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Data That Every Utica Shale Investor Needs to Know About

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By Arjun Sreekumar, The Motley Fool

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The Utica shale may not ring any bells for the average investor. But, utter that name around energy industry professionals, and you’re sure to rouse a lively debate.

An up-and-coming shale oil and gas play, the Utica stretches across Ohio, New York, Pennsylvania, Virginia, and West Virginia, though drilling to date has centered primarily in Ohio. Due to some major similarities with Texas’ highly productive Eagle Ford play, energy companies are buzzing about the play.

Unfortunately, however, relatively very little is known about the Utica’s true potential due to Ohio’s lack of transparency in reporting production data. But, for those who have invested in companies with major operations in the Utica, especially those more leveraged to the play like Gulfport Energy , Rex Energy, and Magnum Hunter Resources , new, soon-to-be-released data should provide a much better glimpse into the play’s potential.

Next month, the state of Ohio will publish a comprehensive report detailing the Utica’s well results for 2012. These results are sure to have major repercussions for the handful of companies that have plowed millions of dollars into the play.

Let’s take a closer look at why Ohio has been so secretive, the specifics of the data it will soon reveal, and implications for some of the Utica’s major drillers.

Limited production data and regulatory constraints
Currently, Ohio state regulators request Utica operators to disclose production statistics only on an annual basis, whereas virtually every other state in the country publicly discloses production statistics and drilling data on a quarterly basis.

Moreover, major drillers in the Utica have only disclosed information about half of their producing wells in the Utica, according to an analysis by Reuters. In addition, much of the data is limited, and drillers aren’t required by law to release results on a per-well basis.

As Reuters highlighted, lawmakers last year were pushing to include a clause within a new energy bill that would have required Utica producers operating in Ohio to publicly release energy production statistics on a quarterly basis.

But, following discussions with oil and gas industry executives, lawmakers rejected the inclusion of the clause. In fact, the new law actually prevented Ohio’s government from releasing the quarterly production data it obtains from Utica producers operating in the state.

Crucial data to watch
At any rate, the time is upon us for that annual data to finally be publicly disclosed. The Ohio Department of Natural Resources (DNR) announced that it will be publishing a comprehensive report next month that will include new data from Ohio’s oil and gas wells.

Producers operating in the Ohio Utica are required to submit production data to the department on March 31, information which it will subsequently make available on its website in April. Though the department did not provide a specific date, it published the data last year on April 2.

The information provided will include only those wells that produced hydrocarbons in 2012, which equates to roughly between 50 and 60 wells. …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Will the Niobrara Be a Boom or a Bust for Oil Companies?

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By Matthew DiLallo, The Motley Fool

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The Niobrara Formation, which is found mainly in Colorado and Wyoming, has been touted by some companies as potentially having more oil than the Bakken, while others have found it to be a complete bust. This presents a problem to the many natural gas producers that are turning to the play in hopes of diversifying their revenue into more lucrative oil and natural gas liquids. Listen to these emerging players talk about the potential of the play and you’ll hear some very mixed signals. Why is the play a bust for some and a boom for others?

The big busts
First, let’s take a look at some of the big busts. Ultra Petroleum was really hoping that the Niobrara would add some liquids production growth to the company’s natural-gas-heavy portfolio. Unfortunately, the Niobrara isn’t turning out to be the solution. On the company’s last earnings call, CEO Michael Watford said:

In Colorado’s DJ Basin, our results in the Niobrara have been disappointing. Although our core and log data indicate the presence of oil in the rocks, the petroleum system is immature, under-pressured and not commercial. This has been verified by completion of test results from both a vertical and a horizontal well. Ultra assembled 139,000 low-cost acres and deployed it over the past two years and has no significant lease expirations until 2014. We’ll continue to monitor industry activity in the region but have no immediate plans for additional exploration in the area.

It turns out that it’s not the only company having trouble in the Niobrara. Rex Energy , a driller focused on the Marcellus and Utica, had also built up a position in the region only to drill a couple of duds. The company entered the DJ Basin in 2010 and was optimistic when giving the initial results of wells in close proximity to the acreage it was building up. Unfortunately, two years later it had written down most of the value of its acquired acreage and was looking to unload it. What happened is that it drilled two non-commercial wells and saw better opportunities to deploy capital within its current portfolio. Such are the risks of energy exploration.

The booms?
Other companies, like Quicksilver Resources , see great potential in its Niobrara acreage. It’s not alone; it recently closed an acquisition and exploration agreement with Shell  that covers 320,000 acres and an area of mutual interest that covers 850,000 acres. Quicksilver not only picked up some cash in the deal but it also picked up a world-class partner. It’s also looking to further de-risk its acreage by signing on another third-party joint venture partner to help further fund its development. Quicksilver is very optimistic about the play and sees the Shell venture as validation of its efforts that this play will pan out. 

