The Alberta Basin Bakken is set to become the next emerging light oil resource play in Western Canada. The Cardium formation mania which gripped investors in early 2010 has subsided but the symptoms of a new mania are showing up on many companies with land holdings in Southern Alberta or Northern Montana. Since mid-2010, land prices have risen significantly from under $100/acres to over $1,700/acre for land sold in Southern Alberta back in September of 2010. Since April 2010, industry has invested over $180 million on Crown land in the Southern Alberta Bakken fairway.
The industry spent millions of dollars grabbing land and is now ramping up to spend millions more as multi-well programs are planned for 2011. Proving up the play will be extremely profitable to the companies that are positioned in the Alberta Bakken. As more and more well data gets released, the share price of these companies, some of which have increased many times over so far, stands to shoot higher.
This map is displayed as is by BeatingTheIndex.com, with no guarantees as to the accuracy of the data. For example, Compton Petroleum confirmed by email that their land lies south of the border, not in Southern Alberta. If you have a better map, please contact me and I will be glad to update this post with it. For now this should give you a pretty good idea on the play.
If the Alberta Bakken is proven to contain as much oil as Saskatchewan or the North Dakota Bakken play, it will be drilled like Swiss cheese generating billions of dollars in return to investors and triggering several mergers and acquisitions. Who are the companies positioned to benefit from this emerging play? Let’s start with a list of companies operating in Southern Alberta with a focus on junior and intermediate producers:
Argosy Energy Inc. (TSE:GSY)
Alberta Bakken Land: 34.5 sections
Argosy believes their land base in the Claresholm area has multizone potential for targeting oil in the Banff, Exshaw/Bakken and Big Valley. With its recent bought deal financing, the company will get rid of its debt and become free to focus on the upcoming 2 HZ wells it plans on drilling during Q1 2011.
Blacksteel Energy Inc. (TSXV:BEY)
Alberta Bakken Land: 4 net sections
The primary catalyst for BEY appears as though it will be drilling results from other operators as they plan to drill 1 vertical well in 2011 to prove up Bakken oil potential. It has 2,560 net acres in Del Bonita, Southern Alberta right along US Canadian Border. The two horizontal wells drilled by Antelope Lands Services (these wells belong to CPG) are located roughly 5.6 and 11.6 miles away from its holdings. ROSE’s two vertical wells are located 2.5 miles away. BEY is pursuing potential partners and is seeking to increase its land position.
Bowood Energy Inc. (TSXV:BWD)
Alberta Bakken Land: 183 sections
BWD entered into a strategic joint venture with Legacy Oil and Gas (TSE:LEG). Through a combination of land equalization and drilling, LEG has the ability to earn 50 percent of Bowood’s entire interest in the Alberta Bakken fairway lands. Legacy will drill two (2) horizontal test wells which will target the lower Banff, Exshaw/Bakken and Big Valley formations. The first test well will spud prior to March 31, 2011 and the second test well will be spud prior to August 31, 2011. One of the test wells will be located on the Blood Tribe Lands and the other will be located on the remaining non-Blood Lands.
Crescent Point Energy (TSE:CPG)
Alberta Bakken Land: 1,562 net sections
When it comes to Alberta Bakken acreage, CPG is the biggest holder of land in Southern Alberta with over 1,000,000 net acres. Positive results proving the play will have a significant impact on its valuation. No results have been released so far following 3 exploration wells drilled in the 2H of 2010. The company seems to be focused on acquiring additional acreage. CPG is planning to drill 14 net development and exploration wells for 2011.
DeeThree Exploration Ltd (TSXV:DTX)
Alberta Bakken Land: 300 net sections
DeeThree has an expansive land base with over 300 sections of land surrounded by CPG’s acreage. The company believes its Lethbridge property holds tremendous potential for shallow crude oil and natural gas as well as light crude oil from the Bakken/Exshaw formations. Any positive drill data released by CPG will be a major driver for the stock price. Following 2 vertical test wells targeting the Bakken/Exshaw fairway in Q4, 2010, DTX anticipates drilling six locations (four vertical, two horizontal) during the first half of 2011. These locations are designed to test multiple intervals within the play across the company’s large acreage position. DTX is financially strong, has a great land base and no one to share the pie with. Proving its land base successfully will make it a prime takeover target as it is operating under the eyes of CPG.
EnCana Corporation (TSE:ECA, NYSE:ECA)
Alberta Bakken Land: 1800+ sections
Encana has more than 1,800 sections in this play that are on fee land (i.e., Encana owns the mineral rights). The farm-out activity they have in place here has third parties paying for 100% of the drilling costs, while Encana earns a royalty (30% to 38%) from those wells. ECA gave Crescent Point Energy access to a 350,000-hectare swath (1,350 sections) along the Montana border for a three- to five-year period, and must drill one section of land to earn an interest in it. ECA has several farm-out arrangements in place, but has not released the details to these arrangements, as each of them is subject to confidentiality agreements.
Murphy Oil (NYSE:MUR)
Alberta Bakken Land: 234 net sections
Murphy’s 150,000 net acres package lies to the west of Bowood’s Blood Tribe lands. The Company spud its first evaluation well in January of 2011. A second well has been licenses in the Del Bonita area along the Alberta/Montana border. In total 6 evaluation wells will be drilled in 2011.
Perpetual Energy (TSE:PMT)
Alberta Bakken Land: ? net sections
Perpetual Energy reported in its year end results of 2010 that it had acquired exploratory parcel of land in the Del Bonita area. PMT refused to divulge how many acres they acquired and simply stated that they had no plans at the moment.
Wild Stream Exploration Inc. (TSXV:WSX)
Alberta Bakken Land: 50 net sections
WSX has approximately 31,750 net acres in its Red Coulee conventional oil area in Alberta Canada. Near term catalysts will be drilling results by other operators as the company has 15 net sections of land adjacent to Rosetta Resources’s wells across the border.
This list was compiled by BeatingTheIndex.com from the latest presentations and company news releases. I do not guarantee the accuracy of the data so please do your own due diligence prior to making any investment in a company mentioned above. If you spot an error in the data or know of a company that I missed from the list, please do not hesitate to contact me.
2011 is the year of the Alberta Bakken. How are you investing in this emerging light oil play?