A Global Shale Gas Update

Last month, I wrote about the amazing shale race that's under way worldwide. Devon Energy (NYSE: DVN  ) likes its prospects in places like the Haynesville and the Horn River Basin so much that it is selling all of its offshore and international assets to focus more of its capital program on these low-cost, repeatable plays.

Everyone from ExxonMobil (NYSE: XOM  ) and BP on down to the scrappiest start-up seems to be intent on sniffing out new shale plays these days. To keep on top of these developments, I plan to run an update every month or so.

Marathon races to take Pole position
Our Thanksgiving edition begins in Poland, where industry expectations are clearly running high. We already knew that ExxonMobil and ConocoPhillips (NYSE: COP  ) were lining up large acreage positions in the Eastern European country. Last week, we learned that Marathon Oil (NYSE: MRO  ) has hopped on board as well.

I'll save you the nearly 50-megabyte download of Marathon's analyst-day slide deck and share the few details on offer. The firm's entry into Poland consists of a single concession, the Kwidzyn license, covering just less than 300,000 acres in the Baltic Basin. This acreage lies right near some of the concessions that Conoco agreed to farm into this summer.

Marathon's push into frontier shale gas follows its entry into various North American plays, namely the Haynesville, the Woodford, and the Marcellus. The company is also a heavy hitter in the oily Bakken shale play. The firm certainly brings a good deal of technological savvy to the table. What we don't know is whether Marathon's sitting on the right rocks. Time and the drill bit will tell all.

Wine, cheese, and ... oil?
Speaking of oil-bearing shale plays -- not to be confused with Royal Dutch Shell's kerogen-cooking schemes in the Green River Basin -- Toreador Resources (Nasdaq: TRGL  ) is a small-cap E&P that's shed assets in several countries to focus on conventional and unconventional oil targets in France's Paris Basin. The company even moved it headquarters from Dallas to Paris, in a rare display of commitment to the area.

Toreador's whittled down its debt and corporate overhead to a somewhat more manageable level, but the firm still needs to figure out how best to tackle its oil shale opportunity. The company hired a banker this month to help it "evaluate strategic alternatives." Such language is often code for "sell the company," but in this case, some sort of financing might be just as likely. The $200 million shelf registration filed around the same time as this announcement would suggest that some serious fundraising may lie ahead.

A Foolish alliance alights in Africa
From France we take a flight down to South Africa, where Chesapeake Energy (NYSE: CHK  ) and StatoilHydro have staked some ground in partnership with Sasol (NYSE: SSL  ) . Now there's a Foolish trio for you. All three companies are recommendations of various Fool newsletters, and all are clearly pumped about global shale gas potential.

The Chesapeake/Statoil international joint venture, formed at the time of the firms' pair-up in the Marcellus late last year, is searching the entire planet for analogues to North America's best unconventional resource plays. The companies have professed interest in places as far-ranging as China, India, and Australia, but this application for exploration rights in South Africa's Karoo Basin is the first public acknowledgment of an actual acreage grab by the pair that I've come across.

The selection of South Africa as a shale hunting ground was a bit of a curveball. I'll be very curious to see where this duo drops in next.

Sasol is a Global Gains recommendation. Both Sasol and StatoilHydro are Income Investor picks. Chesapeake Energy is an Inside Value selection and the Fool owns shares of it. Drill into any of our Foolish newsletters free for 30 days.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.


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  • Report this Comment On December 01, 2009, at 8:37 PM, carbonates wrote:

    In other international shale gas news, China National Petroleum and Shell have started the joint development of shale gas at Fushun-Yongchuan block in Chengdu, Sichuan Province.

    Meanwhile, President Obama and President Hu Jintao of China announced the launch of a new U.S. China Shale Gas Resource Initiative. I'm guessing Halliburton is behind this? (that's a joke-maybe!)

    Thanks for the lead on the Sasol, CHK, STO venture. I'll be investigating that if I can find more on it.

  • Report this Comment On January 07, 2010, at 12:32 AM, shaker13 wrote:

    Talk about under everone's radar and possibly the most undervalued stock on the planet.

    This Canadian micro-cap might be sitting on the biggest shale gas play in the world so far and it's right in China.

    Petromin Resources ( wwww.petromin.ca ) trades at just .15 CDN with 58 million shares outstanding.

    This company has cashflow from O&G properties in Alberta,Canada abiet only 300BPD but still, they are debt free, partnered with the world class organization of the Alberta Research Council and Enviro Energy International Holdings limited of Hong Kong.

