*** Disclosure and Other Useful Phrases ***

DISCLOSURE: The content on this site is provided as general information only and should not be taken as investment advice. All site content shall not be construed as a recommendation to buy or sell any security or financial product, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of firms affiliated with the author(s).  Any action that you take as a result of information or analysis on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

The information contained in this writing is not to be taken as an investment or trading recommendation and serious traders or investors should consult with their own registered financial advisors before acting on any thoughts expressed in this publication.

Hot Summer, Hot Bonds

Unrelenting summer heat has broiled most of the U.S. into a stupor.  Russia had extremes of heat and drought not seen in hundreds of years.  Global warming theories are again on the front burner.

The SP500 has wandered aimlessly all summer and now is about where it was in early June.  The U.S. dollar has mostly fallen, though firming recently.  Commodities, as show by the CRB Spot All Commodities Index, are strong and rising.  Equity volume is light, cash positions high.

Many "went away in May" and are sitting out this hot summer in cash or treasuries.  Is this a smart thing to do?  Well, the stash under your mattress may be safe as long as ex-spouses, burglars, mice and the federal government stay away.  I would be most worried about that last one.

But, wow!  Look at the bond markets!  In case you haven't noticed, everything is on a tear.  Treasury, corporate, sovereign, and municipal bonds, all are trending (in some cases rocketing) up.  U.S. 10 year treasuries as shown by IEF recently topped 98 with the yield dipping below 2.6%.

Even traditionally risky bonds are in a strong upswing.  Consider junk (aka hi-yield) issues.  JNK has risen signifigantly over the last 3 months -- no recession predicted here.

Emerging market bonds also continue to out-perform.

As an (perhaps unrelated) aside, note that Obama's economic advisers are jumping ship.   Peter Orszag, director of the Office and Management and Budget (OMB) resigned in late June while the ebullient Christina Romer, chair of the White House Council of Economic Advisers plans on stepping down in September.  Both Orszag and Romer say they are leaving for personal reasons, not job frustrations.  Well . . . draw your own conclusions.

So what to make of it all?  Do record low 10-yr yield indicate a flight to safety ahead of coming crash?  Or, do steadily rising hi-yield (junk) bonds, strong commodities and emerging market indexes indicate a recovering world economy and strengthening inflationary trends?

It may be a mistake to fight a strong trend but I would watch bond markets very carefully.  U.S. treasury upside potential is limited while downside risk is very high --  if bonds crash.  It may not be to early to take a position in TBF or TBT (short and ultra-short 20+ year U.S. treasuries ETFs). At the very least keep a close eye on this market.   Also, you may wish to consider ENY, the Canadian Energy Income Index, which has both yield (3.6%) and real assets of  Canadian oil and gas.  Gold (GLD)  will be strong with currency market disruptions.

With the U.S. government facing northward of $100 trillion dollar in debt obligations eventual massive money printing seems inevitable.  It just isn't here yet.  Things could end badly with high inflation or possible currency (U.S. dollar) devaluation.


The hot summer of 2010 will soon be a memory but if bonds go south a lot of other (unpleasant) things will heat up fast.  We will then long for the days when just the weather was hot.

The Thrill Ride Thats ATPG

Like roller-coasters?  Then you will love high-beta ATP Oil and Gas Corporation (ATPG). After bottoming around 2.5 in early 2009 it rocketed up to 23 by April of this year.  But, by mid May it was back below 8.3. Currently bouncing around in the 11 - 12 range.  Consider yourself warned!  This stock is not for the faint of heart.

Why the huge drop since April?  Well, the BP spill disaster suddenly brought into question the feasibility of deep water drilling.  ATPG has invested heavily in deep water rigs such as its 7-story ATP Titan at its Telemark Hub.  Since the companies focus in the last few years has been deep water many investors apparently feel ATPG is in trouble

ATPG is also highly sensitive to oil prices, oil prices which are now considerably off  April's high of $87/barrel.  Now, throw in high debt invested in deep water rigs and you have a recipe for extreme uncertainty.   Since the company's main focus is in the Gulf of Mexico (they also have a North Sea presence) the shock waves of the disaster are severely rocking ATPG.

