The exploration and production industry continued to test selected emerging shale oil and natural gas formations in the onshore United States during the third quarter of 2012, as operators look for the next big thing to generate future growth.

Discount Brokers Comparison: Your one-stop shop for finding the perfect broker for your investments.

Lower Smackover Brown Dense
Southwestern Energy (NYSE:SWN) has several emerging plays in the company's New Ventures portfolio, including the Lower Smackover Brown Dense formation in Arkansas and Louisiana. The company has built up a leasehold of 506,000 net acres exposed to this formation at an average cost of only $419 per acre. The Lower Smackover Brown Dense formation is approximately 300 to 550 feet thick and is present at depths from 8,000 to 11,000 feet.

To date, the company has drilled six wells into the Lower Smackover Brown Dense formation and plans to put two of these wells onto sales in November 2012. Southwestern will also re-enter two other wells and complete these horizontally in early 2013.

SEE: A Guide To Investing In Oil Markets

Tuscaloosa Marine Shale
Goodrich Petroleum (NYSE:GDP) has been testing the potential of the Tuscaloosa Marine Shale and spent $10.9 million, or 19% of its capital budget in this play during the third quarter of 2012. The company has 132,000 net acres prospective for this play across Louisiana and Mississippi.

Goodrich has finished hydraulic fracturing operations on its first operated well here and plans to flow back the well after correcting a casing issue and installing tubing. The company is involved in approximately half-dozen other wells that are being drilled, completed or permitted into the Tuscaloosa Marine Shale.

The Tuscaloosa Marine Shale is present on Goodrich Petroleum's acreage at depths of between 11,000 and 13,000 feet and is approximately 100 to 200 feet thick. The formation produces crude oil with an American Petroleum Institute gravity rating from 38 to 44 degrees, indicating high quality light crude oil.

SEE: Oil And Gas Industry Primer

Geneseo Shale
Ultra Petroleum (NYSE:UPL) and Range Resources (NYSE:RRC) both have significant operations in the Appalachian Basin, where both operators are focused mostly on the Marcellus Shale. The leasehold is also prospective for the Geneseo and other Upper Devonian shale plays and the two companies have been selectively evaluating these plays.

Ultra Petroleum put two Geneseo Shale wells onto production during the third quarter of 2012, and has a total of four wells producing from this formation. The company estimates that it has approximately 1,000 net drilling locations into the Geneseo Shale with potential net resources of 3 trillion cubic feet.

Range Resources is also evaluating various Upper Devonian shale formations on its leasehold and reported a recent well with a peak 24-hour production rate of 552 barrels of natural gas liquids and 4.7 million cubic feet of natural gas per day. The company is not planning any additional Upper Devonian wells in 2012 and is currently working on its 2013 program.

The Bottom Line
The exploration and production industry is always on the search for new sources of oil and natural gas to replace depleting reserves and made progress on this quest during the third quarter of 2012.

At the time of writing, Eric Fox did not own any shares in any company mentioned in this article.

Related Articles
  1. 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.
  2. Investing News

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

    Will Ferrari's shares move fast off the line only to sputter later?
  3. Investing

    Have Commodities Bottomed?

    Commodity prices have been heading lower for more than four years, being the worst performing asset class of 2015 with more losses in cyclical commodities.
  4. Stock Analysis

    5 Cheap Dividend Stocks for a Bear Market

    Here are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
  5. Investing

    How to Win More by Losing Less in Today’s Markets

    The further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
  6. Investing

    Oil: Why Not to Put Faith in Forecasts

    West Texas Intermediate oil futures have recently made pronounced movements. What do they bode for the world market?
  7. Fundamental Analysis

    Use Options Data To Predict Stock Market Direction

    Options market trading data can provide important insights about the direction of stocks and the overall market. Here’s how to track it.
  8. Stock Analysis

    2 Oil Stocks to Buy Right Now (PSX,TSO)

    Can these two oil stocks buck the trend?
  9. Investing News

    What Alcoa’s (AA) Breakup Means for Investors

    Alcoa plans to split into two companies. Is this a bullish catalyst for investors?
  10. Stock Analysis

    Top 3 Stocks for the Coming Holiday Season

    If you want to buck the bear market trend by going long on consumer stocks, these three might be your best bets.
  1. 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 >>
  2. 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 >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... 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!