    Kenny Chan who is the CEO of Enviro is also the founder of Petromin.

    Two projects they have in China is a partnership with CUCBM or China United Coalbed Methane to spearhead CO2 Sequestration for enhanced Colabed Methane which the Alberta Research Council

    ( www.arc.ab.ca ) have already proved to China through a previous single well test pilot they did in the Quinshi Basin in 98 which took production from 35% up to 70%.

    China was so impressed, they dropped plans for further single well test pilots and requested Petromin and ARC initiate the worlds first multi-well test pilot in the Quinshi Basin which they just started.

    Once this is proven successful, they plan to go commercial right across China and then the world.

    The other Project they have is a production sharing contract with PetroChina, which takes 2 years minimum to obtain, I will mention which involves 655 sq. Km of land in the Junngar Baisn.

    This property is being drilled for coalbed methane with the intention I believe of turning it also into a ECBM project with CO2 as the top CO2 scientist in the world, Dr. Bill Gunter who is with Petromin has stated because the property is only 15 km away from the city of Urumqi with a population of 5 or 6 million has excellant sources of CO2 that could easily be transported to the property.

    Now for the best part, Petromin's geological team Norwest identified that their entire property is also covered in rich shale gas which Petromin has been working on proving up for the last year.

    A core drilling program was just completed (results due any day now)

    So I will leave it there with posting the data they have thus far for you folks to do the rest of your due diligence.

    For disclosure purposes, I am a large shareholder of both Petromin & Enviro and call these my retirement stocks, but that is JMHO

    Regards.....Shaker13

    Location Formation Average Thickness

    Comparable Gas Basin TOC data:

    -------------------------------------------------------------------------

    Natural Gas Total Organic Quartz

    Producing Basin Age Content (TOC)% (Si)%

    -------------------------------------------------------------------------

    Barnett . Fort Worth Mississippian 1.0-4.5 greater than 50

    -------------------------------------------------------------------------

    Ohio - Appalachian Devonian 0.5-2.0 40-50

    -------------------------------------------------------------------------

    Marcellus -

    Appalachian Devonian 3.0-10.0 greater than 40

    -------------------------------------------------------------------------

    Lewis . San Juan Cretaceous 0.5-2.5 greater than 40

    -------------------------------------------------------------------------

    Fayetteville -

    Arkoma Mississippian 4.0-9.5 greater than 40

    -------------------------------------------------------------------------

    Antrim - Michigan Devonian 0.5-20.0 40-50

    -------------------------------------------------------------------------

    Utica - Appalachian Ordovician 1.0-3.1 greater than 40

    -------------------------------------------------------------------------

    Badaowan - Junggar Jurassic 1.0-11.0 40-50

    -------------------------------------------------------------------------

    Canaccord Adams Inc., 2008; Canadian Society for Unconventional Gas,

    2009; AJM consultants 2009; Energy Resources Conservation Board/Alberta

    Geological Survey 2009.

    Comparable Gas Basin Thickness

    Location Formation Average Thickness

    United States Barnett Shale 100 meters*

    United States Marcellus Shale 15-75 metres**

    Junggar Basin, China Badaowan J1B 750 meters***

    British Columbia Doig, Doig Phosphate, 300-500 meter*

    Montney

    * Data is obtained from "An Overview of Shale Gas Potential in

    Northeastern British Columbia", Levson, V. M., Walsh, W., Adams, C.,

    Ferri, F., Hayes, M., Canadian Society of Petroleum Geologists, 2009

    (CSPG)

    ** Data obtained from Talisman Energy 2008.

    ***Information obtained from Barnett Shale Energy Education Council

    2009 based on 1.4 trillion cubic feet annual total production

    in 2008.

    - This is the indicated true thickness from geological survey of

    surface outcrops conducted by Norwest.

    - Other than the data with regards to the Badowan J1B formation, the

    sources of the data in the above table are independent of Petromin.

    The information obtained from the Canadian Society of Petroleum

    Geologists and the Barnett Shale Energy Council was prepared by

    industry groups.

  • Report this Comment On January 07, 2010, at 12:35 AM, shaker13 wrote:

    Check out www.petromin.ca

    It could be the biggest shale gas play in the world and it's right in China.

    Might also be the most undervalued stock in the world too, you be the judge, but my truck is backed up.

    Cheers

  • Report this Comment On January 07, 2010, at 12:38 AM, shaker13 wrote:

    oops sorry, did'nt think it posted for been too long.lol

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