This perfect storm of a drilling moratorium, the almost certainty of increased regulations, lower oil prices, and high debt has combined to swamp ATPG's stock.  However, even perfect storms subside eventually and the U.S. really needs oil.  Any oil!  Deep water oil is one of the few oil frontiers left in North America, perhaps the world. The BP disaster gushes up to 60,000 barrels a day. The oil is spewing up under its own pressure, pressure so strong even the industry's best engineers can't tame it.  This has been going on for two months and looks like it will be going on for a considerable time yet.  We need this stuff.  Trouble is we need it in tankers, not the ocean.

Although ATPG had no part in the disaster it will surely be affected by drilling moratoriums and inevitable  increased regulations. Recently a 6 month moratorium was put on deep water drilling.  Louisiana wants it lifted sooner. Those who know how government operates say it will be a year or more before it is suspended. Markets hate uncertainty.

In a press release on June 4 (see release here in its entirety) ATPG provides an update on how the company is affected by the drilling moratorium.  Two wells at the Telemark Hub and one natural gas well at the Canyon Express Hub originally scheduled for 2010 will have completion and production pushed back to 2011.

The company sold $1.5 billion senior secured second lien notes in April.  Most was used to refinance debt with approximately $131 million to increase liquidity.  Capital Expenses of between 50 to 100 million will be saved due to the suspension of the three wells while moratorium costs are estimated at under $30 million.  ATPG has show resilience in managing debt in the past, having gotten through low oil and stock prices in early 2009.

Right now anti drilling fever is at a peak as oil executives are grilled by Congress on TV.  Oil prices are low due to dollar strength.  The anti drilling chorus will probably decrease over time, especially as Americans see increasing gasoline prices due to supply curtailment.  Considering the unaddressed deficit situation situation in the U.S. will probably drive the U.S. dollar considerably lower over time.  These longer term trends will work to the advantage of ATPG.

ATPG has done well.  In 2009 it replaced 376% of production with new reserves.  The company claims to have a 98% success rate in bring production from fields.  ATPG does not do exploring, rather they purchase properties with proven reserves, then bring them into production 

Oil prices appear to be heading up long term (but possibly down in the short term due to recessionary factors).  The moratorium on drilling will be removed eventually.  Uncertainty and risk?  Yes!  But the potential for large  price increases in ATPG stock while the downside is limited.  My advice wait for a big down day in the price of oil then buy!

The roller coaster ride isn't over.  If you want to buy I recommend the dips (big ones), then be prepared to bail at the peaks.  Its kind of like Six Flags and Las Vegas combined.

A Lot to Lose

The immensity of the unfolding disaster in the Gulf of Mexico is only now beginning to sink in.  Wildly varying estimates show as  much as 200,000 barrels of crude oil a day into the ocean.  We are in an early stage of an unprecedented environmental disaster.

The St. Petersburg Times' Headline of Sunday May 2 says it all: "A Lot to Lose".  Once the oil hits the Gulf Stream is will be dispersed from off the  Louisiana, Mississippi, and Alabama coasts to around Florida, up the U.S. east coast, then across the Atlantic toward Great Britain and Europe.  One can only speculate on the detromental effects on fish, shrimp, birds and shell fish.  We can only hope for the best.

Don't own BP stock? Think this doesn't affect you?  Think again!  Florida's pristine sand beaches, the price of seafood, the birds, the sea turtles will all suffer.  And then there is this: You better believe that everyone who drives will be paying more for gas because of this catastrophe.  Sarah Palin's "drill baby drill" image and Rush Limbaugh's "Eco-Nazi" rants are about to get a long over due dose of reality.

Suddenly the Gulf of Mexico (GOM), one of the two bright spots (the other is North Dakota) in U.S. oil production, has dimmed.  Oil production has been growing in the GOM recently.  Now, with new drilling temporarily halted, that trend may reverse.  New drilling is needed to replace depleting old fields. Caution and additional safety measures, which may or may not work to prevent this type of catastrophy, will drive costs up.

Since the U.S. absolutely needs oil economic considerations will eventually prevail and drilling will continue.  We will  pay for it not only at the pump but in diminished quality of fisheries and beaches.

Who to blame?  BP, who operated  the now sunken rig?  Transocean (RIG) who owns the rig? Cameron (CAM) who apparently made the malfunctioning blow out protectors?   Alan Von Altendorf, who is well versed in the field, forecasts costs to BP of $10 billion, RIG $1 billion. You can read his article here.  STO, and HAL are also impacted. You can bet legions of attorneys will be arguing this one for a long time.  They are all already dropping the ambulances and flocking to the Gulf coast billions of dollars beckon.

