MENAFN - ProactiveInvestors - Australia
ASX oilies marching to the North American unconventional beat: Part One
North America is at the forefront of unconventional oil and gas developments and a number of ASX-listed companies have focused on these highly prospective plays, In this first part, Proactive Investors examines the Eagle Ford Shale and the Mississippi Lime.
(MENAFN - ProactiveInvestors - Australia) Australian oil and gas companies operating in North America offer investors the opportunity to gain exposure to some promising unconventional and conventional hydrocarbon provinces.
However, there many different plays or their variations that are being targeted, presenting investors with a potentially bewildering amount of information to absorb in order to make a reasoned investment decision.
In a two part series, Proactive Investors presents some of the key plays in North America and some examples of companies operating in them.
Shale and tight hydrocarbon basins
In this first part, we will examine some of the liquids rich and oil bearing shale and tight plays that have captured the attention of most investors, having proven to have the ability to change the U.S. Energy landscape.
The success of these plays owes itself to ongoing technological improvements in both horizontal drilling and hydraulic fracture stimulation as well as good old economies of scale.
Improvements in the use of these technologies and techniques have unlocked the potential of shales, which had previously being recognised as source kitchens for conventional oil and gas plays, to be producing horizons in their own right.
This has seen shale gas rise to form a major part of the U.S. energy mix, leading to the now infamous gas glut while shale oil production has also grown rapidly in recent years.
Eagle Ford Shale
Arguably one of the active oil and gas plays (conventional or unconventional) in the world, the liquids rich Eagle Ford in Texas offers profitable drilling results that have been compared favourably with the more oil prone Bakken Shale.
The value ascribed to this acreage can be seen in the scale of deals made here with some passing US20,000 per acre in 2011 while big American independents such as Chesapeake Energy (NYSE: CHK), Apache Energy (NYSE: APA) and Anadarko Petroleum (NYSE: APC) have all set up shop here.
For Australian companies, the biggest and best well known shale focused player is Aurora Oil & Gas (ASX: AUT), a A1.5 billion market cap, which holds a large stake in the Sugarkane gas and condensate field operated by Marathon Oil Corporation (NYSE:MRO).
BHP Billiton Petroleum (ASX: BHP), the oil and gas arm of the world's largest miner, also holds a significant stake in the Eagle Ford as well as the Permian Basin, Fayetteville Shale and Haynesville Shale.
Texon Petroleum (ASX: TXN) is currently involved in a proposed merger with Sundance Energy Australia (ASX: SEA) that will create an Eagle Ford focused company.
The 7,500 acre Eagle Ford acreage currently holds five producing wells with another two being drilled.
Together, Texon and Sundance would have production of 1,242 barrels of oil equivalent (boe) per day from their Eagle Ford assets as well as proved and probable (2P) reserves of 15.9 million boe.
Further growth in production and reserves is likely as the Eagle Ford is considered to have low risk development potential with the ability to host more than 100 wells.
Austin Exploration (ASX: AKK) holds a 93.5% working interest in the 5,000 acre Texas Birch Prospect, which targets the Eagle Ford Shale.
The company has drilled three vertical wells to test the formation though strong oil and gas shows encountered while drilling the Birch-3 well through the shallower Austin Chalk Formation has led to the decision to produce and deplete the Austin Chalk ahead of exploring the Eagle Ford potential.
Strike Energy (ASX: STX) has also built up a substantial net acreage position of 10,300 acres in the Eagle Ford and is currently carrying out clean-up operations on its initial horizontal production test well.
The Bigham-1H well was successful fracture stimulated in October with data indicating that a very large fracture system was created while gas oil ratio and oil gravity appears to be consistent with other wells along trend.
Bigham-1H has flowed small amounts of gas though Strike does not believe this is material to the potential of the well.
Strong production from nearby wells have also served to considerably de-risk Strike's acreage, which could hold between 35 million and 45 million boe of oil and gas.
Moving further afield, Sun Resources (ASX: SUR) is targeting the tight Woodbine oil sands, which is sourced from the Eagle Ford Shale, and has built up a 18,836 net acre position over four projects.
The company is poised to participate in production testing of its first Texas Woodbine horizontal well, Beeler-1H in the Richland oil Project.
This is the first of three horizontal wells and one vertical well in the project.
