The exploration and production industry moved slowly forward on two less-developed shale plays in North America during the final quarter of 2010 and into early 2011. Although these plays are at an early stage of development, they may one day significantly contribute to supply in North America.

IN PICTURES: 7 Tips To Bounce Back From A Credit Score Disaster

Collingwood Shale
EnCana (NYSE:ECA) is evaluating the Collingwood shale in Michigan, and has increased its position here over the last six months to 424,000 net acres. The company drilled two evaluation wells in 2010, and plans to drill between three and six wells in the Collingwood Shale in 2011.

This is an interesting move for EnCana when viewed in the context of recent oil and gas lease auctions by Michigan, which showed a marked drop in interest during the course of 2010. In May 2010, the state realized approximately $178 million in bids, or an average of $1,500 per acre. This set a record amount of bids for an oil and gas lease in that state.

However, in October 2010, Michigan held another auction and realized only $10 million, or an average of $40 per acre. These disappointing results led many investors to speculate that the Collingwood Shale was not viable.

Utica Shale
Every investor knows that Range Resources (NYSE:RRC) has a huge position in the Marcellus Shale that it is developing, but less known is that much of this same acreage is prospective for the Utica Shale as well.

Range Resources recently disclosed that the first well testing this formation produced an average of 4.4 million cubic feet of natural gas equivalents per day during a seven-day test period. The company plans to drill more wells in 2011 into the Utica Shale.

Range Resources also completed a well into an Upper Devonian Shale play in late 2010, and reported this well with an average of 5.1 million cubic feet of natural gas equivalents per day during a seven-day test period.

Another exploration and production company testing the Utica Shale is CONSOL Energy (NYSE:CNX), which reports that it has more than one million acres prospective for this shale on the company's properties in Ohio, Pennsylvania, and West Virginia. CONSOL Energy drilled a test well in 2010, and is budgeting $35 million to drill six exploration wells into the Utica in 2011.

Talisman Energy (NYSE:TLM) is also testing the potential of the Utica Shale, but is active in Canada, where it has 759,000 net acres in Quebec. Talisman Energy worked on this test program in 2010, drilling five wells into this formation. The company plans to complete the last of these two wells in 2011, and then evaluate the results to determine if any future drilling is warranted.

The Bottom Line
The Utica and Collingwood Shale plays saw minor development activity over the last six months, as the exploration and production industry saw better opportunities in other places in North America. (Long-term energy outlooks suggest a fundamental energy shift to natural gas. To learn more, read Natural Gas Forecast.)

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

Tickers in this Article: TLM, CNX, RRC, ECA

comments powered by Disqus

Trading Center