The Horn River Basin is still seen as an attractive play by many exploration and production companies, even as the industry shies away from natural gas development in other areas due to lower prices.

IN PICTURES: 5 "New" Rules For Safe Investing.

Beginning Stages Of Development By The Industry

The Horn River is in British Columbia, Canada, and has seen the beginning stages of development by the industry over the last couple of years. The area has multiple formations to explore and develop at various depths.

Devon Energy (NYSE: DVN) has 170,000 net acres in the Horn River area, and the company has drilled and completed three wells to date. It plans to drill seven more horizontal wells in 2010, with the results of four of these due in the third quarter of 2010. Devon Energy has compared its acreage in the Horn River to the Barnett Shale, and the company estimates having 1,600 drilling locations with gas content at 150 billion to 300 billion cubic feet per square mile.

Quicksilver Resources (NYSE: KWK) has 130,000 net acres under lease here, and it is initially developing the Muskwa formation. The company has drilled four wells here to date with the first results expected this summer. Quicksilver Resources has to drill 10 wells here to hold the balance of its acreage. The company is also examining the Exshaw oil formation on its acreage and said that it has encountered this formation in the four wells that it has drilled to the Muskwa. (Learn more in The Industry Handbook: The Oil Services Industry.)

Exxon Mobil (NYSE: XOM) has a huge position in the Horn River Basin, and it disclosed during a recent conference call that the company has drilled 10 horizontal wells here to date. Exxon Mobil is currently completing two of the wells. Previous wells here by Exxon Mobil in 2009 produced at initial production rates between 16 million and 18 million cubic feet per day.

Other companies are rushing to secure a place for any future production from the Horn River. EOG Resources (NYSE: EOG) recently purchased a 49% interest in a company that is building a liquefied natural gas (LNG) plant on the Western Coast of Canada. The Kitimat LNG project will cost $3 billion CAD and have a total capacity of 700 million cubic feet per day of natural gas. (Use a global view to determine which stocks belong in your portfolio; see A Top-Down Approach To Investing.)

Apache Corp. (NYSE: APA), which owns the other 51% of the Kitimat LNG facility, is also developing the Horn River Basin. The company plans to drill 15 wells here from three separate pads and complete a total of 30 wells. Apache Corp. also has exposure to the Horn River Basin through EnCana (NYSE: ECA), its joint venture partner in the area.

Demand From Asia Expected In Long Term

Investors may be bearish on natural gas prices, but exploration and production companies are still putting capital into the Horn River Basin, in anticipation of demand from Asia in the long term.

Related Articles
  1. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  2. Fundamental Analysis

    Performance Review: Commodities in 2015

    Learn how commodities took a big hit in 2015 with a huge variance in performances. Discover how the major commodities performed over the year.
  3. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  4. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  5. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  6. Stock Analysis

    The Biggest Risks of Investing in SandRidge Stock

    Learn about the significant risks of investing in SandRidge. Read how the company may not be able to service its substantial debt load.
  7. Stock Analysis

    The Top 5 Micro Cap Alternative Energy Stocks for 2016 (AMSC, SLTD)

    Follow a cautious approach when purchasing micro-cap stocks in the alternative energy sector. Learn about five alternative energy micro-caps worth considering.
  8. Stock Analysis

    Analyzing Porter's Five Forces on Under Armour (UA)

    Learn about Under Armour and how it differentiates itself in the competitive athletic apparel industry in light of the Porter's Five Forces Model.
  9. Stock Analysis

    The Biggest Risks of Investing in Qualcomm Stock (QCOM, BRCM)

    Understand the long-term fundamental risks related to investing in Qualcomm stock, and how financial ratios also play into the investment consideration.
  10. Stock Analysis

    The Biggest Risks of Investing in Johnson & Johnson Stock (JNJ)

    Learn the largest risks to investing in Johnson & Johnson through fundamental analysis and other potential risks. Also discover how JNJ compares to its peers.
  1. What is the formula for calculating EBITDA?

    When analyzing financial fitness, corporate accountants and investors alike closely examine a company's financial statements ... Read Full Answer >>
  2. How do I calculate the P/E ratio of a company?

    The price-earnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate ... Read Full Answer >>
  3. How do you calculate return on equity (ROE)?

    Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its ... Read Full Answer >>
  4. How do you calculate working capital?

    Working capital represents the difference between a firm’s current assets and current liabilities. The challenge can be determining ... Read Full Answer >>
  5. What is the formula for calculating the current ratio?

    The current ratio is a financial ratio that investors and analysts use to examine the liquidity of a company and its ability ... Read Full Answer >>
  6. What is the formula for calculating earnings per share (EPS)?

    Earnings per share (EPS) is the portion of a company’s profit that is allocated to each outstanding share of common stock, ... Read Full Answer >>
Trading Center