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Oilsands Quest Inc. (BQI) - The Numbers Are In

Today we found out why BQI has been on a tear lately.  Looks like speculators knew the company would be announcing the independent estimate of their reserves for its Axe Lake Discovery, and bid up the stock on high expectations.  Yet today the stock fell 12.70% as those speculators were obviously disappointed with the numbers.

I read over the report and, although I know little about oil sands, it seems to me like they have 1.1 billion barrels on the low estimate and management is sticking to their own estimate of 10 billion barrels for all of Oilsands Quest’s lands.  That seems pretty good to me.  Since I am no expert at interpreting the estimates, however, I will be on the lookout for analyst reports over the next few weeks.

Nonetheless, even if the number was 2 billion barrels the stock will, in my opinion, trade significantly higher over time.  

By Theo at 2007-11-06 02:08 | Stocks | BQI | Theo's blog


Valuing BQI

Theo:

I've probably asked this before, but how are you coming to your estimate of BQI's value ("in my opinion, trade significantly higher over time")?

Are you assuming a certain oil price?
By smtkr at Fri, 2007-11-09 11:05 | login or register to post comments

RE: Valuing BQI

smtkr:

Check out my old articles about BQI's valuation and potential.


-theo
By Theo at Fri, 2007-11-09 14:17 | login or register to post comments

RE: Valuing BQI

Theo:

I'm not trying to argue with you. I just see a lot of users valuing equities anecdotally on this site and I want to put some more stable reasoning behing them. Your justifications for BQI seem to have been things like, "look where the stock was last time oil was at this price," or, "the company is worth more than x because there are likely y barrels of oil and current oil prices are z." I learned a lot about the oil refinery business when I was doing research for FTO (which I currently own). FTO's latest conference call indicates:

1. Canadian crude is selling for something like a $50 discount to light sweet crude
2. Production of oil in Canada has increased significantly, but the infrastructure to transport it out of Canada will not be around until something like 2009. This creates an overcapacity condition that results in 1.

The CEO has even said that they buy all of the Canadian crude they can get their hands on. Anyhow, there was a lot of interesting stuff in the conference call (transcript: http://seekingalpha.com/article/53336-frontier-oil-corporation-q3-2007-earnings-call-transcript ).

The point I'm trying to get at is: Are you valuing BQI based on Light Sweet Crude prices? If so, does BQI's property have light sweet or does it have oil more like the rest of Canada? If so, are your models for BQI good (they might be - BQI might be a long way from production and the infrastructure could be in place and prices corrected significantly, albeit Canadian crude will always sell at a 25 to 30 percent discount to light sweet, by the time BQI comes into production).

I'm not trying to harass you or even ask you to do the legwork for me. But, if you have already done some research, please share.
By smtkr at Fri, 2007-11-09 17:29 | login or register to post comments