"Canadian energy giants Suncor Energy (NYSE: SU) and PetroCanada (NYSE: PCZ) announced their intention to merge; Suncor, a holding in our 'Wildcatters Portfolio' will be the surviving entity," says Elliott Gue.

In his The Energy Strategist, he explains, "The combined firm will be the fifth-largest energy company in North America and the largest in Canada." Here, he explains why the new stock remains a buy.

"The combined firm will have more financial flexibility than Suncor did on its own. Debt ratios will be healthier, and the combined firm will also be able to redirect certain planned capital expenditures to higher return potential projects.

Rising global demand for oil, combined with geological studies that predict that global oil production derived from conventional oil supplies will begin to decline late in this century, or as early as 2040, has led to a search for unconventional oil supplies.

Further, a large amount of that unconventional oil exists in the form of tar sands in Alberta, Canada, the bitumen of which is capable of producing 1.7 billion barrels of synthetic crude. Moreover, if just 10% of this field is actually recoverable, it would still represent the second largest oil reserve in the world.

But, as writer Elizabeth Kolbert outlined in an article on unconventional oil in this week's issue of The New Yorker magazine ("Unconventional Crude"), extracting that resource comes at a price: it's more expensive to extract -- about $1 of energy is needed to generate $3 of unconventional oil -- more CO2 is also released into the atmosphere than from conventional oil, and mines dug to secure the material scar the landscape, if not fully restored.

China National Petroleum Corp, parent of PetroChina Comapny, Ltd. (NYSE: PTR) has gotten rights from the Canadian province of Alberta to drill for oil. But the company plans to do it the hard way.

One of the hopes for replacing dependence on current oil reserves is to drill into tar sands. The ground contains a substance that can be converted to oil, but the process of separating out the material that can be refined is very costly. Then again, so are oil prices. As the price for crude sits near $70 a barrel and China looks to the need for oil and gas to keep its economy moving, tar sands drilling may actually make economic sense.

According to Wikipedia: "Oil sands may represent as much as 2/3 of the world's total petroleum resource." If oil demand continues to rise, tapping this resource may become critical.

Right now, China has no way to get much more than its share of the world's oil production. The economies of Europe, Japan, and the U.S. need the fuel just as much as the big Asian country. But if China is willing to make the investment, it could start to change the game. The communist government does not have the public company P&L issues that big oil companies do. It can put down huge sums of money if it thinks tar sands could solve its problem in the decades ahead.

And that would give China an edge.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

Canadian Oil Sands Trust (TSX: COS.UN) is the top conservative buy for 2007 from international investing expert Vivian Lewis. The editor of Global Investing notes, "Canada recently slapped surprise taxes on income trusts. Nevertheless, we think oil sands will also be a good idea even if not exempt from taxes on dividends.

"The main reason is that the dividends are pretty meager. COS pays 2.7%. This is not going to cause a sell-off in the share, even if the dividend is cut in 2011. The trust, however, dropped 10% in what I consider a mistaken reaction to the tax news.

"Meanwhile, Canadian Oil Sands Trust saw third quarter volumes and sales prices rise, which partly offset higher royalties paid, while net fell 27%. The dividend is 30 cents per unit. The stock is up 41%, including dividends, over the past year.

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

Canadian Oil Sands Trust (TSX: COS) is the favorite speculative idea from from Gordon Pape, editor of Internet Wealth Builder.

The advisor notes, "It may seem strange to select a company that owns more than 36% of the Syncrude Oil Sands Project in Alberta as a speculative pick but that's where we are with Canadian energy trusts as a result of the government's October 31 announcement that they would be subject to a 31.5% tax starting in 2011.

"Most of the trusts have seen their market prices clobbered as a result, but not this one. It's actually trading above where it closed on the afternoon prior to the announcement. There are three reasons for this. First, the price of oil has risen recently. Second, there is general expectation that the trust will raise its distributions next year (the current rate is C$0.30 a quarter).

"Finally, there is the asset value. Whatever happens to COS in terms of its corporate structure in the future, it will remain one of the preeminent players in the Oil Sands. Unless you think America is going to stop running on oil sometime soon, this is a stock you want to own for both income and growth."

To see Gordon's top conservative investment idea for 2007, click here.