In one of the stealth oil developments this year, Cuban officials said last week that the Communist country is embarking on an aggressive exploratory drilling program to assess the potential offshore reserves.

Cuba has been relying on companies from China, Central America and the Middle-East for years now to pump crude from offshore rigs. This latest effort, 20 miles north of Havana, represents a new surge in drilling that could start as early as the second quarter in the Gulf of Mexico.

The biggest winner here for investors could be Repsol YSF. S.A. (NYSE: REP), the oil major based in Madrid, Spain. Repsol will lead a consortium of drillers that includes India’s state-run Oil & Natural Gas Co. and Norway’s StatoilHydro. Additional exploratory drilling in the region of the Gulf under Cuba’s economic control is anticipated in 2010 and 2011.

Repsol has been drilling in cooperation with Cuba for at least the past five years. While some skeptics believe that the estimated 20-billion barrels of recoverable oil could be too deep to justify production, Repsol has extensive experience in deep-water drilling.

If the news is good here, it could be the impetus that the stock needs to recover – putting investors in a position to pocket some gains.

Reposol currently trades on the NYSE at about $18, near the bottom of its 52-week range of $16.04 – $44.85.

The company has a market cap of $22.48 billion. Along with its subsidiaries, Reposol is involved in the exploration, development and transportation of oil, natural gas and liquefied natural gas. Its main markets include Spain, Argentina, Brazil, and Bolivia. As of December 31, 2007, it had 951,578 thousands of barrels of crude oil; and 8,156,157 millions of cubic feet of gas, as well as 6,514 service stations.

Repsol has made a significant new oil find in the deepwater area of the U.S waters of the Gulf of Mexico. Other recent discoveries include new gas discoveries in Peru and Algeria, and oil in the deep waters of Brazil’s massive Santos Basin.

Reposol could have been dragged down by low crude prices versus any fundamental flaws in its operation. A top-line look at Reposol’s numbers indicate an upward trend in revenues.

On November 13, 2008, the company posted net income of $3.63 billion in the first nine months of 2008, a 15% rise on the year-earlier period.

Repsol ‘s operating profit, a measure of the company’s ordinary business, reached $6.54 billion, a rise of 18.9% year-on-year.

Profits across its major business units rose in most of its major business units. For example, its LNG unit saw a rise of 20.5% during the period over the previous year.

At the same time, Repsol agreed to pay a gross dividend of $1.29 per share from 2007 earnings, a raise of 39% from the previous year.

With these results, Repsol could prove to be the sleeper oil play of 2009. Oil prices continue to bump along the bottom and worldwide consumption of fuel will probably stay flat. Still, it appears that Repsol has hit bottom and is the way to long, slow climb upwards.

While our government is chastising Big Oil for making money and the Federal Reserve is using taxpayer money to bail out their banking buddies, Cuba is tearing down former economic barriers. It is like the earth has tilted from her axis and everything is backwards.

Let’s start with Cuba. Apparently Raul Castro is one of those rare dictators (or even any politician) that makes good on his word. He promised change and that is what his people are getting. Just yesterday the new president opened the country’s doors to major progress.

Cubans are now allowed to use cell phones. They can stay in hotels. They can own home electronics like DVD players and kitchen appliances. And most importantly, the Cuban government is lending unused state land to farmers. The economy will surge.

The island still has a long ways to go before freedom is declared, but this is a monumental step in the right direction. Investors should take note.

We ain’t Cuba

Unfortunately, the United States is moving in a different direction. Can you tell we have a democrat-controlled congress?

The nation’s large oil companies flew their private jets to Washington yesterday to answer some questions that are considered unusual for a free-market society. Congress wanted to know why Big Oil is raking in so much money when consumers are paying an arm and a leg at the pump.

How come nobody is hanging Starbucks for that $4.75 latte I had on Sunday? That’s the real crime.

The House committee grilling the oil companies yesterday wants to know why the industry continues to receive huge tax breaks while profits make new records. The real question should be why is Big Oil forced overseas to look for opportunities to expand its oil supply. If Congress is truly concerned with high gas prices (and not just with looking good in the eyes of voters), it would open up the nation’s coasts to oil and gas exploration.

Washington is expecting companies like Exxon, Shell, and BP to fund the nation’s alternative energy research, yet it is willing to pickpocket the same companies the instant they begin to see the fruit of their labor. It doesn’t make sense. Maybe Castro quit running Cuba because he got a job in Washington.

At least they won’t die alone

As if a lousy attempt to manipulate the oil markets is not enough, the government is giving the Federal Reserve more power over the banking industry. Instead of relegating the power to the organizations created to oversee the nation’s investment banks, the Fed is crossing its boundaries to be the new Wall Street traffic cop. So long checks and balances.

It is true without the recent help of the Fed, America’s banking industry would be in the toilet (or even further down the sewer line), but isn’t a free market what this country is all about? If I run my business into the ground because of bad decisions, I don’t expect Bernanke to write me a big taxpayer-funded check. Why should some bank that tried a flimsy get-rich-quick scheme get a reprieve?

By sticking out a helping hand and lowering its own lending standards, the Fed left the sidelines and jumped into the nation’s credit mess head first. Eventually, it will all come crashing down. Wall Street banks lost hundreds of billions of dollars. That kind of mess does not disappear overnight. Haven’t we learned enough times that government intervention never helps a free market?

I do not know what has gotten into this country, but it is looking less and less capitalistic every time I turn on the news. When Cuba is setting its people free and America is punishing them for getting rich, we have some very serious issues.

At least they are making money in Cuba.