America’s ingenuity and success in extracting its oil and gas resources certainly seems to be unique. Even though shale areas are found around the world in Australia, Turkey, Russia and China, the U.S. is expected to supply the majority of light tight oil (LTO) to the world through 2035, as other countries are “struggling to replicate” the experience in the U.S., according to the International Energy Agency.
“Drilling Multiple Horizontal Wells from a Single Pad”
As our resident expert on the natural gas and oil opportunities spouting out across the U.S., Evan Smith, CFA, portfolio manager of the Global Resources Fund (PSPFX), discussed the many investment opportunities recently with Streetwise Reports.
In the published article in The Energy Report, Evan says that lately, the shale activity has been more oil-directed, particularly in the Bakken and Eagle Ford. For 2014, he believes there will be a delineation of acreage, focusing on pad drilling:
“Continental Resources Inc. (CLR) is testing 16 wells per pad in the Williston Basin in North Dakota. The company will repeat that pattern and drive costs down. We've seen a big shift to multi-well pad drilling in 2013, but I think it's going to become much more standardized in 2014. The efficiencies that we've seen, which have led to more productivity with fewer rigs, will probably remain and perhaps even accelerate in 2014.”
Earlier this year, we said that oil explorers such as Continental, EOG Resources and Pioneer Natural Resources that were focused on high-margin shale drilling from Texas to North Dakota were set to outperform big oil companies, such as Exxon Mobil and Royal Dutch Shell. We thought these explorers were poised to reap bigger returns than that of energy titans 15 times their market value, as they devoted almost all of their drilling capital to higher-margin, domestic crude wells.