Intervju sa br.1 svjetskim analiticarem iz sektora nafte..

Intervju sa vodecim svjetskim analiticarem iz sektora nafte i gasa..
Maxwel-ove prognoze o kretanju cijene nafte u buducnosti..
Novi sam clan-mozda ovo nije u skladu sa pravilima diskusije-ali nemam vremena da prevodim-a ako zelite da procitate online morate platiti predplatu.
Ako je protiv pravila-moderator moze da brise -imam dobre namjere..

Oil Prices: a Pause, Then Up
Interview With Charles Maxwell
Senior oil analyst, Weeden & Co.
By SANDRA WARD

YOU WANT AN INDEPENDENT AND INFORMED APPRAISAL of the outlook for energy? Then Charley Maxwell's your man. For almost 50 years, Maxwell in one way or another has been involved in the oil and gas industry: from when he started working for Mobil in 1957 to when he moved to Wall Street in 1968 and was routinely lauded as the No. 1 oil analyst throughout the 'Seventies and 'Eighties. For more than 20 years, he's belonged to an elite group of industry executives and OPEC members that meets at Oxford University twice a year to assess trends. We dialed him up last week at Weeden & Co., the institutional trading company in Greenwich, Conn., that he's called home since 1999. Here are Maxwell's thoughts on the current energy scene.

Barron's: Did somebody say energy crisis?

Maxwell: We often say there are not a lot of advantages to getting old except that we have seen it all before. After a big move upward, there is always some counterreaction. We saw it during the 1973-74 crisis, in the '79 to '86 crisis and then in the two wars with Iraq. These crises were manipulations of the oil market by human beings. War, economic problems, but particularly military considerations, were creating, as they say, facts on the ground that worked into shortages that were real, but they were shortages created by the actions of man not nature. It is terribly important to differentiate between past periods and now.

How is that?
[Maxwell]

There are four huge impediments to expanding production in a world in which we need to do this. Hubbert's Peak, the theory that says oil production will peak on a global basis, is a natural impediment. It is not yet the predominant factor but as these crises continue it is the one growing exponentially and by, say, 2015 or 2020 I expect it will dominate the outlook.

What then is the biggest problem now?

About three-quarters of the world's production of oil today is lifted by national oil companies. Companies like Saudi Aramco, Petrobras, the Iran national oil company, the Iraq national oil company, the national companies that operate in Algeria and Libya, produce conservatively 75% of the world supply. Most of them were nationalized in the '70s and early '80s and they have real structural problems today. They bring in a lot of money but most of it goes to support the national Treasuries and the various political constituencies that are in favor in the various countries, whether it's the army or a host of other bureaucratic ministries. In the end, in the political battle for budgetary support the national oil companies tend to be a constituency with little or no political influence. All in all, the national oil companies have been shortchanged and held on a poverty diet for a long time.

What are the other structural challenges they face?

What came out of the 1986-1987 collapse in prices was a huge overcapacity of about 20% in the world's oil production system. The international oil companies began to adjust their capital spending quickly to adapt to that and they more or less serviced a 1% increase in demand each year. The capacity surplus began to come down naturally. We have now had 20 years and taken that surplus down to about 2% to 3%. For efficiency in the energy industry, given the weather factors and political factors and so on, we need something in the 7% to 8% range of excess capacity in order to cover the mountains and the plains of demand and weather and political events. But when the surplus got down to those levels between 1997 and 2000, the companies didn't add to capacity at a fast enough rate.

Bring this back to your point about the national oil companies.

The national oil companies didn't react at all. At least the big international oil companies were producing the 1% to 2% each year that was required, but the national oil companies just tooled along on the backs of the surplus while it got smaller and smaller. The big international oil companies saw all this and didn't prepare for possible future tightening. One reason the NOCs, as the national oil companies are called, didn't respond was lack of money. Also, the NOCs, because of political patronage, have a shortage of skilled workers and experienced managers. Only Saudi Aramco is quite efficient and they are doubling and redoubling their efforts to find oil in the peninsula. They've gone from 10 rigs to 100 rigs and are headed to 125 rigs. They are modern and up to date. They've got a core of around 3,000 expatriates that are well paid and doing a helluva job. But this is unusual.

Where does this lead?

I don't know how we get around the problem of the NOCs. They control so much of the world's production and they are bloody helpless. They don't have enough money and they don't have prestige and they don't have professionalism. These are big factors, any one of which would have been a strike against them and with all three it is a difficult situation.

