Few investors realize that one sector of the heavy oil market is the most profitable oil in all of North America – it’s called cold flow heavy oil. Think of it as light heavy oil, thick and gooey enough that it needs a pump to get out of the ground, but no so thick that it needs expensive heating to make it flow – hence the name cold flow.
And the recent BP disaster in the Gulf of Mexico will only help Canadian heavy oil prices. If production from the Gulf is slowly curtailed, US refineries will look to Canada even more for supply.
When I say cold flow heavy oil is the most profitable, I mean that producers get more dollars of profit out for every dollar they put in to get the oil, than from other types of oil. For every dollar producers put in the ground to get the oil, they get anywhere from $3-$7 back (or more) – compared to $2-$4 for most light oil, generally speaking.
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The Oil Story No One is Talking About
Everywhere you turn these days, it seems, there’s a negative story about the oil exploration industry.
And no doubt – some of the negativity is justified.
But I’m not interested in that. I’m interested in something potentially more powerful.
I’ve uncovered a scenario playing out in the oil and gas exploration industry that will change the game forever.
More importantly…I’ve also discovered a handful of companies poised to soar as a direct result of this developing story.
Now…you won’t hear about any of this on the evening news broadcasts…and you won’t read about it in your local paper.
The best source of information – including specific instructions on how to take full advantage of this game-changing development – is a FREE report I’ve just prepared.
Click here to claim your copy of my Free report right now and find out exactly what’s behind the shocking oil exploration story no one is reporting!
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(This is called the Recycle Ratio – the netback over the finding and development costs. Investors should always ask the management teams what their recycle ratio is on their production!)
This profitability is due to two factors:
- The heavy oil in Canada is shallow so it doesn’t cost much to get out
- US refineries love Canadian crude as Mexico and Venezuela heavy oil production declines, and that strong demand – even before BP’s disaster – is keeping heavy oil prices in Canada strong
And Canada has more of this oil than anyone else in the world. There is thought to be enough heavy oil and bitumen in North America to rival Saudi Arabia – estimated at more than three Trillion barrels1. Now, cold flow oil is only a small part of this number, but the graphic below gives investors a sense of the immense value in the ground…
Chart reference: http://www.petroleumequities.com/HeavyOilReport.htm
Yet only a few junior and intermediate producers focus on cold flow heavy oil. I think that will change.
My subscribers just received a 12 page report detailing the opportunity, along with three junior producers who are growing their profitable heavy oil production quickly.
Like liquid rich or wet gas stocks I wrote about earlier this month, this sector of the energy market is not well understood or recognized by retail investors. But unlike those stocks, heavy oil stocks are not unloved. The analysts and funds have discovered their high profitability, and these stocks are rarely cheap on a valuation basis. But they do get rewarded quickly for their growth.
As well, new technology is continually lowering costs and increasing profit margins; even a small per barrel savings will leverage into huge profits because of the colossal size of these deposits.
Investors will see many new opportunities for profit for many years as this massive Canadian resource gets developed.
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