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Barnett Shale Still Kicking
The Barnett Shale may be the grandfather of all shale plays in North America, but the area is still attracting capital despite the environment of oversupply and low natural gas prices.
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Development here is down from previous years as the industry seeks more oil plays in North America. The rig count in the Barnett Shale in the first quarter of 2010 is down marginally from the same quarter of last year.
Big Players
Devon Energy (NYSE:DVN) is one of the largest producers in the Barnett Shale, and expects to operate 18 rigs in the play in 2010. Production averaged 1.1 Bcf per day in the first quarter of 2010, up 5% sequentially from the final quarter of 2009. The company expects production in the third quarter of 2010, to reach the previous peak of 1.2 Bcf per day.
Quicksilver Resources (NYSE:KWK) just purchased an additional 25% working interest in the company's Lake Arlington project in the Fort Worth Basin. The company paid $62 million in cash and approximately 3.6 million units of BreitBurn Energy Partners L.P. (Nasdaq:BBEP). Lake Arlington is one of the company's core areas here for development, and the company plans to grow production from the Barnett Shale by 12-15% in 2010, through the completion of 125 gross wells in the play.
Pipeline companies are still anxious for exposure to the Barnett Shale. Regency Energy Partners LP (Nasdaq:RGNC) just closed on its purchase of a 49.9% interest in the Midcontinent Express Pipeline, which serves the Barnett Shale and several other basins.
The company expects production from the Barnett Shale and these other basins to reach 23 billion cubic feet per day by 2020, compared to 11.3 billion cubic feet per day of current capacity.
Moving On
Not all operators are sticking with the Barnett Shale as they move to focus on different areas to explore and develop. Denbury Resources (NYSE:DNR) sold its remaining Barnett Shale assets in December 2009 for approximately $210 million.
Oil service companies have also adapted to the shift in capital out of the Barnett Shale. Union Drilling (Nasdaq:UDRL) will only have three rigs in the Barnett Shale in the second quarter of 2010, as the company has seen as many as a dozen of its rigs move to West Texas to drill for oil.
The Bottom Line
The Barnett Shale continues to receive capital and be developed by the exploration and production industry even as many operators shift capital to oil and liquids based plays with higher rates of return. (For more, see our Oil And Gas Industry Primer.)
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IN PICTURES: Learn To Invest In 10 Steps
Development here is down from previous years as the industry seeks more oil plays in North America. The rig count in the Barnett Shale in the first quarter of 2010 is down marginally from the same quarter of last year.
Big Players
Devon Energy (NYSE:DVN) is one of the largest producers in the Barnett Shale, and expects to operate 18 rigs in the play in 2010. Production averaged 1.1 Bcf per day in the first quarter of 2010, up 5% sequentially from the final quarter of 2009. The company expects production in the third quarter of 2010, to reach the previous peak of 1.2 Bcf per day.
Quicksilver Resources (NYSE:KWK) just purchased an additional 25% working interest in the company's Lake Arlington project in the Fort Worth Basin. The company paid $62 million in cash and approximately 3.6 million units of BreitBurn Energy Partners L.P. (Nasdaq:BBEP). Lake Arlington is one of the company's core areas here for development, and the company plans to grow production from the Barnett Shale by 12-15% in 2010, through the completion of 125 gross wells in the play.
The company expects production from the Barnett Shale and these other basins to reach 23 billion cubic feet per day by 2020, compared to 11.3 billion cubic feet per day of current capacity.
Moving On
Not all operators are sticking with the Barnett Shale as they move to focus on different areas to explore and develop. Denbury Resources (NYSE:DNR) sold its remaining Barnett Shale assets in December 2009 for approximately $210 million.
Oil service companies have also adapted to the shift in capital out of the Barnett Shale. Union Drilling (Nasdaq:UDRL) will only have three rigs in the Barnett Shale in the second quarter of 2010, as the company has seen as many as a dozen of its rigs move to West Texas to drill for oil.
The Bottom Line
The Barnett Shale continues to receive capital and be developed by the exploration and production industry even as many operators shift capital to oil and liquids based plays with higher rates of return. (For more, see our Oil And Gas Industry Primer.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Eric Fox
Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.
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