Candian Oil Sands Trust - Pure Oil Sands Play
Most folks don't know that Canada has some of the most significant oil reserves on the planet. Unfortunately much of this oil is not liquid - it is locked up in 'tar sands' in giant deposits in Alberta. Current high prices combined with decades of investments and cost improvements have made it economical to extract this oil. Many companies have some exposure to this resource - but there is one pure Alberta oil sands play for investors.
It's the Canadian Oil Sands trust. It trades on the Toronto Stock exchange. I bought some a little over a year ago via over the counter pink sheets (for those who wish to buy these stocks directly and thus get better execution and liquidity I think Scottrade and TDWaterhouse may be able to help here - you may have to hunt around for a broker who will buy these directly on the TSX).
Canandian Oil Sands trust's only asset is a big stake in Syncrude. As is common in the oil industry other companies also have stakes in Syncrude - to spread risk and provide expertise.
Syncrude runs a giant strip mining operation - if you're a tree hugger this may still be for you since they put it all back nicely when they're done.
The oil gets cooked out of the sand - an expensive process - operating costs are quoted at $18 CDN/barrel. Kurt Wulff at mcdep.com still rates this stock a buy (despite doubling over the last year or so). He notes that big expansion will soon be complete, providing the double whammy of increased production and lower costs. That combined with persistently high oil prices (check the 6 year futures - they're high too ...) could lead to a much higher dividend. There's enough reserves to support operations for at least 30 years (and probably a lot longer).
This stock is a great way to buy 'oil in the ground' as an oil price hedge and a general inflation hedge. It's one of the reasons that high oil and gas prices don't really bother me.
-fg
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FYI: I wrote about oil sands available here. However, I am not sure energy is a good buy at current prices.
My point is that this is the pure play - Suncor and the rest only have a little piece of this.
Mcdep still rates this a buy -
-fg
