The Alberta Bakken, the next hot energy play in North America, has slowly been gaining the attention of analysts and oil companies, including international players like Royal Dutch Shell (NYSE:RDS.A). With the emergence of horizontal drilling, fracking and other enhanced recovery methods, these reserves can now be economically accessed and may have the similar potential to the Bakken formation in Saskatchewan.
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Crescent Point (TSE:CPG.TO) currently has the most exposure to the Alberta Bakken, acquiring over a million net acres in the region. Throughout 2011, Crescent point expects to drill 19 net wells in addition to its 2010 $925 million capital budget to expand Alberta and Saskatchewan drilling operations. Viewing Crescent Point's production results, which are expected to be released prior to those of other players in the region, could serve as a useful gauge of the performance of the smaller juniors.
As of late August this year, approximately $108 million have been spent at public land offerings to purchase acreage in the AlbertaBasin; Bowood Energy held 39,000 hectares. As of November 26, Bowood acquired 94.75 sections on the Blood Tribe Reserve to expand their asset base to 117,000 net acres in the Alberta Bakken. The company expects to drill at least two horizontal Bakken wells in 2011. Commencing the fourth quarter, Bowood announced that they have entered into a strategic joint venture and farmout agreement with Legacy Oil + Gas (TSE:LEG.TO). Under the agreement, Legacy can acquire a 50% working interest in 33,280 acres for $8 million. Legacy will also drill two test wells on March 31 and August 31, 2011.
DeeThree Exploration (DTX.TO), another Calgary based oil and gas exploration company, has identified two drilling locations to test initial production rates in the Bakken. Completion of another four vertical wells and two horizontal wells are expected during the first half of 2011. According to energy analyst Kirk Wilson if 100 sections that DeeThree currently holds are proved to be prospective, this would amount to a value of approximately $30 per share.
Rosetta Resources (Nasdaq:ROSE) holds 300,000 acres in the less mature Southern Alberta Basin and stated that the company is "encouraged about the potential of this opportunity" following preliminary testing. Rosetta has exposure to the Bakken in Montana along with Newfield Exploration (NYSE:NFX). Newfield has active horizontal well operations in the play, but have not yet disclosed their initial production numbers.
The Bottom Line
Investors trying to play the Bakken formation are eagerly anticipating for initial production results from one of the active players to be released - most likely from Crescent Point. Following, investors can either expect a wave of M&A activity or the hype to die down depending on the results. (For additional stock analysis, see Alberta's Cardium Formation.)
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