Exshaw Shale Stocks

Brian Hicks

Written By Brian Hicks

Posted December 26, 2013

Any shale play around the Bakken region is a venture worth exploring.

You have the Three Forks formation, a region that was incorporated into the Bakken when the U.S. Geological Survey came out with a 7.38 billion barrel reserve assessment for the North Dakota play.

shale gas 19And now there is the Exshaw Shale, an area closer to the Bakken, although it falls within a different zone. This play is still in the midst of discovery, but it starts in Alberta, Canada and trails down to western Montana. It overlaps the Upper Devonian portion of the Three Forks formation and comprises limestone, black shale, and siltstone.

In Montana, some hotspot counties are Toole, Glacier, Flathead Teton, and Lake.

This is primarily an oil field, but it has already proven to be a project worth pursuing. And producers are determined to find ways of breaking through the newly discovered shale.

With oil prices higher and horizontal drilling/hydraulic fracturing being improved, companies are more passionate than ever in churning profit from this region.

No resource estimates have been given for the Exshaw. As of now, the Bakken is getting most of the attention, along with the Alberta tar sands of Canada.

But the Exshaw provides an exciting shale opportunity for Canada and the United states.

Bakken Comparison

The two are very similar in composition and makeup, but the Exshaw is 10 percent thinner than the Bakken. In the upper region, the Exshaw has the same organic black shale formation, but this northern portion is rather poorly developed.

In terms of siltstone in the lower portion, both plays are almost identical, but the middle region has a lower penetration rate than the Bakken. The regions have differing levels of thickness and development, but geographically speaking, the two regions are almost identical, which is an encouraging sign for investors and producers looking to mimic the same success from the Bakken.

The Bakken area is producing record levels, and the Exshaw could show the same potential.

For the Exshaw to have the same viability as the Bakken, prices must remain at high levels, and drilling technologies need to evolve over time.

In essence, the Exshaw represents a third layer of shale formations within the region’s shale drilling.

For now, most producers are focused on the Bakken, with the Three Forks next in line to become the focus of exploration. The Exshaw comes in third, and it will provide a buffer to the Three Forks and the Bakken if all goes well in the drilling department.

There is debate over whether or not producers can fully extract resources on a commercial basis, but companies remain hopeful despite the hurdles.

Exshaw Companies

The good news is that companies in the Bakken and Eagle Ford are importing their experience to the Exshaw.

Murphy Oil (NYSE: MUR) has increased its acreage position to 150,000 net acres in the region. Royal Dutch Shell (NYSE: RDS-A) has also been exploring in the Del Bonita in southern Alberta, searching over 60,000 acres through Shell Canada.

This is a relatively new play, and we have yet to see inclusion from the likes of the largest shale producers from the Bakken and the Eagle Ford.

But Rosetta Resources (NASDAQ: ROSE) and Passport Energy (OTC: PPOZF) are just a few of the companies already in the Exshaw in the U.S.

On the Canadian side of the Exshaw, you have Blacksteel Energy (TSX-V: BEY), Exxon Mobil (NYSE: XOM), Stone Energy (NYSE: SGY), and Newfield Exploration (NYSE: NFX).

These companies have experience in drilling for shale oil, and you’re going to see much more interest from major companies going forward. This is one of the more adventurous landscapes as more companies are rushing in to claim stakes of their own.

The similarities between compositions makes this region a worthwhile investment for the future, but there are so many other plays already producing excellent results throughout North America. Take western Canada, for instance, where the Athabasca region is a rich haven not only for oil sands but for uranium extraction as well.

The Exshaw Shale is just one of the many shale regions that could show positive returns as the shale oil boom presses onward, and perhaps this region will one day give the energy boom more legs to stand on.


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