And this is how it always seems to play out doesn't it.  The road to peak oil is not a smooth slow upward trend.  Rather it goes in forward and back in jolts.  We are now seeing a jolt up, it is never a simple trend.  A full blown global crisis (markets are wildly down as I write this) may again drive oil prices dramatically down.  In the long run supply/demand issues and global fiat money printing will win out and drive oil prices much higher though.

Back in the 1960's we lived with the environmental illusions that as long as we picked up our litter, didn't carve initials in trees, followed Smokey the Bear's admonishments about disposing of cigarettes butts, and ate government recommended three square meals a day, all would be well forever.

Now thick oil on our beaches, hardwood trees dying by the thousands across the U.S. Midwest from exotic insects and fungi,  and 62% of Americans overweight or obese shows us just how delusional we have been.

_______________________________________________________________________

BP is said to be in panic mode, turning to its competior Exxon for help.  Just what can you do when the shutoff valves a mile deep don't work and before your very eyes you watch.



Non peak oil people can point to the gushing oil and say: "See, we told you so" the oil is there we just need to harvest it correctly.  And of course they are right, all or the above.

But it just takes one error, one uncontrollable factor to threaten and potentially destroy so much as we are now finding out.

The good life goes on and on and then suddenly, it doesn't.


But yet once you drop the simple explanation you see no one ever gets it exactly right when it comes to the future.  Pollyannish claims of American ingenuity and omnipotence  keeping us happily . . . .  But this has already failed.  We continue

Revised uninsured liability forecast:
BP: $6 billion clean-up, $1 billion litigation, $3 billion compensation, $4 billion lost revenue
RIG: $500 million legal expense, $500 million lost revenue
CAM: $100 million legal expense
HAL: $300 million legal expense
STO: $2 billlion lost revenue Norwegian offshore drilling moratorium

With three miles of rock and a mile of ocean overlay extreme pressure can build in deep wateroil and gas deposits.  Blow-out protectors are supposed to control these high high pressure surges but all it takes is error either human or mechanical and a disaster can result as we are finding out.

Bang! Zoom! Straight to the Moon!

On hearing the latest jobs report Larry Summers told the Financial Times "we are now moving toward escape velocity."  The Great Recession is rapidly receding in the rear-view window.  Whether we reach the moon, fall out of orbit, or end up lost in space remains to be seen though.  "One of these Days America . . . " yes, we will find out.

After the bang of money creation we are zooming.  Stocks are up 70% in a year, gold, federal debt, interest rates, all seem to be nearing "escape velocity".  The boosters have ignited, the rockets are thundering, and off we go, pushing rapidly into the deep black depths (or is it debts) of space.

163,000 people found jobs last month, 48,000 of them as census counters.  Bill Bonner comments "If you could create wealth by having people count one another, perhaps we could create even more wealth by having them count the stars in the heavens." Put em to work in  Montana, no light pollution.

Alice never did get the ". . . Pow! Right in the Kisser!".  Let's hope Larry Summers is so kind.

Note: The "Bang! Zoom! . . .", "One of these days ...", and "Pow! Right in the Kisser!" phrases are paraphrased from "The Honeymooners", a 1955 TV sitcom starring Jackie Gleason as Ralph and Audrey Meadows as Alice.   I took the liberty of substituting "America" for "Alice".

The Coming Boom in Oil Service

With a deafening roar the greenish black gunk spewed 150 feet into the air, drenching men and machinery alike. Welcome to east Texas in 1901. The Spindletop oil discovery produced some 100,000 barrels/day (they expected 5), more oil than anyone knew what to do with at that time. The gusher heralded the start of the great east Texas oil boom. By 1903 the price of a barrel of oil was 3 cents.

But 1901 is so very long ago. Oil is now $80/barrel, gasoline $2.80/gallon, and both are heading up. A voracious, continually growing, worldwide fleet of 600 million plus vehicles, each suck up their quota every day with no end in sight. Oil companies drill through miles of rock and salt, often under thousands of feet of sea water, all doing so in a desperate attempt to find more of the elusive black stuff.

Now, in 2009, the easy pickings are mostly gone. Salt domes like Spindletop are tapped dry (Spindletop itself quit producing in the 1930's). Lots of hydrocarbons remain in the earth, but they are increasingly difficult to extract. Consider:

The U.S. (lower 48): Texas produces more oil than any other U.S. state but production peaked at 3.5 million barrels/day in the early 1970's. Now, Texas production is below 1 million barrels/day and steadily dropping. With the exception of North Dakota and the Gulf of Mexico, the same is true for the rest of the U.S.

