The conventional wisdom is that North America is full of tapped out mature oil and gas producing basin and that the area can do nothing to add to the world's reserves of hydrocarbons. However, this claim sidesteps the existence of stacked or multiple pay zones in many basins on this continent.

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Many investors assume that an exploration and production company drills, completes and puts a well on production and then that particular lease is done. However, most producing areas in North America and elsewhere have multiple producing pay zones at different depths. An exploration and production company can re-enter a lease and tap a different formation either below or above whichever one is currently producing.

Multiple Pay Zone Players
In the Haynesville Shale, where Goodrich Petroleum (NYSE:GDP) has acreage, the industry has identified at least five producing formations. These include the James Lime, the Travis Peak, the Bossier Shale, the Cotton Valley and finally the Haynesville Shale.

Goodrich Petroleum originally got into its acreage in East Texas by developing the Cotton Valley or Taylor Sand. The company now has 230 Bcfe of proved reserves here as of December 31, 2008.

Chesapeake Energy (NYSE:CHK) discussed the Bossier Shale at its recent analyst day. The Bossier Shale overlaps the southern part of the Haynesville Shale, and Chesapeake Energy has 175,000 net acres that are prospective for the Bossier Shale. The company's first test well was the Blackstone 26 H-1, and it had an initial production (IP) rate of 9.4 million cubic feet equivalent per day. A second well is currently being drilled and two more are being planned.

Chesapeake Energy is using what it calls the "superpad" concept, meaning it will drill up to 16 wells from one pad where the Bossier and Haynesville Shale overlap.

Forest Oil (NYSE:FST) is active in the Greater Buffalo Wallow area in Texas, where it has 71,000 acres under net lease. Although the company is targeting the Granite Wash formation, the acreage has other producing zones that can be tapped including the Atoka, Douglas, Cleveland and St. Louis Limes.

Pioneer Natural Resources (NYSE:PXD) plans to drill more than 300 wells in 2010 in the Spraberry Field in West Texas. The company is targeting four pay zones here, the Upper and Lower Spraberry, the Dean, and the Wolfcamp formations. The pay zones are as much as 4000 feet thick.

The Bottom Line
An often-repeated claim about North America is that so many holes have been punched in the ground that there is nothing worthwhile left to find. However, this claim doesn't stand up to an examination of simple geological concepts, and it's possible that the reserves and production might surprise on the upside. (For more, see our Oil And Gas Industry Primer.)

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