Investors searching for the best stocks to buy now often look toward the shale oil boom and, in particular, at key finds such as the Bakken formation in North Dakota or the Permian Basin in west Texas.
But a fresh development in the Permian Basin has made the U.S. oil industry take notice - and that's not easy given the dramatic shale oil finds across the country.
In fact, the U.S. Geological Survey called this find the largest discovery in the last 50 years in the Permian Basin.
I'm talking about the Cline Shale.
Dr. M. Ray Perryman, head of the economic analysis firm The Perryman Group, told Rigzone "The information coming out on the Cline shale indicates up to 30 billion barrels of recoverable oil, which is substantially larger than other large plays."
To get an idea of what this means, consider that the Eagle Ford in Texas is believed to have approximately 10 billion barrels of recoverable oil and the Bakken 11 billion barrels.
That means the Cline Shale has at least three times the amount of recoverable oil as two of the biggest shale oil finds in the United States.
Clearly, if you're looking for the best energy stocks to buy now based on the shale oil boom, you need to find out as much as you can about the Cline Shale.
Where the Cline Shale Fits In
Texas has a number of overlapping oil fields, and the Cline Shale happens to be one of them.
And it's a really, really big one.
The 1.6 million-acre formation lies over a large area on the eastern shelf of the Permian Basin, running about 9,000 feet underneath a 10-county swath of Texas. It averages about 70 miles wide from east to west and roughly 140 miles wide from north to south.
The key target zone for oil production is between 200 and 500 feet thick. The Cline is also known as the Lower Wolfcamp because some of it lies beneath the already-known Wolfcamp shale formation to the west.
That means a few fortunate companies can drill wells with stopping points in both shale formations.
Meanwhile, the potential of the Cline Shale could exceed even the impressive estimate of 30 billion barrels of recoverable oil.
Oil companies like Devon Energy Corp. (NYSE: DVN) have only just begun to drill in this formation.
"We've had some encouraging results in the Cline, and we are hopeful and optimistic about our prospects for being successful in this play," Devon spokesperson Chip Minty told the Texas Tribune.
The company hasn't made a lot of noise about its results so far because it is so early in the Cline's development. In total, fewer than 100 wells have been drilled to date in the Cline Shale.
But some of those wells have already produced 400 to 800 barrels per day of oil equivalent with 60% to 75% oil production. That's just a hint of the extraordinary potential that the Cline Shale holds, both for the oil industry and investors.
The Best Stocks to Buy Now in the Cline Shale
To find the best energy stocks to buy to capitalize on the black gold that's just starting to flow out of the Cline Shale, one need only look at the companies that got there first...
Of course, there's Devon Energy, which drilled many of the early wells.
Other companies already drilling in the Cline include Apache Corp. (NYSE: APA), Gulfport Energy Corp. (Nasdaq: GPOR), and another pioneer in the region, Laredo Petroleum Holdings Inc. (NYSE: LPI).
Laredo's founder, Chairman and Chief Executive Officer (CEO) Randy Foutch, has hinted that the Cline Shale could end up being one of the most profitable shale formations in the United States.
"We believe the Cline shale exhibits similar petrophysical attributes and favorable economics compared to other liquids-rich shale plays, such as in the Eagle Ford and Bakken shale formations," Foutch told the American Association of Petroleum Geologists Explorer magazine last year.
Another company with drilling operations in the Cline as well as nearby, Breitling Oil & Gas, has planned an initial public offering for late this year or early in 2014.
"We are in a hotbed area with great infrastructure from legacy conventional plays, we have access to a talent pool for workers and equipment is already in the area," Breitling CEO Chris Faulkner told Rigzone.
But as optimistic as this seems, the Cline Shale picture could get even brighter. As more wells are drilled in the Cline Shale, it is very likely that the estimates of the amount of recoverable oil will keep rising. That's just what happened with the Bakken and Eagle Ford shale formations.
This exceptionally promising location virtually guarantees success for the companies drilling in the Cline, making them the best energy stocks to buy to take advantage of this new shale oil play.
Note: The profits from the next stage of the shale oil boom could dwarf the initial windfalls, according to Money Morning Global Energy Strategist Dr. Kent Moors. The key to finding the best stocks to buy in the next wave of the boom, Dr. Moors says, is technology...
Related Articles:
- Money Morning:
The Next Best Investments in Oil Come from This Texas Sweet Spot - The Cline Shale:
Cline Shale Brief Overview - Forbes:
Texas' Amazing Shale Oil and Gas Abundance - New York Times:
Ready (or Not?) for a Great Coming Shale Boom - Fuel Fix:
West Texas Shale Could Dwarf Eagle Ford - Rigzone:
Future Looks Bright for Cline Shale Potential
Credit: Money Morning - Only the News You Can Profit From http://feeds.moneymorning.com/~r/moneymorning/jOLe/~3/D2qgf-JvZlM/