Alaska: Prudhoe Bay, the largest oil field in North America, has produced some 13 billion barrels since 1977. BP plc estimated that as of August 2006 only some 2 billion barrels of recoverable oil was left in Prudhoe Bay.

Canada: Canada is the U.S.'s largest oil supplier. I covered Canadian oil production in a previous SA article. It covered the same scenario: conventional oil production is in decline. Potential exists in oil sands and shale, but environmental issues cloud the promise.

Mexico: The woes of Cantarell, one time the second fastest producing oil field in the world (behind Saudi Arabia's Ghawar), are legendary. Production peaked at 2.1 million barrels/day in 2003, and by 2009 it was at 774 thousand barrels/day and falling rapidly. Schlumberger (SLB) is now working with Pemex to slow the decline in Mexican production.
An interesting aside: It is thought that Cantarell exists only because of an asteroid strike some 65 million years ago (the same one that wiped out the dinosaurs). The strike created a large rubble field deep in the earth with good porosity in which oil collected.
The North Sea: North Sea oil production peaked in 1999 and A Wall Street Journal article on January 13, 2010, said about North Sea fields:

... oil and gas fields are in steep decline and nearing the end of their production lives.

The Middle East: The Middle East, especially Saudi Arabia, is somewhat of an unknown. The Saudis, currently pumping 8 million barrels per day, claim to have 4 million barrels per day of spare capacity. But, can you believe the notoriously secretive kingdom? Even assuming the Saudis are right, a worldwide economic resurgence could easily absorb this extra capacity. Ghawar, Saudi Arabia's, and the world's, largest oil field, needs increasingly large water injections to keep the oil flowing. Among other Middle Eastern states only Iraq may be able to ramp up production (and then only if it is able to keep the violence under control).

There is always the risk of geopolitical issues flaring up in the Middle East. Currently, things are relatively calm, and we have $80/barrel oil. Iranian Shiites have aspirations on Sunni oil, Al Qaeda is still around, and Israeli/Arab issues go unresolved. If any of the above flare up you can say goodbye to $80 oil - I don't need to tell you which direction it will go.

Elsewhere: Brazil, Russia, Africa, Indonesia, Venezuela are all large oil producers. All, except Brazil, have plateauing or declining production and/or exports. Several large off shore fields have been discovered in Brazil recently, but they are miles deep in the ocean, under salt and rock.

Throw a worldwide money printing binge into the mix, as governments try to inflate away their debts, and it seems certain the dollar denominated assets such as oil must rise.

This article is not meant to prove or even argue peak oil. Rather, the point is no matter what or who is right about peak oil, it will take more and more effort (read oil service) to keep oil flowing.

The oil services sector supplies the expertise that supports the massive worldwide infrastructure continually turning raw petroleum into useful products, such as the gasoline you put into your car. Whether it be horizontal shale, deep sea basins, getting more out of older fields, transportation or refining, none of it would happen without the oil services sector.

Oil Service Companies
Schlumberger (SLB) is a dominant player, and with a market capitalization of over $75 billion, it dwarfs competitors such as Haliburton (HAL) and Baker Hughes (BHI). Schlumberger is a quality leader in almost all aspects of the oil service industry. Recent acquisitions of Smith International (SII) and Nexus Geosciences enhance expertise in drilling and seismic services. If you were to pick just one, Schlumberger would probably be the best choice.
Transocean (RIG) and Diamond Offshore (DO) specialize in offshore contract drilling, while National Oilwell Varco (NOV) is more a "nuts and bolts" type company, designing, manufacturing and selling products used for the production and transportation of petrochemicals.
Exchange Traded Funds (ETFs)

If you wish to avoid corporate risk consider oil service ETFs. Three of the larger ones are: iShares Dow Jones US Oil Equipment Index ETF (IEZ), Oil Services HOLDRs (OIH), SPDR S&P Oil and Gas Equipment Services ETF (XES).

iShares Dow Jones US Oil Equipment Index ETF

IEZ has holdings in over 40 companies and is market-cap weighted. The three largest holdings: Schlumberger, Haliburton, and National Oilwell Varco comprise almost 40% of capitalization.
Since holdings are weighed by market capitalization, IEZ keeps most of your investment in the the larger, high quality companies, yet still gives some exposure to the smaller ones.
IEZ has a market cap. of $407 million and an expense ratio of .47%.
Oil Services HOLDRs

