The Year's Biggest IPO

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Last week, Athabasca Oil Sands raised $1.32 billion in North America's biggest IPO of the year. If you didn't hear about it, that's probably because the shares listed in Toronto, not New York. This is only fitting for a firm focused on Canadian oil sands development.

AOSC picked a fine moment to IPO. The oil sands developer's public debut coincides with a run-up in oil prices that has seen futures top $86 a barrel in recent days. Crude hasn't traded this high since October 2008.

My readers met AOSC last fall, when the company sold a 60% interest in two of its oil sands projects to PetroChina (NYSE: PTR  ) for $1.9 billion Canadian dollars. This gentle resource grab received Canadian regulatory approval around the beginning of the year.

What makes this firm so attractive to the Chinese, and now to Canadian investors as well, is the very significant potential of its supersized oil sands projects. Net of the PetroChina sale, AOSC has 7.1 billion barrels of "contingent resources" across its 1.5 million acres of leases and permits. These are large, contiguous blocks of prime leasehold, too -- not a patchwork of claims scattered all around the Athabasca region, like Gulfport Energy's (Nasdaq: GPOR  ) interests. (That stock ran up huge last week following AOSC's IPO, which I think is a mistake.)

Like Suncor Energy's (NYSE: SU  ) nearby MacKay River project, AOSC's projects will employ steam-assisted gravity drainage (SAGD) or other in-situ extraction methods. If you want to know why you should care about such obscure-sounding technology, check out my recent feature on SAGD star Cenovus Energy (NYSE: CVE  ) . The bottom line: While firms like Chevron (NYSE: CVX  ) and ExxonMobil (NYSE: XOM  ) will likely continue to pursue surface mining operations, in-situ is an increasingly popular avenue for oil sands development.

As with Cobalt International Energy (NYSE: CIE  ) -- another large oil IPO worth exploring -- Athabasca's first production lies far in the future (i.e. 2014 at the earliest). With this kind of production profile, it's not hard to imagine investor fatigue setting in at some point, especially if oil prices tumble over the next year or two. But just like Cobalt, AOSC is largely a long-dated call option on crude. A big sell-off in the shorter term could create an interesting opportunity for believers in higher future oil prices.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile, or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (4)

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.

  • Report this Comment On April 06, 2010, at 12:19 AM, grant224 wrote:

    wow all that with free shipping?!?!?!

  • Report this Comment On April 06, 2010, at 9:19 AM, 1957Sully wrote:

    where can i ask a question about a specific company

  • Report this Comment On April 06, 2010, at 12:59 PM, XMFSmashy wrote:


    Have you checked to see if there's a message board for the company in question? If not, you could go to to a more general sector board, or head over to CAPS and interact with other players who have given your company a thumbs up or down.


Add your comment.

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: 1143588, ~/Articles/ArticleHandler.aspx, 10/25/2016 1:28:00 AM

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 4 hours ago Sponsored by:
DOW 18,223.03 77.32 0.43%
S&P 500 2,151.33 10.17 0.47%
NASD 5,309.83 52.43 1.00%

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

10/24/2016 4:00 PM
CVX $100.66 Down -0.64 -0.63%
Chevron CAPS Rating: ****
GPOR $25.96 Down -0.55 -2.07%
Gulfport Energy CAPS Rating: **
PTR $73.22 Up +2.08 +2.92%
PetroChina CAPS Rating: ***
SU $29.40 Down -0.02 -0.07%
Suncor Energy CAPS Rating: ***
XOM $86.91 Up +0.29 +0.33%
ExxonMobil CAPS Rating: ****