The multinationals have the money but they haven't been that willing to spend it.

That's another big issue: the problem for the oil companies is coming to grips with the size of the production problem.

Can you elaborate on that.

The oil companies, as a group, seem to believe the future production potential of the world is very large, very wide open and yet their production numbers don't indicate this is so. ExxonMobil (ticker: XOM) took out an advertisement earlier this year saying oil is not peaking, nor is there any peak visible that's going to impinge on production in the next 20 to 30 years and claims there is no practical limit to the oil it can find and there are new supplies that are developable. They are not alone in this thinking, though Dave O'Reilly [Chairman and CEO] of Chevron (CVX) has come around. But John Browne [CEO] of BP (BP) is in the Exxon camp as is industry consultant Cambridge Energy Research Associates.

The technology-will-save-the-day camp.

I'm not downplaying technology at all. But technology will save General Motors, too, if you believe that. Technology can't do everything. I'll give you an example of the vision of the oil companies.

Go for it.

As we understand it, Exxon is not taking on any leases for deep-water drilling after 2008. They haven't leased anything. If you think deep-water leases are going to be very important, and the recent big discovery in the Gulf of Mexico suggests they will be, you would have contracted for the future use of rigs. But if you think the deep-water leases aren't going to be important because the oil found will be more expensive than the common garden-variety Texas oil from 6,000 foot down, and that you will have lots of oil coming from sources like that then you don't need these high-cost leases down the road. On the other hand, many major oil companies have taken these rigs to 2010 and 2012 and 2014 and are pre-empting Exxon's ability to get these rigs. Exxon is putting itself at a huge disadvantage if there should be a need for this type of deep oil. I find that remarkable.

What's the gamble there?

The gamble is they won't need the deep-water leases because there will be big and lush supplies of oil spilling around at $30 a barrel and people will relinquish the rig contracts they've signed. Then Exxon would have the choice of picking up some of these contracts at 50 cents on the dollar, or maybe they won't need to pick them up at all. I think they are dead wrong.

Exxon has gone out of its way to take out advertising and make speeches saying there'll be plenty of future supplies. It verges on the irresponsible because it says to the government there is no problem. It says to the media there is no problem. It says to the public there is no problem. So we are now likely to march with fife and drum, banners flying, into the maw of destruction without so much as a sideways glance because Exxon tells us that the problem is resolved.

Nastavak intervjua..

It has been suggested they benefit from talking down the price of oil.

There is all kind of speculation on that. Another obvious thought would be if they wanted to buy, say, Yukos, which they had hopes of two years ago, they certainly wouldn't want to indicate they thought that the price of oil was going to go much higher down the road because of shortages. Some people think Exxon is cynical. I don't. I really think they believe what they say. It's a lack of vision. Last year, they spent more money on share repurchases and dividends than they did on exploring and developing oil reserves. Most big oil companies tend to be backward looking. They were slow, for instance, in seeing that sulfur standards for gasoline and diesel would be required in this country and getting their refineries set up to meet them. That's why we've had these advances in gasoline prices in the summers of 2005 and 2006 -- fear that the refining system in America and in Europe would be unable to handle these new standards. Oil companies will find it difficult to solve a tightening oil production problem if they don't recognize that it is tightening around their necks.

That's the third impediment of four. What's left?

We as Americans think that because we want more oil these other countries should produce more oil. But there are increasing issues, brought on not just by President Bush and his policies, but also by a feeling that the developed world is imperialistic by nature and is intent on leaving the undeveloped world without resources. All these claims are greatly overdone, but nevertheless, it is a fact that if you live in Iraq you believe the oil companies, or the Americans, are there to get the oil. My point is the people in the Middle East are sophisticated enough to understand this could be Bedouin-to-Bedouin in Saudi Arabia in five generations.

What do you mean by that?

Well two generations ago, many of these people were Bedouins. The majority of people working in the petroleum industry in Saudi Arabia today -- the supervisors and the drillers and so on -- had grandparents who were herding sheep or camels. They fear their great grandchildren could end up doing the same.

Because?

Because the oil will be all gone. The image we have in this country of tumbleweeds running down the streets of abandoned Western mining towns is now beginning to stalk the public consciousness in the Middle East. About three months ago, they realized the second largest oil field in the world, Burgan in Kuwait, had peaked. They didn't expect it and they couldn't believe it. The No. 1 field in the world, the Ghawar, is pretty close to peaking if it hasn't already. These are people who have long believed that Allah was bestowing these oil gifts on them in perpetuity and there would be infinite production. The concept of Hubbert's Peak has only penetrated the Middle East in the last five years in the same way that it has only penetrated Europe in the last five years.

