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Hot Plays In The Canadian Bakken Shale

Posted: Nov 02, 2009 10:08 AM by Eric Fox

Tickers in this Article: PBN.TO, CDNX:PEP.V, PBG.TO, EOG, WLL, CLR, TOG.TO, CPG.TO, TLM

The Bakken shale is all the rage in the exploration and production industry, with most development activity centered in North Dakota. Since all the attention is focused there, some investors may be surprised to learn that the Bakken shale extends into the province of Saskatchewan in Canada.

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Bakken Shale Potential
The Bakken shale potential on the U.S. side is fairly large. A study conducted by the U.S. Geological Survey (USGS) in 2008 estimated that the technically recoverable oil reserves in the U.S. part of the Bakken Shale are in a range from 3.0-4.3 billion barrels. (For more read Unearth Profits In Oil Exploration And Production.)

U.S. Players
The U.S. players have been very aggressive at establishing positions on the U.S. side of the Bakken Shale. Here are the acreage holdings for four U.S. independents:

Company	Net Acreage Holdings
Continental Resources (NYSE:CLR)	605,000
Whiting Petroleum (NYSE:WLL)	89,136
EOG Resources (NYSE:EOG)	513,500
Kodiak Oil and Gas (NYSE:KOG)	35,000

On the Canadian side, it is difficult to get a recent reserve estimate, but clearly the interest is there. A lease by the government in August brought in bids of $14.8 million, mostly on the strength of interest in the Bakken shale. The play is similar to the U.S. side in that it is developed using horizontal wells and hydraulic fracturing.

Canadian Players
Talisman Energy (NYSE:TLM) was early in developing the Bakken shale in Canada. However, Talisman Energy chose to concentrate elsewhere, and sold some of its assets in southern Saskatchewan in March 2009. This sale included the Bakken shale properties, and the company received CAD$720 million or US$565.6 million.

The assets were purchased by TriStar Oil and Gas (TSX:TOG) and Crescent Point Energy Corp (TSX:CPG). Crescent Point Energy Corp is one of the more active players on the Canadian side of the Bakken Shale. The company is currently producing 24,500 barrels oil equivalent (BOE) from its properties there, and believes it has a drilling inventory of nearly 3000 locations. (Before jumping into this hot sector, learn how these companies make their money Oil And Gas Industry Primer.)

TriStar Oil and Gas recently combined with Petrobank Energy and Resources Ltd. (TSX:PBG) to form PetroBakken (TSX:PBN). The new company has an inventory of 1300 Bakken wells to drill.

Another smaller company developing the Bakken shale in Canada is Petrostar Petroleum (Canadian Venture:PEP). The company is an early stage exploration and production company that has a three well program underway.

Bottom Line
Canada seems to be blessed with an abundance of oil and gas resources, and the Bakken Shale spills over across the border into Saskatchewan, providing development opportunities for those who choose to exploit this play for its shareholders.

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By Eric Fox

Eric J. Fox, is the founder of Brittain Capital Management, LLC., which manages the Alesia Fund, LP., a Value oriented long/short investment partnership. You can read more of his views on investments at his blog - Stock Market Prognosticator. Mr. Fox also publishes a paid investment newsletter. Please visit The Unknown Stock Report for more details.

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