I personally suspect that most of these houses are still skeptical that they can get the oil out of the ground at the flow rates that XEL is hoping for.

There is a lot of misconceptions as to whether the technique that they are going to use will actually work.

Heavy oil is not something that anyone should invest in lightly (no pun). There are many challenges to getting a steady production rate and any mistake along the way could kill a project in its infancy.

I would think that the broker houses are still building a fair amount of risk into this venture.

I am a firm believer that heavy oil can be profitable, it needs to be, there are not that many big sources of light sweet anymore that are easily accessible.

I am also heavily invested in STP. The brokers didn't think that they could make it work, so they gave them a huge discount in the price of their reserves. STP is doing what most said they would not do, they are too small, they don't have the technical knowhow, and so on and so on.

Guess what, they have the oil flowing, and they are increasing their production profile with new projects coming on line over the next few years. They are currently getting 5,000 bpd and the cash flow is funding the current expansion plans.

For XEL the coming reserve report is important, as it will allow for funding of future operations through many sources, the real game changer will be first production.

The planned 15,000 bpd will give them good cash flow and with that they will be able to expand the production profile to fully develop the field.

With further exploration of their remaining blocks, the potential of this play is immense.

I will not be selling anytime soon, but I did buy more at 5 bucks to make a short term profit when the reserves report comes out. I am seeing 7.00 on the radar in the short term as achievable. If it doesn't make that, then I can wait until next year when the share price will have no choice but to rise, and then I won't be willing to part with my newer shares for anything less than 12.00.

With the price of oil climbing, all of these valuations may need to be revised.

Andy