El Paso Corporation (NYSE:EP) is developing a relatively unknown field in the Uinta Basin to help meet its goal of increasing production of oil and other liquids over the next few years.
TUTORIAL: 20 Investments To Know

Utah Oil and Gas
Although Utah doesn't get as much publicity as other areas of the United States, the state is an active area for oil and gas exploration and development. There were 29 rigs active in Utah in May 2011, and the state produced 24.6 million barrels of oil and 437 billion cubic feet of natural gas in 2010. Major basins in the state include the Uinta and Paradox basins and the thrust belt near the border with Wyoming.

Altamont Field
The Altamont Field started up in 1970 when Royal Dutch Shell (NYSE:RDS.A) reported a successful well into the Wasatch formation.

El Paso has 190,000 net acres under lease at the Altamont field in the Uinta Basin in Utah. The company has been active in the field for several years and has increased production here at a 19% compound annual growth rate since 2005, and is currently producing 9,000 barrels of oil equivalent per day.

El Paso is producing both oil and natural gas from this field but is currently focused on oil development here and estimates that the company has more than 800 drilling locations and total risked resource potential of 125 million barrels of oil equivalent (BOE).

El Paso plans to operate between two and three rigs in the Altamont Field in 2011, and is targeting the Wasatch and Green River formations. The company is focusing its efforts on infill drilling on its properties and increased drilling efficiencies with a goal of reducing costs by 20% per well. El Paso estimates that wells here will cost between $4 million and $7 million and have estimated ultimate recovery of between 300,000 and 400,000 BOE per well. The company believes that it can earn an internal rate of return between 25% and 35% on wells here assuming a price of $80 a barrel for oil.

Other Players
The Uinta Basin is attracting major interest from other exploration and production companies looking for onshore opportunities. Bill Barrett Corp (NYSE:BBG) recently purchased approximately 20,000 net acres of leasehold in the basin for $120 million, adding to the company's already substantial position in the Uinta Basin.

Newfield Exploration Company (NYSE:NFX) also purchased acreage in the Uinta Basin, paying $215 million to Harvest Natural Resources (NYSE:HNR). Newfield Exploration made a second purchase in the Uinta Basin from a private oil and gas company adding a total of 70,000 net acres to its position here.

Bottom Line
El Paso is planning to develop the Altamont oil field in the Uinta Basin in Utah as the company looks to develop its oil assets due to the price strength of this commodity relative to natural gas. (For related reading, also take a look at El Paso Follows Industry's Spinoff Trend.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    The Biggest Risks of Investing in Netflix Stock

    Examine the current state of Netflix Inc., and learn about three of the major fundamental risks that the company is currently facing.
  2. Mutual Funds & ETFs

    Top 3 Commodities Mutual Funds

    Get information about some of the most popular and best-performing mutual funds that are focused on commodity-related investments.
  3. Stock Analysis

    What Seagate Gains by Acquiring Dot Hill Systems

    Examine the Seagate acquisition of Dot Hill Systems, and learn what Seagate is looking to gain by acquiring Dot Hill's software technology.
  4. Chart Advisor

    Agriculture Commodities Are In The Bear's Sights

    Agriculture stocks have experienced strong moves higher over recent weeks, but chart patterns on sugar, corn and wheat are suggesting the moves could be short lived.
  5. Stock Analysis

    The Biggest Oil Producers in Asia

    Learn which Asian countries deliver the most crude oil to market, and discover what companies are the biggest producers in each country.
  6. Stock Analysis

    The 5 Biggest Russian Oil Companies

    Discover the top Russian oil companies by production volume and find out more about their domestic and international business operations.
  7. Mutual Funds & ETFs

    What Exactly Are Arbitrage Mutual Funds?

    Learn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
  8. Investing News

    Ferrari’s IPO: Ready to Roll or Poor Timing?

    Will Ferrari's shares move fast off the line only to sputter later?
  9. Stock Analysis

    3 Solar Stocks to Add to Your Portfolio

    Understand the growth and challenges of the renewable energy market and its success in 2015. Learn about the top three energy stocks to add to a portfolio.
  10. Investing News

    Glencore Shares Surge in Hong Kong

    Shares of Glencore International, a leading multinational commodities and mining company, jumped by around 15% on London Stock Exchange, after the shares had gained about 71% earlier on the Hong ...
  1. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
  2. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  3. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  4. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  5. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  6. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!