North America’s Hottest Oil Play Just Got Bigger

The Bakken oil play is already one of the largest onshore oil discoveries in North America in decades.

But producers in both Canada and the US are still pushing out the “generally accepted” boundaries of the play – mostly to the west, into Alberta and into Montana from North Dakota – even as far as western Montana.

Rosetta Resources (ROSE-NASDAQ), Newfield (NFX-NYSE) and Quicksilver (KWK-NYSE) have all pushed the boundaries of what is known to be productive Bakken land – theirs is in northwestern Montana, right up against the Alberta border, in what is known as the Alberta Basin Bakken play.

Not only is their far west of all the development activity in North Dakota, it is also outside the six assessment units that the U.S. Geological Survey (USGS) designated when it conducted the assessment of the Bakken Formation, Williston Basin Province as late as 2008.(1)

These producers have established big land positions in the Alberta Bakken play of 100,000 – 300,000 acres each in Montana.

And a land position that size in this very young play has the ability to make a tangible difference in production and potentially stock price for three large US producers – Rosetta Resources (ROSE-NASDAQ–286,000 net acres), Newfield Exploration (NFX-NYSE–224,000 net acres) and Quicksilver Resources (KWK-NYSE–130,000 net acres).

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The Bakken oil formation has created fortunes for countless investors in the last six years. Yet this party’s far from over. You see, there’s one play nearly everyone has overlooked…

One small cap company holds a huge, underdeveloped land position in the “other Bakken” — the Alberta Bakken. Its oil production is climbing quickly… even more quickly than its own management has expected. Moreover, this outfit boasts an impressive balance sheet… and is sitting on one whopper of a natural gas play.  I think it could be the next take-over play in the Bakken, and I’m willing to tell you all about it – completely risk-free. Click here for for more information.

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A fourth NYSE-listed producer, Murphy Oil Corporation (MUR-NYSE) also recently announced a large, 200 section (130,000 acre) land position in the area.

There are few juniors in the play.  Canada’s Primary Petroleum (PIE-TSXv) is the leading junior with 127,000 acres, but Bowood Energy (BWD-TSXv), Mountainview Energy  (MVW-TSXv) and Covenant Resources (CVA-TSXv) are also there, with smaller land positions.

None of the big three producers in the play talk much about the Alberta Bakken, as the play is called (even in Montana) in their website or literature, as they are continually acquiring more land, but they are drilling.  The lead company, Rosetta, didn’t even include a single mention of it in their current investor presentation.

Both Rosetta and Newfield have each started a minimum eight well program on their lands to prove up this potential new discovery of the Alberta Basin Bakken.  And they are finding oil.  While none of the companies has yet issued an IP rate, Rosetta management has estimated there is between 12.5 million and 15.3 million barrels of oil equivalent in place (this means oil and gas) per square mile.

The companies are now drilling lower cost vertical wells, trying to determine where the sweet spots are in the various formations in the Alberta Bakken, where they would drill a more expensive horizontal well.  The market won’t likely see an IP rate until they have drilled several horizontals, and have 30 days production behind them.

An IP rate from any of the producers would be a major catalyst for the entire play.

And the analysts are watching.  Global Hunter Securities said that investors in Rosetta, even with a $1 billion market cap, “should get rewarded,” with success at the Alberta Bakken Basin.  Clarus Securities have added Primary to their “Energy Watch List”.

The Alberta Bakken could also be a multi-zone play, which would increase economics.  Rosetta is targeting the Bakken, Three Forks, Lodgepole and Nisku formations.

The play also stretches up into Alberta. The most recent land sale on September 01, 2010 in the Del Bonita area along the Alberta Montana border brought in roughly $40 million for the sale of 50,000 acres, with the highest price of over $4200 per hectare or $1700/ac for leases along the border and inside the Bakken fairway.

*Primary Petroleum is an OGIB portfolio stock at 16 cents.  Keith Schaefer owns Primary Petroleum.

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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The Oil and Gas Investments Bulletin focuses on the junior and intermediate oil and gas sector with a completely independent voice.  I have found a Bakken oil producer with years of low risk growth in front of it, and if natural gas prices move up, it potentially has one of the largest and lowest cost plays in North America – and most investors have NEVER heard of it! CLICK HERE TO ACCESS YOUR FREE SPECIAL SUMMER STOCK REPORT FROM OIL AND GAS  INVESMENTS!

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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