Don't Overlook This Emerging Oklahoma Oil Play

Photo credit: Devon Energy. 

When we think about America's energy boom, North Dakota's Bakken or the Eagle Ford Shale of Texas are the first to come to mind While there is no doubt that those two oil-rich areas are driving much of the boom, new plays seem to be emerging all the time. One of the latest is Oklahoma's Cana Woodford Shale.

The liquids-rich play has caught the eye of Newfield Exploration (NYSE: NFX  ) and Devon Energy (NYSE: DVN  ) in particular. Both see it fueling production growth for years to come.

Newfield Exploration has used the play to fuel much of its recent production growth. This year, the company expects its production from the play to have grown by 170% over last year. While it has acreage in both the Bakken and Eagle Ford, it has turned its attention to the Cana Woodford. Wells here are fairly expensive to drill at more than $10 million apiece, but because of the amount of oil, gas, and liquids it expects to produce from each well, the returns are pretty solid. In fact, Newfield Exploration expects to earn a rate of return north of 50% on each well it drills.

Devon Energy also sees the Cana Woodford fueling future returns. The company has about a quarter million net acres, with most of those being in the liquids-rich portion of the play. About 40% of the production is oil and natural gas liquids, which, while not as oily as the Bakken, is still pretty solid.

Devon was able to grow its liquids production out of the play by 48% over last year and sees a large runway of future growth opportunities. In fact, after drilling 150 wells this year, Devon sees the potential for 3,000 more.

Another company that sees a big future out of this Oklahoma oil play is Continental Resources (NYSE: CLR  ) . The top developer of the Bakken is earmarking about a quarter of its 2014 capital budget to the state. That will enable Continental to grow its rig count by 80% year over year. Given how important the Bakken has been to Continental's past, this says a lot about where it sees its future.

Continental Resources has enjoyed a pretty impressive 435% jump in its production since the second quarter of last year. While that was off a very low base, it does show how fast the company has scaled up its production. Further, the development of Continental's position in Oklahoma is a critical component of its goal to triple its production by 2017.

Oklahoma's Cana Woodford Shale really looks promising. It's not as oily as the Bakken -- instead, its claim to fame will be the amount of liquids each well will produce during its lifetime. Those should enable producers like Devon, Newfield, and Continental to earn a very solid return over the long term.

Three more stocks that are profiting from America's energy boom
Record oil and natural gas production from emerging shale plays is revolutionizing the United States' energy position. It's opening the door for investors like you to fuel American made oil profits into their portfolios. That's why the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the 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 (4)

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: 2686635, ~/Articles/ArticleHandler.aspx, 10/1/2014 2:42:53 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...


Advertisement