This Train is Pulling out of the Station...
Sunday, December 17, 2006

Oilsands Quest (BQI) has been a stock we have constantly bragged about. Many of you probably realize that it is about flat or down from many of our recent buys (however we did buy most of our shares in the $2 range, so we were averaging up) and wonder why we would push a dog. Well we always knew that it was a great story, and probably less understood on Wall Street than the current uranium boom. Yes that's right, less people on Wall Street understand this phenomenon than the Uranium Boom! We said it first, and will stand by our word. This drilling season is when many will realize how unique this oil sands play is (we have also said this in previous posts, but feel that it should be reiterated).

Last drilling season was when we discovered that the company was correct on its hypothesis regarding where the bitumen was and how it would be situated. The company was highly successful as they returned significant grades and depths of bitumen from roughly 80% of their drill holes. We believe that as they “fill-in” their drill grid from last season as well as do more exploratory drilling that they will significantly add to reserves as well as receive a heft payday from a major oil company (or even national oil company...think India or China) purchasing a JV agreement for this first project. My take is that many are weary of what they do not understand, this is why uranium is still shunned as an investment even in today's environment, and also the reason people shy away from investing in the only Saskatchwan oil sands play. Provincial (and for that matter national) borders have never indicated where a resource area begins or ends, but I guess that it is so engrained in Wall Street's mind that oil sands are supposed to be in Alberta everyone ignores the writing on the wall regarding Saskatchewan.

Finally though one of Wall Street's greatest minds is speaking up for Oilsands Quest! Dennis Gartman (of the highly respected ‘The Gartman Letter’, Just One Thing, and his many appearances on CNBC) recently recommended Oilsands Quest for his “All Things Athabasca” investing approach. We have often quoted and borrowed this approach, as well as expanded it to uraniums (they are in Athabasa as well, so we are taking this approach one step further). Suncor Energy has been his only pick and last year he recommended Birch Mountain Resources as an infrastructure play, but sold out before the collapse. Gartman had this to say in his Friday December 15 2006 issue:

“Finally regarding “all things Athabasca,” and particularly an interesting speculation, Oil Sands Quest Inc (AMEX: BQI) [Ed. Note: In order to be perfectly transparent, we have gotten ourselves involved in this company buy owning a few thousand shares in our trading account just to make certain that we focus our attention upon it... at prices modestly above where it stands as of the close of trading last evening), we are always looking for ancillary trades in that region, for we are convinced that it is, has been and shall be in the future, the big story of N. American energy independence. Our primary interest is of course Suncor Energy. It has been our primary interest and it shall remain so, for it has the liquidity and it has the history we need to be involved “in size.” However, we've speculated on other stocks involved in the Tar Sands, including a time earlier this year when we became involved (for a very short, but very profitable time) in Birch Mountain. We bought the shares near $6/share and were stopped out several months later at $7 1/2. We've stood aside since, as BMD has fallen steadily toward $2 1/2. We've no interest still.

However, Oil Sands Quest was brought to our attention by our old friend, Dr. Mike Berry. Simply put it is a subsidiary of CanWest Petroleum, and it has acreage in Saskatchewan (not Alberta) on land contiguous to the Albertan Athabasca Tar Sands that it is actively pursuing. The stock has broken its downtrend that is contiguous with the weakness in crude oil prices made earlier this year. Further, since the lows made in late-September (when Rod Stewart tells us “We really should be back in school.”), each low has been higher and so too each high. This is our new “punt” on Athabasca. As a balance sheet investment , nothing could be worse. The company has negative earnings; it has negative cash flow; it sells at a price hugely above book value, so be very much forewarned: this is a highly, highly speculative “punt” on “All Things Athabasca.” However, we own it... at a small loss at present, and we intend to add to it when it crosses above $5/share.”

-Dennis Gartman
‘The Gartman Letter’
Friday 12-15-2006.

We highly recommend this letter to all serious investors as it covers everything from the Forex markets to grains to equities. To find out more, please visit http://www.thegartmanletter.com/.This tells us that we have been correct in our assumption that BQI is poised to rocket past $10 (we had thought that this would happen by the end of this year, but it seems destined that we shall continue to lay the ground for larger gains in the beginning of next year) and that the lows have been seen and shall be forgotten. We love the gains and money the stock market can bring us, however we prize being correct above all, especially when we are one of only a few who are initially right. It's great to have an investor far far far wiser than us aboard and investing in one of our oldest and first picks, and it appears more than ever now we are poised for further gains. Surely this was the reason BQI had such strength on Friday when most oils were down. 

On a closing note we have now upgraded http://theinvestar.com to include some company profiles (many more will soon be updated) and added some news links for uranium news as it is so hard to come by. Until next time, good luck and happy investing.