The Positive: Canadian Superior is a small oil and gas exploration company producing about 3000 boe/d. This production allows the company to generate around $20 million in cash flow a year; if you assume a market value of eight times cash flow and stable gas prices you have a floor on the stock price at $1.30. This downward protection is accompanied by a significant opportunity for appreciation. Canadian Superior plans to drill three wells in a potentially high impact area off the coast of Trinidad. Other oil and gas exploration companies have drilled successful wells (300 to 600 mmcf/d) in this area and if Canadian Superior can strike a similar find they will be rewarded with a significantly higher stock price. Assuming a thirty percent chance of drilling success, which is projected to generate $4.00 in appreciate with a seventy percent chance of a $0.70 decline you get an expected outcome of $0.71. This risk/reward ratio is very attractive and makes Canadian Superior a stock purchase worth further researching. The Negative: Canadian Superior’s management consistently over promises and under delivers. Their ability to meet time schedules needs to be questioned and their overly optimistic press releases should be read with an objective eye. Conclusion: Keep a clear perspective on this stock opportunity. The stock presents a healthy risk/reward scenario, but this opportunity as strictly an “option” play on the success of the Trinidad drilling program. If it is successful sell into buying with a $6.00 target. If it is unsuccessful take the loss and expect an immediate thirty-five percent loss.