Investment

Prior to discovering vast heavy oil resource in Alberta’s oil sands, there was not a significant new discovery of oil for good three decades. Also, the world has changed so much in the past decade or so. Wars are still sprouting everywhere, economies have grown terribly dependant on finite sources of energy, the planet has become overpopulated, developed world is slowly drowning in debt, etc. To make matters fundamentally worse, the world’s richest sources of fossil fuel are located in geopolitically unstable areas.

Thankfully, then came the oil sands; the new, rich-beyond-anyone’s-wildest-dreams, source of fossil fuel, and in Canada of all places; a stable, developed, G8 country. Naturally, moments after extraction technologies had improved, the area was swarmed by oil exploration companies, searching for the Holy Grail of the 21st century.

Just in the past year or so, five oil and gas companies found new dance partners for this shindig. More importantly, each time a new acquisition target was named, its stock skyrocketed almost instantly.

Predicting who may be next is potentially a difficult task. The number of potential takeover targets is getting smaller and smaller. It is almost as if oil sands have become like a beachfront property—rare and pricey, but worth every dime.

For starters, there is EnCana, Husky Energy, and Canadian Natural Resources, all three still all alone on the dance podium and still the oil sands “takeover virgins.” Then there are veteran players that have been known to sell bits and pieces for handsome chunks of money, such as Suncor, Canadian Oil Sands Trust, UTS Energy or Western Oil Sands. Basically, anyone having a stake in the oil sands may soon be courted by “Johnny(s) come lately(s).” Because, who knew high oil prices would eventually justify high exploration costs in the oil sands—duuhhh!