The non-OPEC world, 175 countries, of which only 30 produce meaningful amounts of oil, will peak around 2010. Then we become dependent on OPEC for all future growth in barrel needs and that should put us in a pretty difficult situation and the price of oil will begin to rise a little faster.

Are the non-OPEC countries that close to peaking?

Eleven of the non-OPEC countries have peaked already, representing 34.3% of non-OPEC production. There are three on the cusp of peaking, and one of them is Mexico which may have already peaked and represents 7.9% of production. China will probably peak this year, or next, or in 2008. But they are at flat production levels now so it doesn't matter and they contribute 8.5%. More than 50% of the non-OPEC production will therefore have peaked. There are all kinds of issues as to when the whole world peaks. I use a range from 2015 to 2020, which depends on when the rest of the world wakes up to the need to conserve, which could delay the peak.

What about a peak in gas production?

Peering Ahead: Starting with the 2006 number of $68 a barrel, here's what Charley Maxwell estimates will be the average annual price of benchmark West Texas oil.

That's much, much further out. There is a lot of what they call stranded natural gas, big discoveries that are not tied to any local needs, or any local distribution system, and they will be tapped and brought in, in liquefied form to our country and to Europe and to Asia. The peak of natural gas now roughly looks like it will be in 2035 to 2040. There is a finite supply that is being drawn down, but it hasn't been exploited nearly as much as oil. The run-up in natural gas prices in the past year or so was because production in this country has peaked, and natural gas is more expensive and difficult to move from one continent to another, and we don't really have the means to do that yet. We are getting there and the big liquefied natural gas expansion is starting, and soon we are going to have interchangeability between continents. When one continent is short we can move gas there, which will keep prices down.

Where are oil prices headed?

We are now getting a reaction to the higher oil prices. It is translating into slower economic growth and, of course, it is allied with a rise in interest rates. Don't think that it is just that rising oil prices equal lower economic growth. It is a question of rising oil prices and less liquidity and higher rates that's a triple threat. The bottom could be in the high 40s, though that wouldn't be sustainable. On a yearly average, we will stay in the 60s, but we'll spend a lot of time in the 50s. Then they'll start up again in 2008-2009 and go up for some time. When we get to 130 or 150 there will be another pullback.

How do you get to those numbers?

In 1930 we found 10 billion new barrels of oil in the world and we used 1.5 billion. We reached a peak in 1964 when we found 48 billion barrels and used approximately 12 billion. In 1988, we found 23 billion barrels and used 23 billion barrels. That was the crossover when we started finding less than we were using. In 2005, we found about 5 billion to 6 billion and we used 30 billion. These numbers are just overwhelming.

How are you advising people when it comes to the oil stocks?

You want to buy companies that have long-life reserves and are developing them, it's as simple as that. The average oil company, because they are all in the non-OPEC world, will by definition peak around 2010 or thereabouts. I estimate Exxon will peak in 2011. BP will peak in 2012. Total (TOT) in 2012. ConocoPhillips (COP) in 2013. Marathon Oil (MRO) in 2009. Royal Dutch (RDS-B) in 2009 and Hess (HES) in 2010. But a company like Suncor Energy (SU), which operates in the Canadian tar sands, will peak around 2045. It is a completely different world. EnCana (ECA), the big Canadian gas and tar sands producer, will peak around 2020. Canadian Natural Resources (CNQ) is another. I also like Nexen (NXY), another Canadian tar sands producer, and Lukoil (LUKOY) of Russia. The only one I'm recommending at the moment is EnCana because it has a large component of natural gas. The gas market is at a bottom now, whereas I see the oil market bottoming in the spring or summer of 2007, or even early 2008 if we have a recession.

Why Lukoil?

Lukoil isn't owned by the Russian government. They've adopted Western accounting standards because they want to be listed on the New York Stock Exchange and raise capital and become a regular oil company. Lukoil has about 20 billion barrels of reserves and Exxon is No. 1 in the world with 21 billion. But the capitalization of Lukoil is one-sixth that of Exxon. So you are getting a huge advantage in oil barrels per share for a lot less money.

Thanks, Charley.

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Prognoze koje ja dobijam su nešto drugačije - pozivaju se na CNN, CNBC, Investor's Business Daily, MarketWach ankete, Reuters, The Wall Street Journal...a pisac ovih redova je sa Oxfordskog univerziteta.
Preneću delić.

The SECRET ALLIANCE
Behind the Next Oil Apocalypse:

Could these four men push world oil
prices past $150 per barrel?




What Does This Matter to the Price of Oil?

Insiders, the CIA and just about everyone else believe that the group behind the murder of the ex-prime minister... and the backers of the Hezbollah terrorist organization... are not Lebanese at all. They're Syrian. And Iranian.

See, Hariri wanted Lebanon for Lebanon.

Both Iran and Syria want to use Lebanon, and especially Hezbollah, to stir up fights with Israel.

When Israel fights, the Middle East gets hot.

And oil prices go up.

Iran sends over $100 million a year in secret financing to Hezbollah. Along with guns and shoulder rockets and other sophisticated weapons. And most of these get shipped secretly through Syria, one of Iran's few real allies in the Middle East.

The bigger Hezbollah gets, the further Iran's reach across the region.

Tel Aviv wants to send missiles into Tehran? Go ahead. Iran will unleash Hezbollah on northern Israel. Just like it did this summer. And in propaganda terms, it was a huge success.

Hezbollah doubled its victory by handing out bags of money to fellow Muslims whose houses were destroyed by the bombing. Today, that's made Hezbollah even more popular across the Middle East than al-Qaida. Hezbollah's gaining strength. And that's the problem.

Edward Walker is a Middle East expert. He heads up the Middle East Institute and was once ambassador to both Egypt and to Israel. "Hezbollah," he says, "is more popular than sliced bread." All the "wrong guys" are getting a boost from the current situation.

Keep in mind, before Sept. 11, the FBI considered Hezbollah an even bigger terror risk to the U.S. than al-Qaida.

Today, Hezbollah has taken terror mainstream. Imagine al-Qaida, but with seats in Congress. Hezbollah has done almost that. It's recently won seats in Lebanon's parliament... it's now hugely popular with a certain, large group of Lebanese... only the biggest danger about Hezbollah is that it doesn't really work for Lebanon at all.

No, it serves a much bigger, more dangerous master...
The Iran-Iraq war was one of the bloodiest battles of the 20th century. Iraq was run by Sunni Muslims then. Now it's run by Shiites. And Iran, also nearly 91% Shiite, is sending electricity. It's sending wheat. It's sending $1 billion in foreign aid.

Ahmadinejad knows what he's doing.

Iran just offered to pay for three pipelines running across Shia territory in Iraq. Iran has offered to open its ports, so war-torn Iraq can use them for shipping. And every day, Iraq will ship 150,000 barrels of light crude direct to Iran, for refining. Remember, Iran also funds Hezbollah in Lebanon. And it's busily buying influence in Syria.



(...)

legenda za slike ( SE LEVA NA DESNO)
1. Hassan Nasrallah, Hezbolah, IraN
2. Basharal Asrad
3. Moztada Al Sadr, Shiia miliiia, angry cleric
4.Mahmoud Ahmadinejad, hardliner

i na kraju (kao da je rat zbog nafte NOVOST)

Clanak sto sam postirao je iz vodeceg americkog casopisa Barron's..
Interesanto je da su kanadske kompanije koje su spomenute u clanku imale dobar skok danas kao naprimer ECA..
http://ca.finance.yahoo.com/q/bc?s=ECA&t=5d
To je takozvani Baron's efekat ponedjeljkom na berzama..
Komapnije o kojima je dobro pisano u subotnjem Barronu obicno u ponedjeljak imaju dobar skok..

I ove nedjelje je Barron objavio dobar clanak o kanadskim kompanijama iz sektora nafte..
Za one koji prate berzu i opcije neka obrate paznju u ponedjeljak u vezi kretanja SU i CNQ..
Obicno ponedjeljkom ujutro je dobar skok kompanija o kojima je pozitivno komentarisano u Barton-u..
Narocito ako se ne otvore visoko...

Canadian Sunrise
By ANDREW BARY

IN LESS THAN 20 YEARS, Canadian Natural Resources has gone from a flyspeck to one of the largest independent oil and gas companies in North America, with a stock-market value of $28 billion.

