January 25th, 2013 
Category: 
Encana recently unveiled an interesting titbit about its Duvernay JV agreement with PetroChina. The company had 14 interested suitors to choose from. We are talking about eligible parties that were willing to inject billions of dollars in the Duvernay. Recall that in December, Encana announced a JV partnership with Petrochina for $2.18 billion for 49.9% interest in 444,000 net acres in the Duvernay play.
Encana’s Duvernay acreage
Encana’s acreage lies in the liquids-rich fairway with a drilling inventory estimated at up to 1600 wells. We are talking deep expensive wells of $15M a piece to drill and complete. These wells yield up to 300 bbls/MMcfd of liquids 50-60 API oil – i.e. condensate which fetches a premium to the price of light oil.
What is the best way to get exposed to this money besides buying Encana? It would naturally be through investing in drilling companies and fracking companies. They are guaranteed to get a piece of the action. Let’s face it, no intermediate/junior producer will be able to afford these expensive wells so the best way to capture a piece of these billions is through oilfield services stocks.
Within a couple of years, I expect the oil and gas landscape to look very different. And I believe I am not the only one given the billions of dollars currently looking for a piece of the Canadian oil patch. The natural gas market should be supported with new LNG export facilities coming on line. On the oil side, new pipelines will change the pricing dynamics particularly for Alberta’s bitumen/heavy oil. Injecting billions of dollars in Canada’s shale plays by foreigners will certainly show up in the bottom line of the oilfield services sector.
Would you pick a drilling or fracking company? Which one?
News Roundup
Oil price discount costs each Canadian $1,200 a year: Cenovus CEO
Natural gas challenging oil’s dominance in transportation
China oil demand to grow 5% in 2013: Deutsche Bank
Oil discovery in Australia’s outback could ‘transform world’s oil industry’
Nebraska governor approves Keystone XL pipeline route
First LNG export terminal delayed a year
Blog Roundup
3 Golden Rules to Rid Yourself of Debt
I Hereby Declare a Housing Recovery
Paying Off Debt Versus Investing
Carnival Mentions
Carnival of Wealth, Fictional Girlfriend Edition
Carnival of Financial Planning- 1/25/13 | Master the Art of Saving
Yakezie Carnival 01.27.13 Edition — Faithful With A Few
Have a Great Weekend!
I’ve got Canyon (FRC), it’s been a good play for me and has a nice dividend. Was also looking at High Arctic (HWO) today but am going to just watch it for now, and of course, Gasfrac which I trimmed by 20% at $2.85 this a.m. Whew, what a run that’s been! It’s a good reminder that you haven’t made money for realz until there’s cash in your account.
I don’t have any frackers in my portfolio, I don’t mind adding one in the summer doldrums. HWO seems interesting and they must be doing something right in order to trade near 52WK high! Not a bad dividend either.
Excellent timing getting out in GFS! Noticed it dropped 9% on Friday as it was the top losing OFS stock on OGA.
Congrats on the gains
I suppose I have missed the bottom on ECA. I’d still like to buy some.
Thanks for the mention, have a great weekend.
Mark
There’s always next time Mark
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