Canadian Oil Sands - No Jargon Investment Thesis

A discounted Canadian oilsands producer with decades of reserves and multiple catalysts already playing out

Major oil research organizations — most notably the IEA — are finally beginning to acknowledge that global oil demand is unlikely to plateau anytime soon. Most people in the world live in developing countries, and as their incomes rise, they naturally use more energy. Oil demand grows almost automatically as standards of living improve. In my view, the world still has a huge amount of oil demand growth ahead of it:

As an investor, the obvious question is: How do I get exposure to this long-term trend?

One of the simplest ways is to own a company with decades of oil reserves. As new supply becomes harder and more expensive to bring online, oil prices have to rise to motivate companies to drill more. But if you already own oil reserves that can last 30–40 years, you don’t need to keep spending money to find new barrels. When prices rise, the value of what you already own rises with it, and almost all of that increase flows straight into profits.

This is why Canada’s oil sands companies have outperformed (along with pipeline access for their products!) These companies often have 20–50 years of reserves and don’t face the steep production declines that U.S. shale producers do. The market has started recognizing how valuable these long-life assets are.