Lexington Energy Services provides an opportunity to invest in an oil and gas reserve that is still in its infancy. The production from the oil sands of Alberta is now eighth worldwide but is forecasted by The Canadian Association of Petroleum Producers (CAPP) to more than double by 2015 to reach 2.7 million barrels per day. Under these projections Canada would jump to fifth place among the world’s top oil producers projected from its current ranking as the eight largest producer worldwide.
This march towards increased production must be supported by Energy Services and that’s what Lexington does. It provides the fundamental basic services exploration companies require to develop Canada’s proven reserves to propel it from eighth to fifth in word production.
Stable Country with Oil Has Premium Value
There continues to be an increased recognition that the oil sands represent a very large, economically attractive accumulation of oil in a politically stable country. A significant advantage of the oil sands of Alberta is that Canada has a strong history as a stable democracy. Canadian crude reserves carry a safety premium, not only in terms of political stability, but with regard to the legal protection of property rights.CIBC World Markets latest Monthly Indicators report indicates Canada holds almost 60 per cent of the investable oil reserves in the world today and by the end of the decade Canadian oil sands production will be the planet’s single largest source of new supply.
“Canada’s oil sands may be the final frontier for investors intent on profiting from depleting conventional crude reserves,” says Jeff Rubin, Chief Strategist and Chief Economist at CIBC World Markets. “With the Middle East and even Russia increasingly off-limits, we estimate that the oil sands and Canada’s other deposits represent 56 per cent of the world’s investable reserves.”
The CIBC World Markets report finds that Canada’s oil sands are becoming increasingly attractive to investors not only due to the depletion of conventional crude reserves but also due to political instability in many of the other key oil-rich regions.
Jeff Rubin of CIBC noted, “What makes the oil sands properties so valuable is that there are few other places where production can grow and even fewer where you can invest.”
CIBC World Markets is the wholesale and corporate banking arm of CIBC, providing a range of integrated credit and capital markets products, investment banking, and merchant banking to clients in key financial markets in North America and around the world. We provide innovative capital solutions and advisory expertise across a wide range of industries as well as top-ranked research for our corporate, government and institutional clients.
Stable History of Democracy and Property Rights
Fifty countries dominate the major international oil and natural gas producing areas of Latin America, Europe, Africa, Russia, Asia and the Middle East. Many of these countries are subject to political, social and economic risks which may cause volatility within any given country. Few permit outside investment in their oil and gas reserves either directly or indirectly.
The fate of the oilfield services industry largely depends on oil and natural gas prices. Supply constraints in Iraq, Nigeria and the Gulf of Mexico are also pushing oil prices higher. For example, in April of 2006 prices touched $72 per barrel, as U.S. gasoline supplies and traders were worried about nuclear tensions between Iran and the international community. Higher prices encouraged expanded drilling activities, which in turn boost revenues throughout the industry.
The lack of excess productive capacity, and heightened geopolitical tensions, influence oil prices. The stability of Canadian government enhances the viability of the oil sands. Worldwide several projects in growth regions, including the Caspian Sea, Northern Africa and the Southern Asian region, face the threat of political and regulatory instability.
Lexington Energy Services supports an exploration community that faces no political disruption at the beginning of the reserves production period.
Lexington is at the right place at the right time.
Source: Lexington Energy Services Inc. and Nickle’s Oil RegisterSource: The CIBC World Markets Monthly Indicators report is available at http://research.cibcwm.com/economic_public/download/midec06.pdf
CONTACT: Lexington Energy Services Inc., Mark Procknow, Investor Relations, Calgary, 1-877-279-4550About Lexington Energy Services Inc.: Lexington Energy Services Inc. manufactures and leases innovatively designed oilfield service equipment. Through their wholly owned subsidiary, Lexcore Services Inc., we also provide a range of drilling services to meet the growing needs of the oil and gas industry, including Alberta’s oil sands.Forward-Looking Statements: Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements. Actual results may differ materially from those described in forward-looking statements and are subject to risks and uncertainties. See Lexington’s filings with the Securities and Exchange Commission which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.
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