As it stands, oil is at $95 per barrel. Investors are hungry to get energy exposure through whatever means necessary. One of the hottest ways to get oil exposure recently has been through the oil shales. Oil shale acreage is quickly becoming popular, as improving technology and rising oil prices have made it economical.

The Eagle Ford shale in Texas may be the most talked about oil shale play. Marathon Oil (NYSE: MRO) caused waves when it paid $3.5 billion to buy up 141,000 net acres in the Eagle Ford shale formation, for a price of $24,823 per net acre.

It may be tempting to look up the top operators in the Eagle Ford and buy a few of them, but that may not be the smartest way to participate in the oil shale boom. While oil shale acreage plays in general appear to be undervalued thanks to concerns regarding hydraulic fracturing, Eagle Ford shale acreage is already fetching a premium relative to other plays. Perhaps it's time to look elsewhere.

Enter the Niobrara
The Niobrara is an emerging liquids-rich play in Wyoming and Colorado. It hasn't quite had the same M&A activity as the Eagle Ford, but it's had a few transactions of its own:

  • In April 2011, Marathon Oil sold 30 percent of its working interest in 180,000 net acres in the Niobrara shale to Marubeni Denver Julesburg, a subsidiary of Marubeni, for $270 million, or $5,000 per net acre.
  • In January 2011, Chesapeake Energy (NYSE: CHK) sold 33.3% of its net acreage in the Niobrara shale to CNOOC (NYSE: CEO). The deal totaled $1.27 billion for one-third of Chesapeake's 800,000 net acres, which came out to just over $4,750 per net acre.

The caveat is that while acreage values are cheaper than they are in the Eagle Ford, the acreage in the Niobrara is more unproven. Since there are few wells that have been producing for a long time, the results have been highly variable. This uncertainty causes Niobrara acreage to fetch a discount relative to Eagle Ford acreage.

This uncertainty is not a cause to shun the Niobrara shale -- companies are optimistic about the future of this shale play and have continued acquiring acreage, as seen by the recent transactions in 2011.

Let's examine some of the more well-known holders of Niobrara acreage:


Net Acres in Niobrara

Market Cap (in millions)

Market Cap / Acre

Anadarko Petroleum (NYSE: APC) 1,300,000 $38,762 $29,817
Noble Energy (NYSE: NBL) 830,000 $15,946 $19,212
Chesapeake Energy 570,000 $19,102 $33,512
CNOOC 266,667 $104,257 $390,963
EOG Resources (NYSE: EOG) 220,000 $27,670 $125,773
Marathon Oil 133,000 $23,463 $176,414
Double Eagle Petroleum 71,248 $100 $1,404
Samson Oil and Gas (AMEX: SSN) 16,391 $243 $14,825

It is important to note that the table above only shows exposure to the Niobrara. The smaller companies are obviously more levered to the Niobrara since they have more concentrated asset bases. Larger companies are likely to have a diversified set of assets, with the Niobrara being just one of many. Among the larger players, Noble Energy is the most levered to the Niobrara, followed by Anadarko Petroleum.

Foolish bottom line
There are many ways to play the oil shale boom, and investors are encouraged to look beyond just the major headlines, which don't go too much beyond Texas these days. For those willing to search for them, there are oil shales all across the United States and Canada. The Niobrara shale is one such play, and anyone looking to gain exposure might start with the above list.

To learn how to profit from high oil prices, read about "3 Stocks for $100 Oil."

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.