When I was a kid, I used to play "pile on," a game in which a mob of us would all pile on top of one kid. It was great fun, unless you were the kid at the bottom of the pile. The pressure down here was suffocating.

In much the same way, shale rock formations are created. Mud and silt are slowly deposited in rivers. As more and more layers build up, the pressure compacts the bottom layers until the sediment dries out; millions of years later, shale is formed. The purpose of this geology lesson is that the pressure-hardened layer of rock has trapped pockets of natural gas beneath it. If that gas can be exploited, it can be quite valuable.

A rocky road
Unfortunately, drilling through shale isn't easy. While modern drilling techniques like horizontal drilling have improved the ability of companies to tap these reserves -- and some reserves have been tapped since the early 19th century -- it's still a big, expensive undertaking. According to one study completed last October, the NYMEX price of natural gas needed to be anywhere from $4.96 to $7.86 per million BTUs (MMBtu) for it to be profitable to extract it from shale. The current price on NYMEX is more than $8 per MMBtu.

Enter National Fuel Gas (NYSE: NFG), an integrated natural-gas play that's been paying dividends for 105 consecutive years and increasing them for each of the past 37. It is also one of the largest landowners in the Appalachian Basin area, with more than 900,000 acres of property in Pennsylvania and New York.

Failure to exploit
There's a proxy battle shaping up for the future of National Fuel that will be decided next month at the company's annual meeting. Hedge fund New Mountain Vantage Advisors and the California Public Employees' Retirement System, better known as CalPERS, have teamed up to put three board members in place, charging that the current board has not moved management to properly take advantage of its assets. New Mountain Vantage contracted Schlumberger (NYSE: SLB) to take a look at the Appalachian holdings potential and came away with a $1 billion valuation, or $12 per share. New Mountain Vantage believes that management's failure to exploit the Appalachian basin assets has led the market to assign them little to no value.

A free ride
There's no guarantee, however, that those deposits can be tapped. National Fuel has partnered with EOG Resources (NYSE: EOG) to try developing the Appalachian deposits, but New Mountain charges that National Fuel has almost given away the store. While EOG will be responsible for building and operating all the wells, it paid nothing up front for the privilege, yet it will have an interest in National Fuel's property in exchange for a like interest in EOG's acreage in the area.

Of course, management disputes New Mountain's position. It believes it is moving appropriately enough to develop its assets and believes the hedge fund and its cohorts are simply out to maximize their short-term investment.

Regardless, it's also true that National Fuel's stock has lagged that of its peers. If I were a betting man (and I am), I'd say that New Mountain has a better than average chance of being successful. During a period of high natural-gas prices, National Fuel has been slower than its rivals to capitalize on the opportunity. The question is, are shareholders patient enough to wait for management to unlock the value lying hidden beneath the shale? Or, like kids on a playground, will they pile on with New Mountain to get it out now?

National Fuel Gas is an Income Investor recommendation. You can fill up with 30 days of free stock picks with a risk-free trial subscription.

Fool contributor Rich Duprey has no financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.