Understated Energy Plays

The emerging shale plays in North America get all the attention in the media, but the North American continent is teeming with conventional natural gas and oil plays, some of them quite prolific. These fields have been quietly exploited by the industry over the last decade, helping America meet its energy needs.
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Huron Shale
Range Resources (NYSE:RRC) is known mostly for its acreage in the Marcellus shale and Barnett shale, but the company also has a large position in the Nora/Haysi field in Virginia, a state not generally known for its production of oil and gas.

Range has 300,000 acres here and more than 2000 wells that produce coal-bed methane. Range Resources got the acreage through an acquisition from a coal company in 2004. RRC has low finding and development costs of 88 cents per Mcfe, a level that rivals any unconventional shale play. The company has more than 6000 locations to drill in this area.

Range Resources is partnering with EQT Corporation (NYSE:EQT) to develop this field. The acreage is also prospective for the Huron shale, and Range Resources and its partner have drilled 20 wells to test the Huron.

Granite Wash
The Granite Wash is in Texas and Oklahoma, and these areas are known for being oil oriented with a high content of natural gas liquids. Chesapeake Energy (NYSE:CHK) has 100,000 acres exposed to various wash plays, and has drilled several wells with initial production rates as high as 13.5 million cubic feet equivalent per day. The company estimates its future possible reserves here at 1-1.5 Tcfe.

Other Promising Plays
Noble Energy (NYSE:NE) has a well-diversified asset base in West Africa, Israel, Deepwater Gulf of Mexico and the onshore United States. The company's largest onshore U.S. property is the Wattenberg Field in Northeastern Colorado. The area is split about equally between oil and gas, and the company has a fifteen-year inventory of locations to drill.

Concho Resources (NYSE:CXO) is an active player in the Permian Basin, on both the Texas and New Mexico sides. The company is drilling in the Wolfberry in the Texas Permian. CXO is currently running five rigs to develop this play and will move up to nine rigs by the end of 2009. In the New Mexico Permian, Concho Resources is working the Yeso play. Wells here currently cost $1.45 million each, a fraction of the cost of wells in shale areas. Concho has drilled 362 wells here since it entered the area in 2006.

The Bottom Line
Unconventional resource shale plays are not the only game in town, although you can't tell that from the headlines in the financial and mainstream media. The industry knows the value of these assets and is moving at its own pace to develop these resources. (For more, see our Oil And Gas Industry Primer.)

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