Like IEZ, OIH is concentrated in the larger oil service area. Transocean is the top holding at 15%. There are only 16 securities in this ETF. The three largest: Transocean, Schlumberger and Haliburton total around 35% of holdings. If you are considering investing in OIH you should be aware of the unusual features of the HOLDR Merrill Lynch products. Here is a good article on how they differ from most ETFs. Since you can only invest in round lots of OIH, you will need a minimum of $12,100 more or less at current prices to invest.
OIH has a market cap. of $2.28 billion and an expense ratio of .06%. The expense ratio is low because of the unique way that it is calculated (see the above article link for an explanation).
SPDR S&P Oil and Gas Equipment Services ETF

This oil and gas equipment and services ETF holds 24 securities, but no one security comprises more than 5-6% of holdings. Smith International is currently the largest holding. Although XES has many of the same companies as IEZ and OIH, there is a greater weighting of smaller to midsize companies in XES.

XES has a market cap. of $342 million and an expense ratio of .35%.

A Cautionary Note:

If you believe a double dip recession, crash, or even signifigant market decline are on the horizon, you may wish to stay away from this volatile sector. The sector shows even more volatility than oil prices do.

Disclosure: Author long XES

On Canadian Black Gold

"A New Saudi Arabia of Oil" scream the headlines. You've seen the hype. But, how do you separate truth from headline?  Well, we do know there are staggering amounts of hydrocarbons in the western sedimentary basins of North America.  It is no coincidence that the U.S. imports more oil from Canada than any other country.  While Saudi Arabia has 264 billion barrels of oil reserves, Alberta's Athabasca oil sands alone total some 1.7 trillion barrels of hydrocarbons.

Canada's oil and gas are vital for the U.S. The quiet rolling western prairies are safe, peaceful and close. One doesn't deal with egomaniacs like Venezuela's Chavez (though some might nominate Alberta's premier Ed Stelmach), Nigeria's violent saboteurs, or bomb-toting Middle Eastern jihadists. With that in mind, let's take a closer look at the Canadian portion of these "staggering" North American reserves.

Canadian oil originates from three sources: Conventional oil, oil sands, and newly recoverable oil from "tight" strata. "tight" refers to oil (or gas) locked in low porosity/permeability formations of shale, siltstone, or sandstone.  Historically, conventional oil production has predominated.  Now, by necessity, that is changing.

Conventional Oil and Gas

Mobil Oil discovered Pembina, Canada's super-giant oil field, in 1953.  Located in the Cardium Formation, some 100 kilometers southwest of Edmonton, Alberta, Pembina still produces more conventional oil than all other Canadian fields combined, it has given up over 1.2 billion barrels of oil in its 50 year history.

Canadian conventional oil, about half of all Canadian production, is a desirable light to medium grade.  Only 17% of Pembina's conventional oil has been recovered, yet production has been declining since the 1970's. It's there, you just have to crank harder and harder to get it.

It is no secret that worldwide conventional oil production is also in decline.  Saudi Arabia, which claimed two years ago it could produce 15 million barrels per day, has yet to even come close.  Saudi production has never exceeded 10 million barrels per day, even with the $120 plus/barrel environment of 2008.  Saudi Arabia's Ghawar, the largest oil field is the world, seems to be in decline (see here).  Saudi crude is rumored to be increasingly sour, with increasing sulfur and water content.

Even in decline, Canadian conventional oil production will continue to supply oil for U.S. and Canadian markets for quite some time.  Water and carbon dioxide flooding continue to push more oil out of Pembina.  Penn West Energy Trust (PWE) is a large producer of conventional oil and gas in the Pembina area.

Oil Sands

The extensive Athabasca oil sands and other smaller oil sand fields north of Edmonton are (as noted above) estimated to hold more than 1.7 trillion barrels of hydrocarbons -- the largest petroleum resource in the world.  The catch?  Oil sand hydrocarbons are bitumen, a thick, gooey, tar-like substance.  Bitumen lies in vast beds near the surface of north-central Alberta.  Huge shovels and trucks strip off the boreal forest vegetation and surface soil to get to it after which, capital intensive processing and refining are necessary to produce gasoline and other end products.  Often more BTU's must be input than are derived.

