A New Star in the Oil Sands

I'm pretty sure everyone and his mother has an oil sands project now.

The latest company to jump into the Athabasca deposit in Canada is California's Occidental Petroleum (NYSE: OXY  ) . The firm has agreed to pick up a 15% stake in Total SA's (NYSE: TOT  ) major Joslyn project for about half a billion dollars. While my hometown energy hulk doesn't currently operate in Canada, this is familiar ground for Oxy -- the company we now call Nexen (NYSE: NXY  ) used to be CanadianOxy, at the time an 80%-owned subsidiary.

While Oxy's investment marks a new entry in the oil sands, Enerplus Resources Fund's (NYSE: ERF  ) sale of the stake doesn't denote a departure. Enerplus is merely optimizing its asset portfolio. Remember last year, when Devon (NYSE: DVN  ) decided to shed some oil sands lands in order to focus on an in-situ project? Enerplus is mirroring that move by focusing on its 100%-owned and operated Kirby project. In-situ recovery, unlike open-pit bitumen mining, is much closer to conventional oil recovery. Bulk mining just doesn't suit smaller players.

Enerplus has actually been shopping its Joslyn stake since March. Perhaps the company foresaw the ensuing regulatory delays that have pushed back the project startup by at least a year. Today's environmental hurdles are tough to clear, as fellow oil sands miners Suncor (NYSE: SU  ) and Canadian Natural Resources (NYSE: CNQ  ) can certainly attest. In-situ recovery is no panacea, but like any investor, Enerplus is best off sticking within its circle of competence.

This has to be a welcome development for Total as well. Occidental offers both great financial muscle and technological savvy. With these two energy giants putting their noggins together, even a tough regulatory regime shouldn't prove insurmountable.

Related Foolishness:

Total is an Income Investor recommendation. Drill into the market-beating, dividend-focused newsletter service free for 30 days.

Fool contributor Toby Shute and Oxy are neighbors, but the company has never come asking to borrow a cup of sugar. Toby doesn't have a position in any company mentioned. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 670842, ~/Articles/ArticleHandler.aspx, 10/28/2016 12:46:27 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,247.41 77.73 0.43%
S&P 500 2,139.17 6.13 0.29%
NASD 5,228.34 12.36 0.24%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/28/2016 12:30 PM
OXY $74.58 Up +0.79 +1.07%
Occidental Petrole… CAPS Rating: ****
CNQ $32.63 Up +0.11 +0.34%
Canadian Natural R… CAPS Rating: ***
DVN $40.01 Down -0.45 -1.11%
Devon Energy CAPS Rating: ****
ERF $7.00 Up +0.12 +1.74%
Enerplus Resources… CAPS Rating: ****
NXY.DL $0.00 Down +0.00 +0.00%
Nexen CAPS Rating: No stars
SU $31.18 Up +0.03 +0.10%
Suncor Energy CAPS Rating: ***
TOT $48.53 Up +0.15 +0.31%
Total CAPS Rating: ****