Duvernay Shale Stocks

Brian Hicks

Written By Brian Hicks

Posted September 6, 2013

So if you’ve been investing in domestic shale in the U.S., you may be looking for investments beyond the borders. There are new discoveries and successful operations being conducted all over the world, with such companies as Chevron (NYSE: CVX) and Royal Dutch Shell (NYSE: RDS-A) leading the charge.

But instead of placing your dollars in risky overseas ventures, why not look across the border to Canada? Another shale play is on the horizon: the Duvernay shale of Alberta.

shaleWe often hear of promising shale areas being looked upon in the U.S., but there are new oil and gas hotspots that could yield plenty of energy revenue in Canada as well.

The Duvernay play extends into British Columbia and is just north of the Montney Shale – another successful play that is also gaining in popularity.

Oil can be found in the north of the Duvernay, while natural gas is located in the south and central areas.

A full resource assessment of the Duvernay has not been completed, but it may contain 61.7 billion barrels of oil, 11.3 billion barrels of natural gas liquids, and 419 trillion cubic feet of natural gas, World Oil reports.

On an investment level, $6 billion has already poured into the Duvernay. An additional $955 million is expected to funnel in for the remainder of the year.

The area has only recently gained widespread attention in 2011, but it is gaining more traction as of late amid tensions in the Middle East and rising oil prices.

This is one play to keep on the radar, since both big and small companies have had some of the most successful drilling results in the region.

Overall, this is great news not only for Canadian drilling, but for the entire shale oil boom throughout North America.

The U.S. and Canada are expected to be the main suppliers of non-OPEC commodities for 2013. But in order for the energy momentum to keep going, there must be new plays that will function as a buffer to keep the shale boom afloat.

The U.S. already has emerging shale landscapes, such as the Mancos Shale and the Niobrara Shale out West, but Canadian drillers are making plenty of new and exciting discoveries too.

So how does this new Canadian play compare to plays in the United States?

Shale Comparisons

Reserves may change as the region is further developed, and it will actually be hard to lump the Duvernay in the same boat with more established plays, since the region is a fairly new area of development.

But let’s take, for instance, the Eagle Ford Shale of South Texas – holding 150 trillion cubic feet of natural gas and 3 billion barrels of oil. If recent estimates hold true, then the Duvernay has the potential to become the next Eagle Ford. There have been problems with well volumes, but drillers have still been able to tap into energy resources.

This is an exciting discovery and an investment worth exploring.

Company Investment

The best way to get involved in the Duvernay is to follow those companies in the region. And you’ll have plenty of options, since many of these companies are drilling for diverse resources.

Chevron recently made a purchase from a smaller energy company. Through its subsidiary Chevron Canada Ltd., the primary focus of this operation will be on wet shale gas.

Royal Dutch Shell, through its own subsidiary, also made heavy investments in the Duvernay since 2008, having acquired Duvernay Oil Corp for $5.9 billion. Shell Canada is the largest operator in the region, with 54 licensed wells.

Exxon Mobil’s (NYSE: XOM) XTO Energy has been in the area, with nine active wells online. And Exxon purchased a smaller Canadian company that was among the first explorers in the Duvernay for $3.1 billion.

The Chinese are swooping in as well; Phoenix Duvernay Gas is a subsidiary of PetroChina (NYSE: PTR).

I predict this play is going to benefit Canada on a mass scale, and it has already done well regarding production and well numbers. Current projections show that 100 wells will be drilled by the end of the year, and 200 could be drilled in 2014.

But check out the wider region as well. There are four emerging plays, including Viking, Slave Point, East Basin Duvernay, and Cardium, and all of these plays have a total estimate of 423.6 billion barrels of oil and 58.6 barrels of NGLs, Platts reports. For natural gas reserves, the region could have up to 3,324 trillion cubic feet.

Analysts predict that over $28 billion will be invested in the Eagle Ford, and I believe the Duvernay will get there one day.

This is a positive play that is gaining momentum, and it will be an important part of the drilling rush.

Stay tuned for more shale discoveries.


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