Oil sand development raises serious environment questions. The surface forest is destroyed, leaving a barren, moon-like landscape over thousands of acres. Greenhouse gas emissions are high. The Pembina Institute has taken the lead in monitoring oil sand environmental issues.  Some people question if it will be worth the environmental, ecological and financial cost.

Alberta's oil sands currently produce approximately half of Canadian Oil, most of it is exported to the U.S.  Despite the drawbacks, declining conventional oil production and rising prices have led to increasing oil sand production in recent years.  The trend is projected to continue, provided the environmental issues can be addressed.

Many companies, both domestic and foreign, have stakes in the Canadian oil sands. Suncor (SU) and Syncrude Canada (joint venture of several oil companies) are major participants. ConocoPhillips (COP) has big plans.  Imperial Oil (IMO), Canada's large integrated oil company, has a major presence.

Tight Oil Formations and Multi-stage Fracturing

Multi-stage fracturing (MSF) is where all the excitement is now.  MSF in horizontal bores has revolutionized North American gas production and may do the same with oil.

MSF has the potential to draw billions of barrels oil from previously inaccessible tight formations.  Tight formations often contain large quantities of oil and gas but, due to low porosity and permeability, have historically been hard to get at.  MSF creates flow paths in tight strata from which oil and gas can be harvested.  By creating fractures MSF makes accessable smaller, previously uneconomical, oil and gas collections . The hydrocarbons flow into the induced fractures while proppants, such as sand, ceramic, or other particles, prevent the fractures from closing.

Candian (and U.S.) tight oil often has a very desirable gravity (API 39-45), better than Pembina conventional oil (API 37), and comparable or better than WTL (API 39.6).  Since MSF technology has significantly reduced extraction costs it may be a game changer for western Canada.

Keep in mind that tight oil production rates often decline quickly and the water component rises over time.  For now, better technology is trumping this.  Here is an excellent 2008 article on U.S. Bakken tight oil economics.  Recent technological improvements continue to point toward ever better recovery rates, with up to 24 stage MSF improving productivity.

The success of MSF in the Pembina area will probably be duplicated in other fields, potentially drawing billions of addition barrels of previously inaccessable oil from tight formations.  MSF is now being tried in over 20 Canadian formations.

The Candaian company Petrobakken's (PBKEF.PK) website claims it is ". . . primarily a pure-play, southeast Saskatchewan, light oil-focused company with targeted 2009 exit production of more than 37,000 boepd, more than 95% light oil".  Petrobaken is now also moving into Cardium light oil with its proposed acquisitions of Berens and Result Energy.

One might also consider investing in Canadian Royalty Trusts (CANROYS).   Penn West , mentioned earlier for its conventional production, also has large tight oil lands as a bonus.  Enerplus (ERF) is another CANROY which pays high distributions and has large land holdings in tight oil areas.  Some of best land potential for MSF is on the flanks of convention oil fields such as Pembina.

CANROYS have special taxing considerations so consult your tax advisor.  Also, since distributions track the price of gas and oil they can change quickly.  Both Penn West and Enerplus plan to convert to corporations in the next few years as new taxes on CANROYS take effect.

Summary

MSF has revolutionized natural gas production in the U.S and, though unheralded, North America is now self sufficient in gas.  Can MSF do the same for oil?  Can MSF make up for declining conventional oil production?  Can it make  environmental sacrifices for oil sands unnessary?  It's a tall order but recent trends are encouraging.  MSF will, at a minimum, stem and help reverse the decline in North American oil production.  U.S. oil production, for the first time in 30 years, is now up (see my earlier article here).

Don't underestimate geopolitical considerations.  Declining exports from both Mexico and Venezuela make Canadian deposits even more valuable for the U.S.  Western Canada (and U.S.) are as safe an oil and gas investment as you can find now-a-days. A major flare up in the Middle East will send Canadian and U.S. oil and gas companies stocks soaring.

You have a choice of income paying CANROYs with large land holdings, established integrated companies such as Imperial Oil, or new exciting tight oil plays such as Petrobakken.

Thanks to "The Big Fat Greek Crisis" the US dollar is now strengthening against all risk currencies including the Canadian dollar.  This is driving commodity and natural resource company prices down so the coming weeks may present an excellent entry point into Canadian oil companies.  Do your own research.

Tags: SU, COP, IMO, PBKEF.PK, PWE, ERF