Exploration and production companies are starting to direct capital into the Bossier Shale, a shale formation located above the more famous Haynesville Shale in East Texas and North Louisiana.

The nomenclature of this shale can be confusing. Several years ago, before the Haynesville Shale became a prominent play, the shale on the Louisiana side was called the Haynesville Shale, while the shale in East Texas was known as the Bossier Shale, although it was the same continuous formation. Later, operators started to refer to the shale in East Texas as the Haynesville Shale so that investors would understand that it was indistinguishable from the shale in Louisiana. (Find out how to take advantage of this market without having to open a futures account in A Guide To Investing In Oil Markets.)

The Bossier Shale also is referred to as the Lower or Middle Bossier. The Upper Bossier Shale is located to the southwest and composed of sands. Some operators even refer to the Bossier Shale as the Upper Haynesville Shale. One company that already has tested the Bossier Shale with a well is Chesapeake Energy (NYSE:CHK), which has produced at a rate of 9.4 million cubic feet equivalent per day. The company described the results as not as "robust" as the Haynesville Shale.

Comstock Resources (NYSE:CRK) stated during its third quarter earnings conference call held in November 2009 that 60% of its acreage in the Haynesville Shale had Bossier Shale exposure. This would amount to 45,000 net acres. The company plans several test wells in 2010.

Petrohawk Energy (NYSE:HK) has acreage prospective for the Bossier Shale and plans to drill a test well in early 2010 on its 122,000 net acres. Petrohawk Energy says that the estimated ultimate recovery of the well should total approximately 5.5 Bcfe and cost between $8 million and $9 million.

Forest Oil (NYSE:FST) also has acreage prospective for the Bossier Shale in an area it refers to as the Middle Bossier. In 2010, Forest Oil will assess its potential with test wells.

Although exploration and production companies are hawking the Bossier Shale, no one really knows the potential of the shale since so few wells have been drilled into it.

Bottom Line
Investors will hear more about the Bossier Shale in 2010, as several exploration and production companies with acreage in the Haynesville Shale plan to test this formation. Even if the Bossier Shale is not as good as the Haynesville Shale, it still will be economical and provide more upside to companies. (Before jumping into this hot sector, learn how these companies make their money in Oil And Gas Industry Primer.)

Tickers in this Article: CHK, FST, HK, CRK

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