Additionally, Sun and partner Amerril Energy are drilling one vertical well and three vertical wells at the Amerril Oil Project.
Production from all these wells can be quickly and cheaply tied into nearby existing infrastructure for early cashflow.
Success will also de-risk Sun's wholly-owned Delta Oil Project as well as the recently acquired Normangee Oil Project. Potential also exists for other stacked pays to be produced in the future.
The Mississippian Lime oil play in Kansas and Oklahoma is a tight carbonate formation that responds well to fraccing with horizontal drilling increasing the likelihood of intersecting natural vertical fractures that may already contain oil.
While it contains less liquids than the Bakken, it has infrastructure in place due to decades of drilling and is only about half as deep at about 4,000 to 6,000 feet. Less pressure is also required to fracture carbonate rocks compared to shale.
SandRidge Energy (NYSE: SD) and Chesapeake Energy (NYSE: CHK) are two of the largest companies operating in the area.
Of the Australian players, AusTex Oil (ASX: AOK) has already established steady production from Mississippi Lime wells and is targeting production of 1,000 barrels per day (bpd) of oil in 2013.
To achieve this, the company is drilling two vertical wells per month, adding to the seven producing wells and six wells to be brought on line by Christmas.
With net back of about US40 per barrel, AusTex could see earnings of about US1.2 million a month after royalty and tax when it hits its 1,000bpd target.
It is also participating in horizontal wells drilled by Range Resources Corporation (NYSE: RRC) that promise to substantially increase production and reserves.
AusTex holds 23,000 net acres in both Kansas and Oklahoma with its main focus on its Snake River project.
Red Fork Energy (ASX: RFE) holds a large 75,000 net acre position that have the potential to host 900 gross drilling locations in full field development.
The company has thus far completed eight horizontal Mississippi Lime wells for production with one well being stimulated, another three awaiting completion and drilling underway for three wells.
While the majority of these are located in Development Area 2, Red Fork has also started work on Development Areas 3 and 4.
In all, the company has 10 development areas planned across five counties.
Additional play potential also exists in the deeper Woodford formation where a nearby horizontal well achieved initial flow rates of 353 barrels of oil and 262,000 cubic feet of gas per day.
In the second part of the series, we will take a look at the Permian Basin in Texas and the Duvernay Shale in Alberta, Canada.
MENA News Headlines
|Mar 10 2014||Releasing A Book Featuring The Rich Biodiversity of Irkaya ,Qatar News Agency|
|(MENAFN - Qatar News Agency) A hardback book featuring the rich biodiversity of Irkaya, an area of arable farmland in the center of the Qatar peninsula, was formally released here on Sunday in a ...|
|Mar 10 2014||Arab-League Secretary General Calls for Unity ,Qatar News Agency|
|(MENAFN - Qatar News Agency) Arab League Secretary-General Dr
Nabil El Araby said Sunday that relations between Arab countries need a strong stand in order to overcome the obstacles to joint Arab ...|
|Mar 10 2014||Border Guards Receive 1944 New Syrian Refugees ,Qatar News Agency|
|(MENAFN - Qatar News Agency) A total of 1944 Syrian refugees, of different ages including the wounded and sick , entered the Kingdom through various illegal border points during the past 72 hours. ...|
|Mar 10 2014||Director General of Public Security Maj.Gen. Saad Al Khulaifi Meets GCC Traffic Chief Delegates ,Qatar News Agency|
|(MENAFN - Qatar News Agency) HE Director General of Public Security Staff Maj. Gen. Saad bin Jassim Al Khulaifi on Sunday met with the chief delegates of the GCC Traffic departments and the Jordanian ...|
|Mar 10 2014||Emir of Kuwait Receives A Written Message from Nigerian President ,Qatar News Agency|
|(MENAFN - Qatar News Agency) Emir of Kuwait Sheikh Sabah Al Ahmed Al Jaber Al Sabah received Sunday a written message from Nigerian President Goodluck Jonathan, related to bilateral relations and the ...|
|Mar 10 2014||Death Toll Rises to 22 in Iraq Explosion, 100 Others Injured ,Qatar News Agency|
|(MENAFN - Qatar News Agency) The number of casualties in the Hilla city, Iraq reached to 22 people killed , with around a 100 people injured.
