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Saturday, October 13, 2007

Warren Buffett Likes Alberta's Oil Sands As An Investment

UPDATE: August 19, 2008...Bill Gates and Warren Buffett visit the Alberta oil sands

Bad news for the Alberta oil sector doom and gloom propagandists - and it is coming from Warren Buffett. Buffett says he had spent time avoiding the oil sands as an investment. On Thursday in Toronto he told an international audience of 140 prominent investors from all over the globe he has changed his mind.

The Toronto Star story gives his reasons as follows:
"Buffett, who has made substantial resource investments this decade, after a history of avoiding them, is now interested in the Alberta oil sands. His rationale is that it is a known resource, says Hull, who manages money for clients of Berkshire Securities Inc., recently acquired by Manulife Financial Corp.

In contrast to speculative drilling, oil-sands projects are mining operations where the size of the reserves is known. One can calculate with relative certainty the breakeven requirements over 10 years. And production costs tend to drop as the extraction and processing technology improves. "

For those who say they are going to be pulling out of their oil sands related investment in Alberta because of the royalty review - call Buffett - he is coming into the market. As an Albertan I would welcome him.

For those of you who will be leaving us, presuming you were not scaremongering or merely pulling our legs - good bye. I presume you will be considering transferring your efforts to Venezuela's oil sands. The weather is nice there even if the political and investmate climate is not. But it is a free country - at least in Canada...so do as you wish.