeavor.

2008 May 13 04:12 PM

[babsheen:]

quit bitching knowalls and load up


lenihan

2008 Jul 10 12:51 PM