Filed Under: ,
Tickers in this Article: XOM, STO, CHK, SSL, COP, MRO, C.FO
The shale gas business model is about to make a transatlantic leap to both Europe and Africa, as U.S.-based companies are tapped for their expertise in this unconventional type of development. These areas are all very early stage, and the reserve and production potential is completely unknown.

IN PICTURES: How To Make Your First $1 Million

Part of the motivation in Europe is an effort by the governments to reduce dependence on gas imported from Russia, which is viewed by many countries as an unreliable source for future needs. Africa
StatoilHydro ASA (NYSE: STO), Chesapeake Energy (NYSE: CHK) and Sasol Ltd (NYSE: SSL) recently submitted a joint application to explore the Karoo Basin in South Africa. StatoilHydro ASA is currently partnering with Chesapeake Energy to develop the Haynesville Shale.

Falcon Oil and Gas Ltd. (TSX: C.FO), a smaller exploration and production company, is a little farther along in the process and was awarded a permit earlier in 2009 to assess the Karoo Basin. The basin has potential as nine wells were drilled here in the 1960s and 1970s, and all encountered gas pay. One well produced 1.84 million cubic feet of gas per day. While this may seem a pittance compared to some of the U.S.-based shale play production rates, the well was drilled almost a half century ago with none of the advanced technological advantages of modern drilling.

Exxon Mobil (NYSE: XOM) seems to be among the more aggressive of the international majors in assembling acreage in Europe that is prospective for unconventional shale gas. The company has 750,000 acres in Germany, 400,000 acres in Hungary and acreage in Poland as well.

It's possible that Exxon's aggressiveness is a response to what some see as a failure to exploit similar opportunities in unconventional shale in North America.

Marathon Oil (NYSE: MRO) is another company in the early stage of developing shale resources on its international properties. One of these areas is near Kwidzyn in northern Poland, where the company was awarded a license to explore. Marathon Oil has a 100% working interest in the lease.

The lease size is 295,000 acres, and Marathon Oil will try to tap the unconventional resources at depths from 8,000-13,000 feet. The shale is anywhere from 100-500 feet thick.

(NYSE: COP) is also starting to explore for natural gas in Poland. ConocoPhillips signed an agreement with Lane Energy, a subsidiary of 3Legs Resources. Lane Energy has six licenses covering 1 million acres.

ConocoPhillips has an option to acquire up to a 70% stake in the licenses. The company is shooting seismic and will drill an exploration well in the first quarter of 2010.

International Shale Bug
Europe and other international areas are starting to get the unconventional shale bug, as it slowly dawns on other countries that these resources lay under their own soil. It will take years, however, before the commercial viability of these resources is known, and whether it will make a difference in world markets. (Learn about factors that affect oil prices in our article, What Determines Oil Prices?)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

comments powered by Disqus

Trading Center