The Stocks of the Keystone XL Pipeline
Nice work Republicans, they managed to squeeze the decision for the Keystone XL pipeline from Canada to Texas into the payroll tax cut. Obama must now make a decision on whether to approve construction of the 1,700 mile pipeline within the next 60 days. The major players that could bank the most coin from the deal will be TransCanada Corporation (NYSE:TRP), Exxon Mobil (NYSE:XOM), and PetroChina Company Limited (ADR)
Canada holds the world's third-largest reserves of oil, its all in their precious oil sands. The U.S. would rather get its oil from its friendly neighbors of the north than deal with South America or the Middle East. The Keystone XL pipeline is the tap on the oil sands keg to allow America to get drunk on oil without leaving the couch to do so.
No. 1 -- The pipeline company that will build the Keyston XL line is TransCanada Corp. (TRP).
No. 2 -- The Candian Oil Sands is where the oil will come from and PetroChina (PTR) is buying up what they can. PetroChina has a very small interest at this point, but we expect they will continue to purchase more with deep money filled Chinese pockets.
No 3. -- When it comes the major oil players, Exxon Mobil (XOM) still wears the crown with the largest market cap of them all ($412.2 billion). They have tons invested in the oil sands and will reap the benefits should the Keystone XL pipeline get the green light.
Mastery isn't concerned with the argument of how many jobs will it create in the U.S. or what the environmental impact may be. Sorry folks, we all know big oil always wins, there's no reason to fight it. I think most Americans think the Keystone XL pipeline is a terrible idea that has the potential to destroy an aquifer critical to Midwestern water supply. However time and time again big oil wins over our governments (U.S. and abroad), pays next to zero taxes and gets richer and richer.
Here's a little tidbit that will make you puke in your mouth -- The Sunlight Foundation Reporting Group, a Washington-based nonpartisan research organization, recently found that four members of our least and dimmest on Capitol Hill who are in favor of Keystone actually own stakes in TransCanada: Rep. Michael McCaul, R-Texas, Rep. Judy Biggert, R-Ill., and Rep. Carolyn McCarthy, D-N.Y.
The obvious choices for oil sand production are Suncor Energy (SU), Imperial Oil (IMO), and Athabasca Oil Sands Corp. (FRA:ATI) but the China play offers more bang for your buck. PetroChina (PTR) has thrown hundreds of millions into various equity positions and oil sands projects, we anticipate that trend to continue. Via the WSJ today:
CALGARY—Athabasca Oil Sands Corp. said it was selling a 40% stake in one of its oil-sands prospects to PetroChina Co., a move that for the first time will give full ownership of such a project to a Chinese company.
Athabasca is selling its remaining interest in the MacKay River project in northern Alberta to PetroChina for 680 million Canadian dollars, or US$666 million. In 2010, Athabasca sold 60% stakes in MacKay and a separate development, Dover, to PetroChina for C$1.9 billion.
Chinese oil companies PetroChina, China Petroleum & Chemical Corp., known as Sinopec, and Cnooc Ltd. have all invested heavily in Canada's oil patch. Chinese firms have typically sought to buy into minority stakes in projects or companies. But last year, interest in buying whole companies ratcheted up.
MASTERY Bottom line:
Big oil always wins. We aren't going to fight it, rather join in with their profits.
Its time to consider picking up shares of TransCanada (TRP), Exxon Mobil (XOM), and PetroChina (PTR).
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