The initial numbers were 12 people died in the ...|
|Mar 10 2014||Arab League Ministerial Council Begins Its 141th Session ,Qatar News Agency|
|(MENAFN - Qatar News Agency) The 141th session of the Arab Ministerial Council began at the ministerial level at the Cairo-based Arab League headquarters on Sunday under Moroccan foreign minister ...|
|Mar 10 2014||Arab Ministerial Meeting to Follow Up Implementation of Doha Summit Resolutions ,Qatar News Agency|
|(MENAFN - Qatar News Agency) The authority to follow up the implementation of resolutions of the last Arab Summit held a ministerial-level meeting at the Arab League headquarters today chaired by HE ...|
|Mar 10 2014||UN-Arab League to Launch Year of Solidarity with PalestinianPeople ,Qatar News Agency|
|(MENAFN - Qatar News Agency) Joint Ministerial-level Meeting of the Committee on the Exercise of the Inalienable Rights of the Palestinian People and the League of Arab States will hold a meeting on ...|
|Mar 10 2014||Big Data and Disruptive Technologies Can be "Game-Changers" for Employee Training in Saudi Arabia ,MENAFN Press|
|(MENAFN Press) SAP Chief Learning Officer Calls for More Focused Employee Education and Measurable Business Outcomes
JEDDAH, Kingdom of Saudi Arabia â€“ March 10, 2014 â€“ The Chief Learning ...|
|Mar 10 2014||UAE's Tecom sees interested partners in its project ,MENAFN|
|(MENAFN) Tecom Investments, the master developers of Dubai Design District (d3), saw several interested prospective business partners in the project, according to the Emirates 24/7.
d3 has ...|
|Mar 10 2014||Spinneys to launch new branch in Dubai ,MENAFN|
|(MENAFN) Khalifa Industrial Zone Abu Dhabi (Kizad) said that Spinneys Dubai LLC plans to open a new center with a dedicated cold storage facility in the industrial zone's logistics cluster, according ...|
|Mar 10 2014||UAE's Emirates launches flights to Boston ,MENAFN|
|(MENAFN) Emirates has announced the launching of its inaugural flight for Boston on Monday, adding a new destination to the seven-destination list in the US, according to the Emirates 24/7.
|Mar 10 2014||Kuwait's IFA launches USD270 m development ,MENAFN|
|(MENAFN) Kuwait's IFA Hotels & Resorts, the largest foreign investor in Dubai's Palm Jumeirah, has opened the new mixed-use luxury development worth USD270 million, according to Arabian ...|
|Mar 10 2014||Dubai launches USD299 m Smart City ,MENAFN|
|(MENAFN) Dubai has launched the Smart City Project worth USD299 million on Sunday, according to Arabian Business.
The new city will feature electricity-charged vehicles as the primary form of ...|
|Mar 10 2014||Saudi Health 2014 to showcase latest medical solutions for Kingdoms flourishing healthcare sector ,MENAFN Press|
|(MENAFN Press) Riyadh â€“ March 10, 2014: The healthcare sector of Saudi Arabia has witnessed positive growth over the last few years and has attributed to strong support from the Saudi government. ...|
|Mar 10 2014||Minister of State for Defense Affairs Meets Commandant ofSandhurst ,Qatar News Agency|
|(MENAFN - Qatar News Agency) HE the Minister of State for Defense Affairs Major General Hamad bin Ali Al-Attiyah met on Sunday with Commandant of the Royal Military Academy Sandhurst in the United ...|
|Mar 10 2014||Israeli Forces Raid Hebron and Bethlehem ,Qatar News Agency|
|(MENAFN - Qatar News Agency) Israeli forces launched several raiding campaigns on different parts in Hebron and Bethlehem, south of the West Bank, early on Sunday. Palestinian sources reported that ...|
|Mar 10 2014||Friendster wins McDonald�s-Lifestylez 3x3 basketball title ,Arab News|
(MENAFN -Arab News) Another year, another victory by a Filipino team in the 3rd annual McDonald?s-Lifestylez Jeddah 3-on-3 Basketball Championship.Friendster beat defending champion MGI Thunderous ...|
|Mar 10 2014||Nuns held in Syria have been freed ,Arab News|
(MENAFN -Arab News) BEIRUT: About a dozen nuns held in Syria for more than three months have been released and are on their way to Damascus via Lebanon, a Lebanese security source and church ...|