The following is an excerpt from Kirk Spano | January 18, 2012 | marketwatch.com |
As discussed last week, improvements in hydraulic fracturing has led to vast opportunities for oil and gas service companies that can stay on the right side of the EPA. As most readers know, fracking is also providing significant growth for many oil and gas exploration and production companies in America. This rapid growth is now also creating the circumstances for increased mergers and acquisition activity.
Among the fastest growing oil and gas companies and those with the biggest potential are those involved with the Bakken and Three Forks formations in the Williston Basin of North Dakota and to a lesser extent Montana. North Dakota’s rich reserves and friendly attitude towards drillers makes it a prime place for oil and gas production. As of last month North Dakota drillers reached 500,000 barrels of oil (and equivalents) per day of production. That curve, presuming no outright shut down of fracking by the Federal Government, appears likely to hit 1,000,000 barrels per day within a few years.
Given the intermediate and longer term supply and demand picture for oil and gas, there is a clear desire for companies to control as much strategic reserves as possible. North Dakota has somewhere between 11 billion barrels of oil, according to the North Dakota Geological Survey, and 24 billion barrels of oil, according to Harold Hamm founder of the largest Bakken acreage holder, Continental Resources CLR +0.38% , that is recoverable. This is reserves for several decades even at double today’s production and could provide as much as 20% of America’s oil needs.
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