So Many Shale Plays, So Little Time: The Little Bakken
By this point, I am sure that many of you have heard about the numerous shale plays that have been developed all across the United States. The Bakken Shale has been one of the largest and most well known of these shale plays. I have been hearing more and more about the Little Bakken. What is it and what do you need to know as an investor? Kevin McElroy lets us in on all the details.
What is it?
The Bakken formation is known as a dependable supplier of crude oil and natural gas, but there’s another lesser known region that promises to become the next big thing in the U.S. for oil and gas explorers.
This place is being called “the little Bakken,” or “NeoBakken” because of its potential. Companies are snapping up acreage, doing deals and moving rigs into position as I type this.
Stocks to Watch in the Little Bakken.
…Samson Oil and Gas Ltd. (SSN) is headquartered in Perth, but its U.S. operations are based in Colorado. The company’s shares have pulled back as oil prices have dipped, and are currently trading below the 50-day moving average. A retracement to the 200-day moving average, around $2.00 per share, would be an excellent place to load up on shares – although $2.50 will probably be a significant support area where an initial position would also be attractive…
…The big players in the Niobrara include EOG Resources (EOG), which has accumulated some 300,000 acres in Colorado and Wyoming; Noble Energy (NBL) with 830,000 acres; and Chesapeake Energy (CHK), with 535,000 acres.
By comparison, Samson’s holdings are small, but it’s looking to acquire other leases as it moves forward not only in the Niobrara, but also with other projects in North Dakota, New Mexico and the Texas Gulf Coast where it expects to begin test drilling on one promising site by June.
In September 2010, Samson reduced its holdings when it sold 24,000 acres to Chesapeake for $73.7 million. But Samson kept an adjacent 17,000 acres for its Hawk Springs project.
Chesapeake placed the expected ultimate recovery (EUR) estimate at 500,000 barrels, which buoyed Samson’s optimism about Hawk Springs’ potential. It also piqued the interest of Halliburton Energy Services, which formed a joint venture with Samson for a piece of the Hawk Springs site.
After getting its finances in order, Samson is predicting that it will be debt-free by May. In the fiscal year that ended in June 2010, earnings were flat after four years of losses, and indications are that the company should show a profit in fiscal year 2011. At the midpoint of its fiscal year, Samson posted a profit of $0.03 per share.
Samson’s shares shot up in early January after energy consulting group EnerCom labeled the stock undervalued at $2 per share. Shares then reached $4.75 in early March before beginning to lose momentum…
It seems as though the U.S. Shale Plays are just going to continue to grow in quantity. Investors are intrigued by these exploration projects, and oil and natural gas companies are eager to get in on the excitement. I think the momentum will continue in shale plays for some time to come.
Reported by Kevin McElroy, Read the entire article here.
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