Heavy Oil Investing News

By Duncan Sutherland- Exclusive to Heavy Oil Investing News

Senator and Presidential candidate Barack Obama has announced that his administration would release light crude oil from the nation’s Strategic Petroleum Reserve and restock the inventory with heavy crude.  Many have criticized the US government for continuing to stock the reserve with oil prices so high, arguing that the government should halt acquisition until per barrel prices decrease.

British-based Hunting Plc (LSE:HTG) is selling Gibson Energy to Riverstone Holdings and the Carlyle Group for $1.27 (CDN), which gave HTG a welcome boost to its share price. Bloomberg is reporting that the deal is likely, pending “an extraordinary general meeting of its shareholders on Aug. 28”.

Marathon Oil (NYSE:MRO)also reported strong quarterly numbers, although its Oil Sands unit lost $157 million in the time period. It also confirmed that construction had begun on its Detroit upgrading plant for Canadian heavy oil. The facility should be complete in 2010 with 80,000 bpd capacity.

Unconventionals junior MegaWest Energy Corp (OTCBB:MGWSF) bought a 75% stake in the Devils Basin Montana play. The company currently has two other operations in the state, and appears to be focusing there. Additionally, it has announced the beginning of oil sales from its enhanced oil recovery Marmaton River project in Missouri. This operation has a target of 500 bpd when fully online. Two other Missouri projects are in the beginning stages for MegaWest, making it a stock to keep ones eye on.

Also in Missouri, Freedom Financial Holdings (PINKSHEETS:FDMF) has signed a letter of intent to form a joint venture with a privately held oil technology company, hopes that the companies’ upgrading technology will prove profitable in mitigating the costs associated with heavy oil production.

Pengrowth Energy Trust (TSX:PGF.UN) has announced its Q2 results, detailing “record cash flow from operating activities of approximately $267.9 million”,  up from $216.2 during last year’s corresponding quarter. Following the sector-wide trend, Pengrowth confirmed that despite increased profit, production volumes were down by almost 10% since Q2 of the year previous.

Analysts are questioning whether the competing southerly pipeline projects of Enbridge (TSX:ENB) and TransCanada (TSX:TRP) can profitably coexist. TransCanada ‘s joint venture with ConocoPhillips (NYSE:COP) is the $5.2 billion Keystone project from Hardisty, Alberta to Cushing, Oklahoma, with a later extension to the massive refineries on Texas’ Gulf Coast. Enbridge’s project with ExxonMobil, (NYSE:XOM) the $2.6 billion Texas Access pipeline would tap into existing infrastructure in Illinois.

Mexico’s people half-heartedly rejected a stunt referendum called by the opposition Democratic Revolution Party. President Felipe Calderon has made energy sector reform a crux of his government’s platform. Senor Calderon is trying to open a troubled industry to more foreign direct investment and loosen the restrictions on joint ventures with state-owned Pemex. A number of proposals and counterproposals are wending their way through the country’s Senate Energy and Legislative Studies committees.

The referendum was marked by low turnout, dampening the DRP’s hopes to use popular support as a bargaining tool in energy negotiations. It appears that wide agreement exists that something must be done to shore up Pemex’s “four-year decline in output and reserves”. Particularly worrying are the rapid decline in production at the supergiant Cantarell field, a paucity of refining capacity, and continuing underinvestment in exploration.

Though parliamentary gridlock is likely to continue, Mexico’s stunted oil and heavy oil industries sit on underexplored and underdeveloped resources in quantity. Should liberalization of foreign investment rules occur in the upcoming months or years, the country will offer a bright spot for publicly traded companies.

The always entertaining President Hugo Chavez of Venezuela continues to baffle foreign policy mavens with his erratic petro-diplomacy. In the last week he has unleashed a flurry of idiosyncratic initiatives. Mr. Chavez has concluded a deal to provide 10,000 bpd to Spain at $100 per barrel. Spain and Venezuela have had a difficult relationship in the past years, with the King famously telling Mr. Chavez to “shut up”. It appears a rapprochement is occurring, with Mr. Chavez offering to give the King of Spain a “big hug”, which is not traditionally part of diplomatic protocol.

An interesting website called OneGeology is set to launch this week. The site hopes to create a free online database of world geology. BBC is reporting that up to 70% of land area will be available at the launch date. Built along the lines of Google Earth, the site promises many happy hours of time-wasting for amateur geologists and junior resource companies unwilling to splurge for huge exploration projects. If you enjoy Google Earth, be sure to check this one out!