Abstract: Several procedures are provided for the thermal rearrangement of a water emulsion, of or a mixture with water, of a feedstock selected from the group consisting of tar sand bitumen, heavy oil, refinery residue and a heavy waste oil stream, the feedstock containing a naturally-occurring, finely-divided mineral material. The essence of such procedures involves contacting the water emulsion or the water mixture with a gas selected from the group consisting of synthesis gas and carbon monoxide in the presence of a catalytic amount, i.e., from about 0.3% to about 15% of a bifunctional catalyst that facilitates the water gas shift reaction and also promotes the hydrogenation and stabilization of cracking reaction products. The bifunctional catalyst includes the naturally-occurring, finely-divided mineral material which is contained in the feedstock. The process is conducted under such conditions of pressure and temperature that the water gas shift reaction occurs.