The Heath formation in Montana is starting to attract more attention and capital from the exploration and production industry, as it scours North America looking for the next best oil and liquid play to develop.

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Heath Formation
The Heath formation is located in Montana across various parts of the middle of the state, including Garfield, Musselshell and Petroleum Counties. The Heath is a late Mississippian formation and has been the source rock for many of the existing oil fields in central Montana. Some operators refer to the play as the Heath - Tyler formation, as the Tyler Sandstone lies above the Heath.

The Players
Cabot Oil and Gas (NYSE:COG) finished drilling a Heath well earlier in 2011, and plans to begin completion operations on the well in May 2011. The company has more than 100,000 net acres with exposure to the Heath.

Cabot Oil and Gas is not disclosing any other plans for the area until it can evaluate the results of this well. "We have been asked about our future plans in the Heath and right now, we're just currently focused on the completion of this particular well," said Dan Dinges, the CEO of Cabot Oil and Gas.

MDU Resources (NYSE:MDU) has 80,000 net acres prospective for the Heath formation and is looking to drill an exploratory well in the second half of 2011.


EOG Resources (NYSE:EOG) may also have exposure to the Heath formation. The company drilled the Flatwillow 1-31H well in 2008 to test the Bakken formation in Montana. The well was considered non productive by the company but during the drilling EOG Resources obtained core samples from the Heath formation that according to one geologic report contained "thick, gassy, oil saturated, mature source/reservoir rock."

Other companies have exposure to the Heath formation. Voyager Oil and Gas (AMEX:VOG) has 33,500 net acres under lease in various counties in Montana. The company plans to evaluate the results of other operators working on the play before committing substantial capital to the Heath play.

Endeavour International (NYSE:END) has 75,000 net acres and is involved in a joint venture with two other private oil and gas companies in the area. The joint venture plans up to four vertical pilot wells in 2011 on its acreage. UnionTown Energy (OTCBB:UTOG) has 7,000 acres in Musselshell County, and estimates its recoverable resources from the Heath and other formations at 10.4 million barrels of oil equivalent.

The exploration and production industry is working on the Heath formation in Montana, and hopes this play will yield large amounts of recoverable resources at a reasonable cost.

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