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In Depth Analysis: Raymond James Oil Sands Conference
Tuesday, May 09, 2006

On Monday May 9 CanWest took part in the Raymond James Oil Sands Conference through its majority owned subsidiary OILSANDS QUEST INC. This conference featured the tried and true of the oil sands in Alberta such as Suncor, Imperial Oil, and Synenco as well as the newcomers to the group. The OILSANDS QUEST presentation consisted of much of what current investors who have done their due diligence on the stock already knew, with some interesting new information.

The company stated that they currently have 850,000 acres of exploration permits after their first relinquishment, and expect to have 508,000 acres after their 2006 relinquishments (but as we already knew they are still trying to have this delayed due to the Saskatchewan government taking so long with approving the drilling permits). They described this land as the largest land holding in the tar sands of any company and described their plan of bringing the sands into production through ventures. If the sands prove to be economical the company will seek partners to come into the projects (expected to be between4-6, which we believe depends not only on how economical the sands are but also on the breadth of the projects and interest) while maintaining a 20-40% interest in each project. We would expect the first sale to be the most important for the company because it will set a benchmark for the equity percentage it is able to retain in the following transactions, but once again that all depends on the level of interest in the projects.

The company also displayed a slide that displayed the Chesapeake Bay area showing the type of geological formation they are seeking in order to establish where the tar sands may or may not be. We think this might be part of their “thesis” which was described earlier that they did not want to divulge at the time. So the company is most likely drilling in these basins now and began drilling on their 150 hole Phase II program this past winter, but expect it to be completed next winter due to its size and weather conditions. The company also stated that the environment is practically unscathed at this point so they face less regulatory hurdles as the environment will not be faced with the Pollution Growth Effect (this is simply an effect that takes place where as new projects are added their pollution outputs add exponentially to the current pollution problems).

In 2005 the Company spend $5 million on land and site infrastructure, $6 million on Phase I drilling. In 2006 the Company then spent $5 million on drilling and geophysics and expect to spend another $20 million on Phase II drilling. The company expects to spend $35 million total and stated that the bulk of this money has already been raised at this point. This bodes well for current shareholders as dilution should not be a problem as the company appears to have these expenditures paid for mostly.

What makes this company special is that it is in a previously untouched province where currently the problems in Alberta do not exist. There is plenty of water in Saskatchewan which appears likely to last into the future and a large base of labor from which to draw. Both of these resources seem to be in very short supply in Alberta where the oil sands business is exploding. The company will also have access to transportation routes while having a minimal impact on the environment once again.

The Company stated, “uncertainties have been addressed” and the results are “consistent with our geologic model” because the “materiality of resource has been proven.” They noted Norwest classified the resources as “Discovered Resources” which had been previously announced and stated that they expect a full evaluation of the Phase I drilling program to be out in August. The Company stated, “We are confident Phase II drilling program will result in commercial viability of Firebag East.” So as the CanWest and OILSANDS QUEST remain bullish, so do we.

CVVLF (CVV.V): This is our priority right now as they should have some big news out soon, news that could rival CanWest's first announcement of its drilling program. This company reminds me a lot of CanWest as it was an infant and that it has many projects with one currently under development. Also today the Company announced that it had staked an additional 250,381 acres of land in and North of the Athabascan Basin. They added to their Poplar and NE Project and created the Grease River claim. Grease River previously had work done on it by the Canadian Government and it contains up to 1.60% U308 on surface testing with another area containing 1331 ppm of Uranium. As previously stated we see this stock as a potential double on good news and a worse case scenario would put it down 40% on bad news. We should know soon as to which way we are headed and hope for the best.

UREGF (URE.TO): The Company recently announced that it was going to sell its holdings in Canada for cash which will undoubtedly help in bringing their Wyoming holdings into production. We see this as a positive as it will keep the company from diluting its shares by being forced to raise cash to build out infrastructure on its site.

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