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Investing in the Paris Basin Shale Oil Play

10x Bigger than the Bakken

The Paris Basin shale oil play in France has the potential to be ten times the size of the Bakken play in North America, and some high profile exploration is beginning soon.

Estimates range from just a few to many tens of billions of barrels of oil in the Paris Basin.  Much like the North American shale plays, these formations have been drilled through many times – there are over 1000 wells drilled into the Basin – so exploration risk is low.  It’s completion risk – how to best unlock the oil from the rock – that is the main risk.

So there is a lot of data, which makes exploration much less risky.  It also means that local residents are used to having oil wells drilled in the region – unlike New York State ;).

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Activity by explorers in this part of France has been growing, and is now hitting a fever pitch.  A huge land race is underway, with applications for more than 1.6 million acres pending approval for several companies, including Toreador Resources (TRGL-NASD) in the US, Vermillion Energy (VET.UN-TSX) and Realm Energy (RLM-TSXv) in Canada.

Exploration – real drilling – in the Paris Basin will ramp up this fall.  Toreador Resources Corporation is the purest play. In May they announced an exploration deal with Hess Corporation (HES-NYSE) that could be worth as much as $265 million for 50% of Toreador’s 600,000 acres in the play.  They spud their first well into the play in Q4 2010. It will be one of the most watched wells in the world.

Canada’s Vermilion Energy has also acquired acreage in the play and begun exploration activities.  Vermilion is already recognized as France’s largest oil producer.

Craig Steinke, Executive Chairman for Realm Energy, says “The Paris Basin is arguably the most exciting shale play in Europe right now.  We expect to acquire a good-sized position in this play.”

As I wrote about earlier, many of the European shale gas plays are being bought up by the majors, there are intermediate and junior producers in the game, which should keep news flow on the play steady for retail investors.

When this happened in North America, there was huge wealth creation as the juniors and intermediates were small enough that their stocks could benefit from a productive land position.

Like the big North American shale oil plays that enriched investors, the Paris Basin has big reserve potential, good existing well data, and a local population that’s familiar with drilling.

Hopefully, history will repeat itself.

*Keith Schaefer owns  Toreador



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