lurking turkey

Something's Brewing at Oilsands Quest Inc.

P.S. to DDyer

I wouldn't take a TSE listing as any guarantee of authenticity either. Oil and Gas reserve reports are sometimes a reasonable guess, and sometimes much worse. I have seen falsified reserves at a major TSE-listed oil and gas company, and deliberate misrepresentation (misbooking) of reserves by a major oil and gas reserves evaluator. But I don't want to spend the rest of my life in court defending libel allegations, so I will leave it at that.

By the way, I think Imperial made money at Cold Lake, when all costs are included and discounted. But their deposit is very high quality, and Cold Lake bitumen gets a good price because it makes excellent asphalt, compared to other bitumens on the market. I am sure there are other in-situ projects that have been economic, or would be at today's prices. But because of the risk and economies of scale (= big capital requirements), my opinion is that it is a game for the big players only.

Something's Brewing at Oilsands Quest Inc.

As a petroleum reservoir engineer with experience in bitumen recovery, I would caution investors into reading too much into "bitumen in place" figures. Recovery efficiency is not "the only real concern remaining", it is the major concern for any bitumen deposit from day 1.

The world has enormous deposits of bitumen that are not currently economic to develop. The difference between the uneconomic deposits and the economic deposits depends on the interaction of many variables, including, but not limited to bitumen concentration, oil viscosity, reservoir thickness, continuity and mineralogy, and reservoir depth. A well-designed in-situ pilot in stable operation for at least a year or two is absolutely necessary before investing significant capital. You cannot use rules-of-thumb except to estimate maximum possible recovery (where the minimum is zero).

Without wishing to single out BQI (about which I know nothing), all small-cap oil stocks are potential targets for manipulation. Heavy oil and bitumen stocks are especially susceptible, because it is so easy to release positive-sounding in-place numbers, without demonstrated having any real economic potential. Maybe this is like a biotech company with good results in Phase I trials.

Maybe in a year or so, the initial pilot results will "de-risk the BQI story and eliminate the overhang on the stock". Or maybe they will be a complete bust. Anyone who decides to go long BQI had better be sure of top-quality access to confidential information, because the insiders will be in (or out) before you know what happened.

Good luck, guys.