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Oil & Gas
Micro-cap Stock Report
February 2006
Business Summary
CanWest Petroleum Corporation (OTC BB: CWPC) is exploring and developing large oil and gas resources in the sedimentary basins of politically and economically stable Western Canada. The Company holds more than 2.25 million acres of land under permit for exploration and comes to market with several billion barrels of proven and potential resources.
Each year, junior companies make 80% of all oil and gas discoveries. CanWest is a unique junior company and one of few, small public companies that can claim controlling interests with such significant upside potential in the North American markets.
In addition to its 2.25 million acres of land permitted for exploration, the Company has partnered with NOVA Chemicals (NYSE/TSE: NCX) to develop 850,000 acres of land, known as Pasquia Hills, in central Saskatchewan, Alberta, Canada. CanWest and its subsidiary, Oil Sands Quest, also own over 1.4 million acres within the Athabasca Oil Sands Region to explore for oil sands and has significant working interests in several oil and gas drilling prospects, which are expected to generate substantial cash flow by the end of 2006.
Bullish Petrochemical Market
Petrochemicals represent a $162 billion plus industry in North America. Growing demand and rising prices of petroleum products have fueled renewed interest by petrochemical refiners to secure feedstock supplies at stable pricing. The depletion of conventional petroleum products, coupled with the question of security of the global petroleum supply, is another factor in the expansion of this market. Energy prices have also risen, opening the market for alternative petrochemical resources.
The United States only utilizes 3.5% of its total oil and gas production for petrochemicals. A great deal of research has been conducted to improve production technologies with corresponding cost savings oil shales, which enhances CanWest Petroleum's potential to become a feedstock producer with stable production costs.
Growing Energy Market
By the year 2010, it is estimated that U.S. oil imports will exceed 16 million barrels a day. Production from Canada's Athabasca oil sands is expected to meet part of this demand with the capacity to produce several million barrels of oil per day. Canada's large oil sands reserves represent a long-term, proximate and secure source of oil supply to meet North America's energy needs. In addition, the mid term forecasts for oil and gas remain in the $40 per barrel range, which bodes well for both CanWest's Athabasca Oil Sands interests as well as its conventional drilling projects such as the Sylvan Lake oil project and Barr Head gas project.
Pasquia Hills Oil Shale Project
CanWest recently partnered with NOVA Chemicals Corporation to jointly study the feasibility of the Pasquia Hills Oil Shale Project as a long-term source of petrochemical feedstocks. The Pasquia Hills Oil Shale Project is located in central Saskatchewan, Alberta, Canada and covers approximately 850,000 acres, including a mine site of 50,000 acres with a drill indicated resource of 4 billion oil barrels. The Company is the owner of the mine site and proposed primary processing plant. Under the terms of the joint venture, NOVA will purchase crude products by way of a long term purchase contract for benzenes, naphthalene, olefins, and other feedstocks, which will allow the Company to finance the mine and processing plant while maintaining a majority interest.
Stock Information
(OTC BB: CWPC)
Business: Oil and Gas Exploration
OTC BB Symbol: CWPC
Market Price $8.09
52-Week Range: $0.36 - 8.15
Average Daily Volume: 2.46 Million
Common Shares Outstanding: 105.68 Million
Market Cap: $854.96 Million
Fiscal Year End: December 31
Questions? Call 781.444.6100 x625 or see www.otcfn.com/cwpc and www.canwestpetroleum.com
Prices as of March 27, 2006.
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Investment Highlights
High Growth Market - As oil and gas prices continue to rise and demand for domestic oil and gas grows, potential for profitability increases substantially in the North American $162 billion sector.
Stable Holdings - Substantially all of CanWest's 2.25 million acre holdings are in the economically and politically stable North American marketplace where demand for lowered dependence on imports is growing significantly.
Significant Opportunities - lie beneath the surface of the Company's holdings. Recent progress reports at a number of projects indicated substantial reserves and significant potential for long term drilling prospects.
Well-Financed - CanWest's recent $22.5 million funding should support a number of projects currently underway and provides significant room for operational growth.
Due to the consistent ore grade of 7.8% oil by weight from 44 holes drilled to date, a large percentage of the inferred and indicated resources may become measured or proven after completing an infield drill program of some 200 holes as part of the feasibility study. Based on the 44 holes drilled to date, a third party engineering group has assigned, on a fully risked basis, a resource of 2.4 billion barrels of oil from within the mine site and a potential for the overall property of some 7.8 billion barrels of oil to the north and west of the mine site. To date, approximately $2 million has been spent on the project, which confirms this potential petrochemical feedstock supply may be the richest ore grade oil shale resource known in the world. The 7.8% grade of oil contains 59% aromatics, a valuable petrochemical feedstock, throughout the mine site area with a suggested value of more than $55/barrel at an estimated mining and processing cost of $25/barrel.
Firebag East Oil Sands Project
CanWest is also exploring land it controls within the Athabasca Oil Sands region, the largest oil deposit in the world, hosting some 1.7 trillion barrels of oil of which 440 billion barrels are producible with current technologies. The Firebag East Oil Sands Project totals 1,400,000 acres that host Fort McMurray and Wabiskaw paleochannels, which contain a potential for a major discovery of several billion barrels of oil. This is the largest land holding in the Canadian Athabasca Oil Sands District. The Firebag East Project is adjacent to and east of world class oil sand projects including Suncor Energy's Firebag Operations, Synenco Energy's Northern Lights Project, Imperial and Husky Oil's Kearl Lake Project, and Petro Canada's Lewis Project, which have a total planned production of 500,000 barrels oil per day from 14 billion barrels oil reserves.
