Buffett and Gates tour Alberta oilsands
Published Thursday August 21st, 2008
CALGARY - A surprise visit to Alberta's oilsands by two of the world's richest men - Warren Buffett and Bill Gates - may have grabbed headlines Wednesday, but analysts don't expect the billionaires to start buying oilsands companies.
"The fact that people were up there kicking the tires means nothing from a financial standpoint and therefore really shouldn't really play into what the price of these stocks is doing today," said Lanny Pendill, an energy analyst for Edward Jones in St. Louis.
That didn't stop traders from bidding up shares of Canadian Natural Resources Ltd. (TSX:CNQ) which hosted the tour on Monday at its $9.3-billion Horizon oilsands project north of Fort McMurray, Alta., which is set to start production later this year.
Canadian Natural rose $6.13 to $88.40, a gain of 7.5 per cent in trading of 4.7 million shares.
The Canadian Association of Petroleum Producers gave a brief presentation to the tycoons about Canada's energy industry before the tour, said Travis Davies, a spokesman for the group.
"We were not hosting this tour. It was not our initiative. We were simply asked by a third party to go up there and give a broad overview, which we did," Davies said.
"It's nothing new. CAPP does these presentations often to a very wide demographic, be it media, politicians or investors. This was no different."
Davies would not comment on what the men had hoped to glean from the tour or what they thought of the trip.
Warren Buffett, 77, is the Omaha, Neb.-based founder of holding firm Berkshire Hathaway. His net worth is US$62-billion, making him the richest man on the planet, according to Forbes.
Microsoft founder and chairman Bill Gates, 52, is Forbes' third richest man, with a net worth of US$58 billion.
The oil sector gains Wednesday came on a turbulent day for crude oil on commodities markets. The September crude contract closed up 45 cents to US$114.98 after swinging between $112.61 and US$117.03.
Avery Shenfeld, a senior economist at CIBC World Markets, said traders "seem to be focusing on the gasoline demand number within it and ignoring the very large buildup of crude oil on the week.
The U.S. Energy Department said Wednesday crude inventories rose to a hefty 9.4 million barrels in the week ended Aug. 15. But Gasoline inventories shrank by a larger-than-expected 6.2 million barrels.
As for the Gates-Buffet trip, Shenfeld said: "That's a very popular trip for all sorts of people to take (in the investment community)."
"People who are interested in the future of oil in North America have trekked up to the oilsands to see what they look like."
Bill Harris, energy and mining specialist at Avenue Investment Management in Toronto, said the world fuel supply situation had more of an impact on the oilpatch trading than the oilsands tour.
"Everybody thought the oil price was coming down and the oil market is relatively tight," said Harris.
"We're just having a bounce back because everything was insanely negative two days ago."
Among other major Canadian oilsands operators to gain on the TSX, Suncor Inc. (TSX:SU) gained $3.62 to $59.89, a jump of 6.4 per cent, on the Toronto Stock Exchange.
EnCana Corp, (TSX:ECA) rose $3.85 to $76.12, a gain of 5.3 per cent in trading of 4.3 million shares.
Canadian Oil Sands Trust, the biggest partner in the world's largest oilsands project, Syncrude, gained $1.42 to $50.26, up about three per cent in trading of 1.8 million shares.
Petro-Canada (TSX:PCA), meanwhile, traded at $46.45, up $1.28 or almost three per cent, on more than two million shares. Its oilsands properties include the MacKay River in situ project.
And Nexen Inc. (TSX:NXY), which is developing its Long Lake project in the Athabasca oilsands region, rose $1.93 to $33,10, a gain of six per cent on a volume of 4.1 million shares.
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