Shale Bounty Hiding Under America’s Hat

blog8With all that is happening with shale around our country, it can be easy to forget that this boom doesn’t stop at our borders.Unlike the boundaries defined by a river or mountain range, the line between Canada and the United States is purely political.

That means the geography of some shale plays in the United States travel up into our northern neighbor’s territory. And the real shale gem north of the border is the Montney shale play – the shale basin that stretches across northwest Alberta and into northeast British Columbia.

Experts believe that this play is going to be incredibly lucrative, and now is the time to invest.

This One’s a “Geyser”

Researchers have already determined that the Montney region is incredibly rich with fuels.

The Canadian government estimates that the basin holds about 2,200 cubic feet of natural gas, enough to supply current Canadian gas consumption for 145 years.

On top of that, there’s an estimated 29 billion barrels of natural gas liquids and more than 136 billion barrels of oil believed to lie there.

With Montney being the closest natural gas field to the proposed LNG terminals on the east coast of British Columbia, it’s no surprise that James Burgess of Oilprice.com said that the so-called Middle Montney, which holds these high concentrations of natural gas liquids, may soon become one of the largest commercially viable plays in the world.

That is an exciting prospect for the companies positioned in the Montney…

The Players to Watch

One of the biggest companies in the Montney is Canada’s own Encana (ECA).

The company’s total net position in the Montney is nearly 600,000 acres. It also owns large, contiguous core land positions in the most proven region of the entire play.

Encana’s capital expenditures this year are focused on the development of the oil and natural gas liquids-rich areas of the Montney. The company plans to drill 80 to 85 new wells and is devoting 25% of its capital expenditures to the project.

Two smaller companies to consider are Arc Resources (ARX.TO), with a market cap of $9.5 billion, and Trilogy Energy (TET.TO), boasting a $3.21-billion market cap.

Arc Resources reported record second-quarter results and pays a monthly dividend. It was an early entrant in the Montney, with operations beginning in 2005, and its use of the latest fracking techniques – like horizontal fracturing – really opened up the play for development. It continues to expand its acreage and is now one of the largest operators in the Montney with over 180,000 net acres.

Trilogy Energy also pays investors a monthly dividend. It’s the leader in the oil region of the Montney, with 50 net sections of land overlying an estimated 500 million barrels of oil.

On top of direct producers, the Montney has attracted a lot of deal-making activity. Seventy-five percent of Canada’s energy merger and acquisition activity in the past few years can be attributed to companies wanting to take advantage of the Montney’s potential.

The most active company acquiring Montney acreage is the Malaysian energy giant Petronas (5681.KL). Many believed Petronas’ main interest is in exporting liquid natural gas to Asia – a high-demand market

In November 2013, Petronas announced a $1.4-billion deal with Canada’s Talisman Energy (TLM) to acquire 127,000 net acres in the Montney. The deal was made through Petronas’s Progress Energy subsidiary, which it bought for $5.2 billion in 2012, after initially being rejected by the Canadian government.

Many are predicting that the Montney may be even richer than U.S. shale plays. And with development at just the tip of the iceberg – compared to U.S. plays – there is ample opportunity for investors to profit by getting in with companies involved in shale north of the border.

And “the chase” continues,

Courtesy Wall St. Daily

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