Oil sands are expected to become an increasingly large percentage of Canada's total oil production. By 2010 oil sands are expected to make up 60-70% of Canada's total oil production. Oil sands also offer a long life, resource base without any depletion of annual production. A 30 to 50 year oil sands' reserve life allows companies like CanWest to provide a long-term solution to the North American oil demands.
Conventional Oil and Gas Development
CanWest has a preferential right to drill, on a third for quarter basis, several conventional oil and gas development projects from an experienced Calgary based oil company, Energy 51. The Company also owns a 25% equity interest in Energy 51, which has over a 74% drilling success rate.
CanWest has a 25% working interest in the Sylvan Lake project, which is a four-well development project for oil from Pekisco sands at 7,400 feet with the first well to be drill in January. The project is in field and has the potential for over 1 million barrels of oil, which may generate over $1.5 million to CanWest by midyear. In addition, the Company has a 30% working interest in the Barr Head Gas development project with the first well of five to be drilled in January, which has the potential to generate similar cash flow realizable by midyear. The Company continues to review projects of merit on an ongoing basis with Energy 51 and will participate in other development programs in the future.
Recent Developments
February, 2006 - Initial Drilling Results from Exploration Program in Saskatchewan are positive, with seven resource delineation holes drilled to dated, six intersectued bitumen saturated McMurray Formation.
February, 2006 - Firebag East Athabasca Oil Sands Project Progress reports that five core holes have been completed to date with a sixth core hole not completed due to a loss of circulation and will be re-drilled later in the program. A seventh core hole was started on February 04. The core samples are being transported to laboratory facilities for analysis, including hydrocarbon assay.
December, 2005 - Completes $22,500,000 Equity Funding by way of a non-brokered private placement of 15,000,000 units. Each unit comprises one common share and one warrant at a cost of $1.50 per unit. For each two warrants the warrant holder has the right to purchase an additional common share for two years at $2 per share. The private placement totals 15,000,000 shares and an equal number of warrants to purchase an additional 7,500,000 shares.
November, 2005 - Firebag East Athabasca Oil Sands Reports Significant Progress and Increases Ownership of Oilsands Quest to 71.2%.
Strong Upside Potential
Canada's current role as a major oil supplier to the United States is becoming increasingly important. Already, the country is the largest supplier of crude oil and petroleum products to the U.S. As the price of petroleum products increases due to the depletion of conventional resources, the interest in alternative petroleum resources is increasing. A great deal of research has been conducted to improve production technologies with corresponding cost savings for tar sands, heavy oil and oil shales. CanWest Petroleum has the potential to be a niche feedstock producer with stable production costs.
As an oil and gas exploration company, CanWest Petroleum Corporation has acquired two important rich petroleum alternatives with an aggressive exploration and development program underway for both projects. Petrochemicals represent a $162 billion industry in North America. The United States only utilizes 3.5% of its total oil and gas production for petrochemicals. While conventional production of petrochemical products is decreasing, alternative methods of production are becoming the more reliable and profitable.
As CanWest Petroleum Corporation embarks on larger research and development of Firebag Sands and Pasquia hills, it represents a potentially long-term profitable investment. The Company also has significant working interests in several oil and gas drilling prospects throughout North America, which is expected to generate significant cash flow in the coming quarters for the benefit of its early investors.
Management Team
Thornton Donaldson, P .Eng, President, Chairman & Director - A geologist with over 40 years experience in all aspects of public company finance and administration. Mr. Donaldson was formerly the majority shareholder of a securities company, and has extensive experience in mineral exploration and production.
Keith McCrae, P. Eng, Consultant - A seasoned oil industry executive with successful international leadership history and diversified business and project management experience.
Bill Timmins, P. Eng Director - Geologist with over 35 years experience in all aspects of mineral exploration, oil and gas exploration and development in Western Canada and the United States. He brings extensive experience as a Director of various publicly traded companies over the last 25 years.
George Orr, Consulting Accountant - Accountant with 15 years experience, in public company administration, governance, audit procedures and reporting requirements.
Tim BrockConsultant - Financial advisor with 30 years experience in venture capital finance as well as shareholder relation programs. Over 10 years of experience in oil and gas exploration and production, Mr. Brock also completed the initial finance for Synenco Energy Inc., a private company that has now reported over 1.5 billion barrels measured Athabasca tar sands at its Firebag project located north of Fort McMurray, Alberta.
Christopher Hopkins President, Oil Sands QuestOperator of the Firebag East Project with over 20 years experience in all aspects of oil and gas development with particular experience in Athabasca Oil Sands development being formerly an Executive Vice President of Synenco Energy Inc.
Contact Information
Company:
CanWest Petroleum
475 Howe St
Vancouver, BC V6C 2B3
604-685-8355
604-687-8789 (fax)
investor@canwestpetroleum.com
randall@sweetwatercapital.net
Randall Pow
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