A few weeks ago, I mentioned that some of the largest publicly-traded oil companies were turning to natural gas to mask their declining oil production.
As it turns out, one of North America’s largest natural gas producers is doing the complete opposite. This is more than a company shifting its production mix to liquids (practically everyone in the field is doing that due to low natural gas prices)…
Most of you have come across Encana before, possibly when they startled analysts earlier this year after announcing plans to ramp up their Haynesville drilling activity.
Make no mistake; this is a natural gas company, through and through. The company produced an average of 2.8 billion cubic feet of natural gas per day — which, at 6,000 cubic feet per barrel, comes out to 479,500 boepd. That’s compared to the 43,500 barrels of liquids production the company pumped out during the same period.
In fact, 84% of Encana’s U.S. production is centered on just three resource plays: the Jonah field in the Green River Basin, the Piceance Basin, and Haynesville.
And they may soon be adding a new oil play to their resume.
What could possibly have enticed Encana to drill for oil?
Dear reader, 60 billion barrels will do that to a company.
60 Billion Barrels — Untouched
I always love to hear about an emerging shale play before it hits the national spotlight.
When I came across this one awhile back, my interest was piqued mostly because it was taking place in an area most oil drillers would avoid…
It’s called the Mancos Shale, and this play has Encana searching for barrels of black gold.
Located in the San Juan Basin in New Mexico and Colorado, I doubt many oil investors have even heard of this shale play — and for good reason: the San Juan Basin holds a large amount of natural gas.
That’s how Encana initially became interested in the region.
But buried in their quarterly report is a short paragraph that could spark an oil boom in the Mancos Shale:
Encana has determined that its core acreage in the San Juan Basin has reached commerciality with 2013 production expected to reach over 1,700 barrels of oil equivalent per day (boe/d) in the play. The company is in the process of adding to its current 166,000 net acres. The last five wells the company completed have initial 30 day production rates ranging from 150 boe/d to 700 boe/d with 80 percent oil and current well costs average approximately $5.0 million to $6.0 million per well. Encana is running two rigs in the play and may add an additional rig by year-end.
There’s certainly enough to crude to go around…
An estimated 60 billion barrels of oil is locked in the Macos Shale. Even if we assume 10% of this oil is recoverable, we’re talking about nearly as much oil as the now-famous Bakken Shale in North Dakota!
You don’t need me to tell you that the best, most bankable investment profits come from new opportunities; and in most cases, all you need to do is find them before the herd.
One of my colleagues proved this very point to me this morning…
The Play that Made our No. 1 Gas Producer Drill for Oil
After poring over Encana’s sudden (and now understandable) love for U.S. shale oil, I couldn’t help sharing the news with one of my colleagues, Nick Hodge.
I was met with a confident grin that made me think he was about to one up me…
“What’s a barrel of oil at today, about $94 or $95 bucks a barrel?” I nodded, and he continued: “I’ll even spot you $100 per barrel. Now take the millions of dollars spent drilling and completing a well, paying off royalties… they’ll still pull in a tidy profit.”
Then he mentioned a stock he and his readers had discovered.
It’s a tiny stock — one that hasn’t shown up on anyone else’s radar yet.
“Let Encana chase oil for $100 a barrel. These guys are dealing with a substance worth up to $900,000 per gram. Think about it: a barrel of oil is what, 42 gallons? That means a single barrel of this stuff is worth more than $140 billion… three barrels are worth more than ExxonMobil’s market capitalization of $404 billion!”
How has Nick’s stock pick stacked up against Encana, one of the largest natural gas producers in North America?
I’ll let you see for yourself:
Taking a 200% gain since we rang in the New Year would turn any investor green with envy.
The best part is the highly-valued product this company produces is only found in one region in the world.
“That,” he told me, “is just the tip of the iceberg. This play’s only going to become more lucrative once the story breaks on Wall Street.”
Until next time,
A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
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