Investing In the Oil Sands: 4 Stocks: CNQ / CVE / IMO / SU

It seems everyone, including investors, are coming to grips with the fact that higher crude oil prices are here to stay. The fact is, the U.S., China, and other world economies have a insatiable demand for oil. While we are dependent on the Middle East for most of our oil, there are alternatives. The Canadian oil sands region is in the Alberta region of Canada. This massive area of oil reserves is second in size only to Saudi Arabia.
Oil from this region must be extracted from the sand at a cost of about $30-$40 per barrel of oil. The process has become viable in recent years due to the increasing cost of crude. With tensions flaring across the Middle East, we are reminded of the vulnerabilities of economies that have become so dependent on oil. It is great to know that we have a friendly neighbor to the north with vast amounts oil. The Canadian government has been more than willing help fill the oil demands of both the U.S. and China.
Earlier I wrote an article about an ETF that gives you exposure to the oil sands as a way to profit from rising crude prices. Now I am going to focus on individual companies that garner a significant amount of their revenue from oil sands production. The four companies in this article all trade on U.S. exchanges. Each of these four companies give you exposure to the oil sands and rising price of crude oil. In fact, the price of crude doesn't really even have to rise for these companies to remain profitable. It only has to stay high. Most people, including myself, don't see a steep drop in oil prices any time in the near future. Each of these four companies are components of the ETF I wrote about earlier.

Canadian Natural Resources (CNQ)
Canadian Natural Resources has the lowest exposure to the oil sands in the group. The company gets about 15% of production from the oil sands. The remaining oil production comes from other parts of Canada, the North Sea, Ivory Coast, and Gabon. The company's midstream activities include a natural gas pipeline and an electricity co-generation system. CNQ is probably the safest play on the oil sands because of its diversification. If a future U.S. energy policy includes natural gas, the company will benefit. CNQ trades at a reasonable 18 times forward earnings. The dividend yield is lowest of the group at only .68%. Revenues have grown nicely at 7% annualized over five years. Out of eleven analysts covering the stock; four rate it a strong buy, five rate it a buy, and two rate it a hold. (more)