Shell’s not the only energy giant that’s looking for big things from the Niobrara. ConocoPhillips has amassed 130,000 acres in what it …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

3 Exciting Energy Growth Plays

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By Matt DiLallo, The Motley Fool

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We are in the midst of an energy revolution like we never dreamed possible. Trapped beneath our great country are vast oil and gas resources that we’re still learning how to access. Our oil and gas production is expected to grow rapidly over the coming decade; as it does, three tiny energy companies have the potential for very big futures.

Just the Bakken, please
Weighing in at an enterprise value just shy of $4 billion, Kodiak Oil & Gas is the largest company on this list but a real runt when compared to more well-known energy companies. The company is almost solely focused on oil and gas production in the Bakken, which has helped it to grow its production at an unbelievable rate. In fact, from 2011 to 2012 it grew  production by a staggering 270% and it’s projected to double production again this year. To get there, the company is planning to spend nearly $750 million to drill 75 new wells.

With an inventory of more than 950 future wells, Kodiak still has a huge growth runway ahead. This is especially true when you consider the company currently has just 125 wells. With its shares up more than 300% over the past five years, its returns over the next five could be even better. If you want to invest in the growth of the Bakken, Kodiak is certainly worth a deeper look. 

I’ll take the Marcellus, with a side of Utica
If you thought Kodiak was small, tiny Rex Energy weighs in at an enterprise value of just over a billion dollars. Don’t let its small size fool you: This energy underdog could grow up to be a top dog someday. Its operations are mainly focused on the Marcellus Shale, with emerging growth coming from the Utica Shale. Since 2009 the company has grown its production by a compound annual rate of 50%.

Rex is planning to spend about $250 million to grow production over the next year and expects to see those funds to yield a 30%-40% boost in production. The big story here is that the growth will be in the all-important liquids department — overall liquids growth will come in at 70%, with oil and condensate growth coming in at 55% of that. If you want to stake your claim to the potential growth in the Marcellus and Utica, then Rex Energy is a name you want to get to know.

I want it all, and I want the Eagle Ford too!
The final name on my list is Magnum Hunter Resources . With an enterprise value of around $1.5 billion, it’s around the same size as Rex, however, there’s a much bigger story at Magnum Hunter. What’s intriguing here is the company has acreage in the Bakken like Kodiak, and has its own Marcellus and Utica Shale positions like Rex, but it really goes over the top with further diversification …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Heckmann Earnings: An Early Look

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By Dan Caplinger, The Motley Fool

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Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Heckmann is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.

Plenty of companies have taken advantage of the boom in oil and natural gas drilling recently, but Heckmann has taken an unusual angle toward unearthing riches from the natural resources industry. Let’s take an early look at what’s been happening with Heckmann over the past quarter, and what we’re likely to see in its quarterly report on Monday.

Stats on Heckmann

 

  

Analyst EPS Estimate

($0.02)

Year-Ago EPS

$0.03

Revenue Estimate

$105.6 million

Change From Year-Ago Revenue

104%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Will Heckmann clean up this quarter?
Analysts have been pretty solid in their views toward Heckmann over the past few months, holding their consensus earnings estimates for the just-ended quarter steady, and cutting just a single penny from their full-year 2013 earnings-per-share calls. But the stock has struggled, falling 7% since early December, despite the broader market‘s run toward new highs.

Heckmann has found an unusual way to make money from new unconventional drilling techniques. It has developed a specialty in helping oil and gas exploration and production companies transport, treat, and dispose of the water and other fluids that they use in hydraulic fracturing operations. Given the need for oil and gas companies to maintain good relations with the communities where they drill, Heckmann has benefited from their attention to waste and water disposal, attracting a stable of well-known energy-company clients that includes Chesapeake Energy and EOG Resources.

But, increasingly, companies are looking to create their own in-house water solutions. As Fool contributor Matt DiLallo recently discovered, CONSOL Energy has its own subsidiary to handle water treatment from its mines and drilling operations, and is investing substantial amounts of money to expand its treatment capacity. Devon Energy has a similar facility that has enabled it to reuse water repeatedly, saving hundreds of millions of gallons of water. Even relatively small player Rex Energy has seen the value of an in-house operation, owning an 80% stake in a company that handles its wastewater.

Still, Heckmann is investing in its future, having bought privately held Power Fuels. The buyout gives Heckmann more exposure to the lucrative Bakken shale play, and should boost earnings per share immediately.

In its quarterly report, watch for news on how the integration of the Power Fuels acquisition is proceeding, as well as …read more
Source: FULL ARTICLE at DailyFinance