3 Companies Cracking the Code to Unlock More Oil

Photo credit: ConocoPhillips

One of the greatest challenges an oil and gas company faces is how much of the resources it finds can ultimately be recovered. Believe it or not, oil and gas companies are never able to truly drain an oil and gas reservoir dry. In fact, oil companies typically are only able to ultimately recover about 35% of the oil that's in place.

If companies were able to recover just one percent more of the oil that's in place it would boost proven global reserves by 80 billion barrels of oil, or 6%. For perspective, that represents more than 11 years' worth of U.S. consumption. Clearly, producing more oil from known reserves should be a priority.

Because America's oil shale plays are still in their infancy, oil and gas companies are still trying to figure out how best to get the oil out. As companies try new techniques, some are finding the key to unlocking more oil. This is leading to much higher estimated ultimate recoveries, or EURs which is the amount of oil and gas a well will produce in its lifetime. 

One company finding success of late is ConocoPhillips (NYSE: COP  ) . Over the past few years the company has been able to double the EUR of its Eagle Ford shale wells, while seeing a 50% boost at its Bakken wells. Those are significant improvements to say the least. Not only does it mean more American made oil will be produced, but Conoco's investors will enjoy the higher returns that these wells produce. The slide below details some of what Conoco is doing on its quest to optimize its oil recovery efforts.

ConocoPhillips Investor Presentation (link opens a PDF)

Another company tinkering with its completion methods in order to find the keys to unlocking more oil is Halcon Resources (NYSE: HK  ) . One of its newer tools to crack the code are ceramic proppants like those produced by CARBO Ceramics (NYSE: CRR  ) . That switch has enabled the company to increase the estimated ultimate recoveries of its wells by 40%. That's even better than the 30% increase in EUR's that CARBO estimates is possible. This is why despite the fact that ceramic proppants cost more, the company is seeing a meaningful improvement in its internal rate of return, thanks to the higher estimated ultimate recovery of the oil that's in place.

Finally, Pioneer Natural Resources (NYSE: PXD  ) has been undergoing a 20 well test to extend the laterals of its wells. While this has added 20% to its well costs, the company is seeing a 40% to 60% increase in the EURs of those wells. Here again the added costs are more than outweighed by the additional quantities of oil and gas that these wells will ultimately produce.

With so much oil and gas still being left in each and every well, oil companies will to continue to work to find new ways of getting more it out of the ground. Unfortunately, there isn't a one size fits all approach, meaning that the right formula needs to be developed for each shale play. However, as new best practices are developed and spread throughout the industry it will really help to deliver more oil from each new well that's drilled. 

These are just three of the many companies delivering record oil and natural gas production, which is revolutionizing the United States' energy position. There are many more companies, including one with a sole focus of recovering more oil from wells. For a deeper look at this and two other companies poised to for growth, the Motley Fool is offering a comprehensive look though a special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2618879, ~/Articles/ArticleHandler.aspx, 10/20/2014 1:13:31 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement