The dramatic uplift in American oil and gas production is changing the global energy landscape. When it comes to crude oil production, the U.S. still sits in third place behind Russia and Saudi Arabia, but that gap is closing every day. While a lot of companies frighten OPEC, the following seven are working to make its worst nightmare a reality.
The bountiful Bakken
North Dakota's Bakken Shale has fueled an amazing boost to American oil production. The numbers are just staggering. Consider this: In 2010 Kodiak Oil & Gas (NYSE: KOG ) was producing just 1,260 barrels of oil equivalent, or BOE per day. Fast-forward to this year and Kodiak expects production to top out well in excess of 34,000 BOE per day. That means Kodiak Oil & Gas is growing its oil production by a staggering compound annual rate of 168%. Not only that but Kodiak Oil & Gas is finding oil just as fast as its producing it as evidenced by the fact its reserves have have grown from 4.5 million BOE to 144 million BOE. The bottom line here is that Kodiak Oil & Gas has found plenty of oil meaning it should have no problems keeping its oil production flowing in the years ahead.
That said, the real blow could come from Continental Resources (NYSE: CLR ) . The company is leading the charge to drill the Three Forks formation, which sits below the Bakken. That oil-rich shale, when combined with the Bakken, could add 20 billion barrels of recoverable oil to America's energy reserves. That's quite a boost from our current reserves of 29 billion barrels of oil. Because of this Continental Resources expects to triple both its production and reserves by 2017. This is a true nightmare scenario for OPEC and one that Continental Resources hopes becomes its reality.
Production here is soaring like an Eagle
Back in 2010 EOG Resources (NYSE: EOG ) CEO Mark Papa is noted as saying that the Eagle Ford could "prove to be one of the most significant United States oil discoveries in the past 40 years." Over the years since, thanks to its strong position in Texas' Eagle Ford shale, EOG Resources has grown its oil production by an average of 40% per year. The company doesn't expect that growth to taper off anytime soon. In fact, EOG Resources sees best-in-class oil production growth through at least 2017 as it continues to get better at drawing the product out of the Eagle Ford. Looking back at that remark, OPEC should have seen it as an omen that its worst nightmare was truly unfolding.
Likewise, Chesapeake Energy (NYSE: CHK ) has seen game-changing production growth out of the Eagle Ford. Since 2011 its oil and gas production from the shale has grown by a compound annual rate of 44%. That has helped America's second-largest natural gas producer to survive as natural gas prices have remained depressed. Overall, Chesapeake Energy was one of the earliest adopters in using the combination of horizontal drilling and hydraulic fracturing that has been the key to unlocking our vast oil and gas resources from shale. That's in addition to leading the discovery of many liquids rich shale plays like the Utica Shale. If America is able to break OPEC's grip on world energy prices, Chesapeake Energy will be remembered as one of the main contributors to its demise.
Don't miss The Miss
In a world where every drop of oil matters, unlocking new resource plays like the Mississippi Lime will be critical to toppling OPEC. SandRidge Energy (NYSE: SD ) is the one company that has really figured out the code to unlocking the oil trapped within the formation. What SandRidge Energy was able to do is figure out how to efficiently deal with all the water that was produced from the formation along with the oil. Because of this the company expects to grow its oil production from the play by 76% this year. With the key to unlocking oil from The Miss and a plan in place, SandRidge Energy is now more focused than ever on delivering oil rich production growth out of a play where few others have found success.
Even carbon dioxide is our ally against OPEC
While many think carbon dioxide might be the environment's worst enemy, it's an old oil well's best friend. Consider that the average American oil well only gives up 30% of its product willingly. What that means is that companies have left a staggering 89 billion barrels of oil underground. If the United States could actually recover that oil our nation would rank fifth in the world in terms of the size of our oil reserves, up from No. 12. That would mean our oil reserves could rival Middle Eastern nations such as Iraq and Iran.
By injecting carbon dioxide into a declining oil field, producers like Occidental Petroleum (NYSE: OXY ) and Denbury Resources (NYSE: DNR ) are able to unlock these vast quantities of oil. For example, Occidental Petroleum uses naturally occurring carbon dioxide to produce 60% of the oil it gets out of the Permian Basin. Looking ahead, Occidental Petroleum believes it can recover another 2.5 billion barrels of oil equivalent resources using this process in the Permian. This is oil that otherwise would have simply stayed underground because there simply isn't enough pressure for it to come out willingly.
Denbury Resources is also using naturally occurring carbon dioxide to bring aging oil fields back to life. However, it's taking efforts a step further by taking carbon dioxide from several industrial projects that capture carbon dioxide instead of emitting the gas. Denbury Resources is then able to inject that man-made carbon dioxide into a well and produce the oil while at the same time locking the carbon dioxide underground. It's a uniquely green way of producing more oil.
OPEC is losing a lot of sleep these days and is rumored to be considering a production cut to keep oil prices high. These seven American oil and gas companies can take most of the blame for its concerns. That is because the nightmare scenario where its top customer no longer needs its product is slowly becoming a reality with each well these companies drill. It's shifting the global energy dynamics, while giving American investors the opportunity to profit from OPEC's worst nightmare becoming its reality.
One more great stock to profit from U.S oil growth
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