The growth has been driven by shrewd acquisition and drilling activity that bears the imprint of the company's vice chairman and largest individual shareholder, Murray Edwards. He initially invested in a struggling Canadian Natural Resources (ticker: CNQ) in 1988, when the Calgary, Alb.-based outfit was valued at just $1 million.
[mancanada]
Murray Edwards: a power behind the scenes

Edwards, 46, has no day-to-day management role, and his equity stake isn't huge at 10 million shares, or 2%. Yet he has been a guiding force at Canadian Natural Resources and at several other successful Canadian resource-related companies, including Penn West Energy Trust. Edwards, a low-profile billionaire, is well-regarded in Alberta energy circles, where some liken him to Warren Buffett because of his investment and business acumen. Edwards couldn't be reached for comment.

Canadian Natural Resources' success may continue because it has both attractive conventional oil and gas assets, mostly in Western Canada, and a promising oil-sands project in Alberta that is expected to start producing crude in 2008. Bulls argue that Wall Street is giving the company little credit for its valuable oil-sands play and that the stock, trading Friday at 53 on the New York Stock Exchange, could jump in the next two years as the oil-sands development nears completion.

The stock dipped to 42 early this month, when oil prices tumbled. But it has rallied lately, helped by a rise in crude prices and by Royal Dutch Shell's offer last week to buy out minority holders of Shell Canada for $7 billion (See the European Trader for more on this). Much of Shell Canada's sizable market value of $31 billion is attributable to its 60% stake in the Athabasca project, one of three major Alberta oil-sands projects now in operation.

The Shell offer puts a lofty value on the Athabasca project and further demonstrates that the world's leading energy companies view the Alberta oil sands as one of the world's most promising energy regions. ExxonMobil (XOM), Chevron (CVX), Total (TOT), and ConocoPhillips (COP) all have stakes in the oil sands, which potentially contain 175 billion barrels of crude, second only to Saudi Arabia with its 259 billion barrels.
[canadaphot]
The remote sands of the Horizon Project in northern Alberta don't look like much, but to Canadian Natural Resources' energy prospectors, they're beautiful.

Canadian Natural Resources eventually could become a takeover target for an oil major like BP (BP) or ENI (E) that lacks a presence in the oil sands. However, says John Langille, a Canadian Natural Resources vice chairman: "We want to continue to grow our company into a very strong independent. Selling to someone else is not part of our game plan." The company aims to boost its daily energy output, now equivalent to about 600,000 barrels a day, roughly split evenly between oil and gas, to one million barrels by the end of 2012. That's an ambitious goal at a time when most big energy concerns are struggling to generate any production growth.

"Very simply, the company has an unbelievable track record," says Bruce Berkowitz, who heads Fairholme Capital Management, a Short Hills, N.J., investment firm that owns Canadian Natural Resources shares. "Murray Edwards is a brilliant strategist. The company has a great team of people, up and down the chain of command. Given the strength of the company's asset base and given how much of the world's oil and gas reserves are in inhospitable places, we don't think we can lose a lot. And, in the best case, it's a grand slam."
Table: Worth The Difference

In a bullish research note last week, Thomas Driscoll, a Lehman Brothers energy analyst, said that "little value" is being ascribed to Canadian Natural Resources' share price for Horizon, which he figures is worth over $15 billion. He carries a price target on the stock of $63, while Berkowitz sees greater appreciation potential.

The stock trades at a comparable valuation to other North American oil-and-gas exploration companies, such as EnCana (ECA), Apache (APA) and XTO Energy (XTO), based on earnings and cash flow. Canadian Natural Resources' advantage is that it possesses one of its industry's best production-growth profiles, thanks to its Horizon oil-sands project, scheduled to start production in 2008 at 110,000 barrels a day, rising to 232,000 by 2012, after a second development phase. Once completed, Horizon should yield crude for decades, given its estimated 3.4 billion barrels of oil-sands reserves.
[canadachart]

Canadian Natural Resources doesn't look cheap. It fetches 18 times projected 2006 profits of $2.86 a share -- double the price/earnings ratio of Chevron and ConocoPhillips. This year's earnings, however, are being held down by below-market oil and gas hedges. As the hedges roll off next year, profits should rise, even if energy quotes don't rise. The stock trades for a more reasonable 12 times estimated 2007 earnings of $4.45 a share.

