As much as I love to look at onshore oil and gas companies in the United States to find names operating in the hottest emerging liquid shale plays, there are some solid companies up in Canada as well. One company on my radar right now is Penn West Exploration (NYSE: PWE), a company with 6 million net acres of land waiting to be developed in western Canada.

Company snapshot

Market Cap $9.3 billion
Net Debt $3 billion
TTM Operating Cash Flow (OCF) $1.2 billion
TTM Capex $2 billion
Price-to-OCF Ratio 7.8
Recent Price $19.73
Dividend Yield 5.4%

Source: S&P Capital IQ.

Penn West's assets include 665,000 net acres of Cardium targeting light oil, 750,000 net acres of Viking targeting light oil, 75,000 net acres of Spearfish targeting light oil, 380,000 net acres of Carbonates targeting light oil, and its Cordova gas project, which is a joint venture with Mitsubishi targeting shale gas.

For the past two years, Penn West has been spending 75% of its capital expenditures on appraising its acreage, which included many single-well drilling events. Obviously, this is not the most efficient way to develop large blocks of acreage. In 2012, the company expects to spend 85% of its capital to develop its acreage, now that it's properly assessed and tested its acreage. This should lead to lower per-well costs and help drive meaningful production growth.

At the start of 2010, the company's light oil production was just 39% of total production, with liquids making up 57%. By the end of 2011, those numbers should be 51% and 66%, respectively. The company is also on track to meet its average production target of 162,000 to 164,000 BOE per day for the year. At the end of 2011, the company expects to achieve an exit rate of 174,000 to 177,000 BOE per day.

While the company expects to drive production growth from its main assets by allocating a much higher portion of its spending budget to its developmental plays, there's still a good deal of land to assess so that it can drive future growth. The two active appraisal projects are the Cordova shale gas project and the Peace River oil partnership targeting heavy oil, both joint ventures.

The company has also been leasing acreage for further exploration. Two plays where the company has been actively leasing are Duvernay and Second White Specks, where the company has acquired 200 sections of land for testing.

Foolish bottom line
All told, the exploration pipeline is brimming, and the company has more than 10,000 drilling locations for development. That should be enough to fuel production growth for quite a while, helping achieve the company's goal of rewarding shareholders with a dividend and growing the company through tight oil development.