Oil companies ramp up operations in liquids-rich Niobrara shale play
Similar to the mature Bakken shale play, the 'oily' Niobrara is considered ripe for investing
It's no surprise that petroleum investors have been selling their positions in dry gas areas due to sustained low prices for natural gas. Many of them have decided to refocus on oil and gas liquids, which command a better price than dry gas, and one of the most promising areas for investment is the Niobrara Shale of northeastern Colorado, southeastern Wyoming, and smaller parts of Nebraska and Kansas. Most of the Niobrara Shale lies in the Denver-Julesburg Basin, or DJ Basin.
Still an emerging play, the Niobrara is in its early stages and there is a veritable "land rush" by companies seeking to lease land for future drilling. It has been characterized by some as a "mini-Bakken" or a "Neo-Bakken." The Bakken shale play is farther north in North Dakota and Montana and in parts of Western Canada and is a more mature play in terms of its drilling history.
In a report issued late last year, Jefferies & Co. Inc. called the Niobrara "ripe for investing," cautioning that the play "is not well understood and data has been spotty." It adds that limited results from EOG Resources and Noble Energy have, thus far, been promising.
Other players in the Niobrara to date include Anadarko Petroleum, PDC Energy, Chesapeake Energy, Rosewood Resources, Encana Oil & Gas (USA), Fidelity Exploration & Production, Augustus Energy Partners, Petro-Canada Resources (USA), Mountain Petroleum Corp., Rosetta Resources, Samson Oil & Gas, Voyager Oil & Gas, Slawson Exploration Co., Marathon Oil Corp., and ConocoPhillips.
"Voyager Oil & Gas currently controls an interest in 44,000 net acres in the DJ Basin's Niobrara shale play in a joint venture with Slawson Exploration Co. Last year's agreement, valued at $7.5 million, gives Voyager a 50% working interest in Slawson's net acreage in Weld County (Colorado) and Laramie County (Wyoming).
Voyager, based in Billings, Mont., controls about 24,000 net acres in the Williston Basin in Montana and North Dakota and has developed expertise drilling in the Bakken shale play.
Slawson is one of the largest liquids producers in the DJ Basin and recently announced it would speed up drilling plans in the area."