While most investor attention is focused on the development of the Bakken formation in the Williston Basin, the industry also progressed on the same play in the Southern Alberta Basin in Montana during the third quarter of 2011.
Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.
Southern Alberta Basin
In 2008, the U.S. Geological Survey (USGS) estimated that the Bakken formation in North Dakota and Montana holds anywhere from 3 to 4.3 billion barrels of undiscovered, technically recoverable oil. The USGS estimate only covers the Williston Basin where most industry development has occurred to date.
The Bakken is also present in the southern portion of the Alberta Basin, which extends into several counties in Northwestern Montana. If the industry can prove up this play here, it would mean that the Bakken is even more prolific than current estimates indicate.
Rosetta Resources (Nasdaq:ROSE) is in the midst of a seven-well horizontal drilling program to test the commercial potential of the Bakken on the company's acreage in the Southern Alberta Basin. The company finished drilling three wells here during the third quarter of 2011, and recently started on a fourth horizontal well.
Rosetta Resources has completed one horizontal well in this program and is currently testing this well. The company expects to complete and start testing two more wells during the final quarter of 2011. Rosetta Resources plans to drill and complete the final four assessment wells during the first quarter of 2012.
Newfield Exploration (NYSE:NFX) has drilled nine wells in the Southern Alberta Basin and is almost finished with the company's assessment program. The company recently reported that the first horizontal well in this program produced at an initial rate of 225 barrels of oil equivalent (BOE) per day, with only 33% of the lateral producing. (To know more about oil industry lingo, read Understanding Oil Industry Terminology. )
Newfield Exploration does not have to rush into another development program as the company estimates that 80% of its 340,000 net acre position is held by production.
Since the development of the Bakken in the Southern Alberta Basin is still at an exploratory stage, many operators are watching the progress of other industry players before committing resources here.
Abraxas Petroleum (SMCAP:AXAS) has 10,000 net acres in the Southern Alberta Basin and did not allocate any funds for drilling here in 2011. The company has been adding to its leasehold here and plans to monitor the results of others before moving forward.
Quicksilver Resources (NYSE:KWK) has 175,000 net acres under lease in Glacier and Toole Counties in Montana. The company is currently inactive in this play as it allocates scarce funds to other areas of its portfolio. "We're with a tight budget, that's an area where we just decided not to spend dollars until we got more clarity," said Glenn M. Darden, the CEO of Quicksilver Resources, during a recent conference call. Quicksilver Resources is also considering a joint venture partner here to share the cost and risk of development.
Stone Energy (NYSE:SGY) has 35,000 net acres and is also dormant in this play, with the company putting most of its funds into the Gulf of Mexico and the Appalachian Basin.
The Bottom Line
If the exploration and production industry finds the Bakken to be commercial in the Southern Alberta Basin, it will lead to another upward revision to the level of oil resources present in this play in North Dakota and Montana. (For additional reading, check out: Oil: A Big Investment With Big Tax Breaks.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.
Chart AdvisorCopper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
Options & FuturesInvesting during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
MarketsLearn how this simple calculation can help you determine a stock's earnings potential.
Stock AnalysisLearn about large changes to Berkshire Hathaway's portfolio. See why Warren Buffett has invested in a commodity company even though he does not usually do so.
Investing BasicsHeld onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
InvestingWe look at the meaning of two terms that often get confused, duration and maturity, to set the record straight.
EconomicsWill remaining calm and staying long present significant risks to your investment health?
Stock AnalysisIs DKS a bargain here?
Investing NewsA third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
Stock AnalysisHome Depot has outperformed the market by a wide margin in the last 12 months. Is this sustainable?
Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
Nonprofit organizations continuously face debate over how much money they bring in that is kept in reserve. These financial ... Read Full Answer >>
A company's working capital turnover ratio can be negative when a company's current liabilities exceed its current assets. ... Read Full Answer >>
Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>