RPT-Bay Street Week Ahead-A frosty warning for oil sands firms (In Iraq!)

[Tom Yossarian Joad]

CALGARY, Alberta, June 4 (Reuters) - Western Oil Sands Inc. (WTO.TO: Quote, Profile, Research), didn't get a favorable reaction when it announced this past week it would spend $45 million over four years exploring for oil in northern Iraq.

The Calgary-based firm had been, until the announcement, what's called a pure-play oil sands company. Its sole business was a 20 percent stake in the 155,000 barrel a day Athabasca oil sands project run by Shell Canada Ltd. (SHC.TO: Quote, Profile, Research).

But the possibility that it could have an edge on rivals in looking for possible multibillion-barrel fields in under-explored Iraq hit with a thud. The company's share price fell C$1.69, shaving more than C$272 million from Western's market capitalization.

Analysts said investors were concerned about increased risk for the company and a dilution of what was perceived to be a mandate to invest only in Canada's rich oil sands region. If that's the case, other oil sands firms may face a dilemma. What's to be done with the huge amounts of cash spun off by a successful oil sands project?

More: http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=CN&storyID=2006-06-04T142950Z_01_N02224069_RTRIDST_0_COLUMN-CANADA-MARKETS-SCHEDULED-WEEKLY-COLUMN.XML&rpc=66

We're going to keep seeing more of this. Companies willing to risk the safety of their employees to get in on the new oil made available by Bushco.