As the price of oil hikes onward, the United States is forecasted in a September report by Goldman Sachs to hit an all-time high crude oil production of 10.9 million barrels of oil per day (B/D) by 2016, up from its current production of 8.3 million. In comparison to the United States, for 2010, Canada reported oil production of 2.8 million B/D, with forecasts increasing this to 3.5 million B/D by 2015, to 4.2 million B/D by 2020 and to 4.7 million B/D by 2025 with the majority of this coming from the Alberta oil sands. It is remarkable to note that a country with about the tenth the population size is producing about 25% of North America's oil production.

Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

With forecasts that oil prices will hit $185 per barrel by 2020, the requirement to increase domestic production is playing an ever increasing role in American energy policy. It is fortunate then that Canada is the largest supplier of oil to the U.S., exporting 2.16 million B/D year to date. Saudi Arabia and Mexico, on the other hand supply 1.18 and 1.11 million daily barrels, respectively so far for 2011. With the growing production out of the oil sands, Canada will be playing a larger role in supplying America's energy needs. Taking a look at the largest oil sands providers, investors can see where the opportunity lies to profit from the increase in oil prices. (For related reading, see What Determines Oil Prices?)

Canada's largest energy company by market cap, Suncor (NYSE:SU), holds approximately 5.9 million net barrels of oil equivalent (BOE) in 2P (proven + probable) resources as of 2010. Oil sands production is expected to increase at a compounded annual growth rate (CAGR) of 10% over the next nine years. Its production for the first nine months of 2011 has been 297,400 B/D, along with about 364 million cubic feet (Mcf) of natural gas per day. For the third quarter, Suncor reported $1.29 billion in net earnings, up 5% from $1.22 billion in the third quarter of 2010. Revenue came in at $10.68 billion, up 39% from the year ago quarter.

Cenovus Energy
Not quite as big as Suncor, Cenovus Energy (NYSE:CVE) in comparison has about 2.4 billion BOE in 2P reserves, or about half of Suncor's. Producing about 131,000 B/D of crude oil and natural gas liquids for the first nine months of 2011, as well as 655 Mcf of natural gas per day. It might not be as big but Cenovus is growing fast, translating $3.86 billion in revenues for the third quarter of 2011 to net profits of $510 million, up 30 and 73% respectively from the same period a year ago.

Canadian Natural Resources Limited
Canadian Natural Resources Limited
(NYSE:CNQ) had 2P reserves of 6.9 billion BOE as of 2010. In 2011, CNQ produced 370,000 B/D and 1,249 Mcf of natural gas production per day, with goals to increase its BOE production by 17% by the end of 2012. The top line came in at $3.29 billion, with the bottom line bringing in $836 million, up 40% from $596 million the same quarter a year ago. (For related reading, see A Snapshot Of Canadian Natural Resources Limited.)

Imperial Oil
Another major Canadian oil producer is Imperial Oil (AMEX:IMO) with over 5.8 billion BOE of 2P reserves. With current production of 251,000 B/D for 2011, and 259 Mcf of natural gas, Imperial Oil proves to be a major player in the oil sands sector. The top line growth came in at 36%, bringing in $7.9 billion in revenue over the year ago quarter. Net income was $859 million, or 105% higher than it was a year ago.

The Bottom Line
Canada has the second highest oil reserves only to Saudi Arabia. With the growing demand for oil and the ever increasing oil prices, investors should take a look at these companies with operations in the Canadian oil sands.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  2. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  3. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  4. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  5. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  6. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  7. Stock Analysis

    Home Depot: Can its Shares Continue Climbing?

    Home Depot has outperformed the market by a wide margin in the last 12 months. Is this sustainable?
  8. Stock Analysis

    Yelp: Can it Regain its Losses in 2016? (YELP)

    Yelp investors have had reason to be happy recently. Will the good spirits last?
  9. Stock Analysis

    Is Walmart's Rally Sustainable? (WMT)

    Walmart is enjoying a short-term rally. Is it sustainable? Is Amazon still a better bet?
  10. Stock Analysis

    GoPro's Stock: Can it Fall Much Further? (GPRO)

    As a company that primarily sells discretionary products, GoPro and its potential falls right in line with consumer trends. Is that good or bad?
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center