The company now is valued at about 6.5 times projected 2007 pre-tax cash flow, a common financial yardstick for energy producers, Driscoll estimates. That's slightly higher than XTO and EOG Resources (EOG), neither of which has an oil-sands development. Canadian Natural Resources pays a very modest dividend of 0.5% because it is spending $6 billion this year on conventional energy exploration and Horizon.

The company is operated much like a private corporation, meaning that Edwards and the rest of management make decisions that they believe are in its long-term interest, even if the moves don't suit Wall Street.

The investment community, for instance, wasn't crazy about their purchase of Anadarko Petroleum's (APC) Canadian energy assets this summer for $4 billion in cash. Some thought that the company paid a full price for the gas-dominated Anadarko business, while diluting its exposure to the oil sands.

Canadian Natural Resources also has chosen to bear the entire $6 billion estimated cost of the first phase of Horizon, reflecting its longstanding strategy of controlling its own destiny. To help ensure that it has adequate funding, it has hedged much of its energy production, hurting earnings this year. The company has about $9 billion in debt.

Berkowitz argues that the Anadarko deal was shrewd, strategic and fairly priced. Canadian Natural Resources has a history of smart acquisitions, most notably its $1 billion purchase in 1999 of a chunk of BP's Canadian assets, which included substantial Alberta oil-sands properties. Back then, oil was $20 a barrel and the oil sands weren't deemed economically viable.

Berkowitz also points to the sizable management ownership. The top brass -- Edwards, Langille, Chairman Allan Markin and President Steve Laut -- have been with Canadian Natural Resources for at least 15 years. They own a combined 4% -- or $1 billion -- of the company's stock. That's the largest amount of insider ownership among major energy and production companies, but far from enough to block a takeover.
[table canada]
The Northern Saudis: Only Saudi Arabia, with 259 billion barrels, has larger estimated crude-oil reserves than Alberta's oil-sand region, which has 175 billion. Above, some big projects in the Canadian province.

Wall Street is keen on oil-sands operations because of their long reserve lives. Industry leader Suncor (SU) is valued at $36 billion and has one of the highest P/E and cash/flow multiples in the energy industry. Suncor, the subject of a bullish Barron's profile a year ago, trades for 78, 16 times estimated 2006 earnings and 10 times projected 2006 pre-tax cash flow. Royal Dutch is offering nearly 20 times 2006 earnings to buy out minority holders of Shell Canada.

There's a gold-rush atmosphere in Alberta, as energy companies may spend $100 billion over the next decade to further develop the oil-sands region. Oil output, now one million barrels a day, could rise to 4 million by 2020.

The problem is that the cost of developing oil sands has doubled in the past five years, with much of the rise coming in the past 12 months, thanks to labor shortages, higher prices for steel and other materials, plus the construction challenges of remote northern Alberta, where winter temperatures can be 40 below. In this hostile environment, workers can command $100,000 a year or more.

Industry executives, including Edwards, have said that new oil-sands projects may need crude prices of at least $45 or $50 a barrel to be viable. Canadian Natural Resources says it will earn high returns from Horizon at $35.

Bitumen, the tar-like heavy oil that is abundant in Alberta, can't be used in refineries. The process of creating marketable crude involves obtaining bitumen, usually through strip mining, and then processing it through special refineries called upgraders. The upgraded crude is then refined further, into gasoline and other products. The oil-sands industry has been criticized by environmentalists for bitumen mining's harsh impact on the land and the large amount of energy needed to turn bitumen into lighter crude.

The Bottom Line:
Canadian Natural Resource stock, now 53, looks enticing. The shares could hit the 60s in a year and go much higher in the long run. The company might be takevoer bait, too.

The first phase of the Horizon project is half completed and on budget. More details may be revealed when the company reports third-quarter results Wednesday.

To help prevent construction problems, Canadian Natural Resources spent $400 million on preparatory work before a shovel hit the ground in 2005. The company, for instance, built an airstrip that allows it to ferry in workers on 737s from all parts of Canada for limited stints at the project. This is a big advantage, given the out-of-the-way location and the lack of infrastructure. The nearest city, Fort McMurray, is overwhelmed by oil-sands workers; housing is scarce. Earlier this month, 3,200 workers were on the Horizon site. The company has used fixed-price contracts to guard against cost overruns.

Wall Street is concerned that Horizon's second phase, preliminarily budgeted at $4 billion, will cost a lot more. But judging from its progress so far, Canadian Natural Resources should handle its expansion better than its rivals. The combination of top-flight management and a bold exploration strategy could reward investors for years to come.