Just got a mention in the Australian - Business Section
Shale gas stocks with US exposure in play. November 10, 2010 12:18PM
THE US economy may be kipping -- thus subduing domestic gas demand -- but that hasn't stopped another bid in the emerging shale sector.
In between running feel-good ads about human energy, Chevron has sought to bolster its supply of the hydrocarbon variety, with a $US3.2 billion ($3.18bn) offer for the Pittsburgh-based Atlas Energy.
Atlas boasts 1.2 million of shale acreage in covering parts of Pennsylvania, West Virginia and upstate New York.
Other oil and gas big boys -- Reliance, Total, Shell and Exxon -- have also made big-ticket shale purchases. Notably, Exxon last December paid $US40 billion for XTO Energy, which boasts the biggest reserves of unconventional (shale and other "tight" gas) in the US.
Shale production involves accessing "tight" reserves through rock fracturing techniques. It's more expensive, but better than relying on Middle East sheiks and pesky Venezuelans in the longer term.
The Atlas news this morning modestly supported the growing legion of Australian stocks with North American shale acreage:Samson Oil and Gas (SSN), Texon Petroleum (TXN), Sundance Energy (SEA) and Molopo Energy (MPO). Foster Stockbroking describes the overnight news as "positive for Australian-listed stocks with a presence in US shale gas".
On our own shores, the deal also highlights the value in AWE (AWE, $1.77), which yesterday announced a gas-in-place estimate of 13-20 trillion cubic feet in its Perth Basin shale acreage.
Samson has already capitalised on the shale boom, having sold 24,000 acres of turf in Wyoming's DJ Basin to Chesapeake Energy, for $US73m. But Samson retains ground in North Dakota's Bakken Shale, which according to broker Hartleys is not reflected at all in its market valuation.
Molopo, which last year invested in shale oil acreage in Canada, the Bakken play in Manitoba and Spearfish in Saskatchewan (better known for potash than gas).
Molopo is flush with more than $100m from the sale of NSW gas assets to AGL and is using $30m of this kitty to drill 25 wells on Spearfish.
Criterion had the stock as a speculative buy at $1.09 in mid-September. Deferring to Macquarie Equities $2 a share valuation, we maintain the call.
Criterion has shared Foster's view that AWE has been a "dog". The market doesn't lie -- AWE has clearly underperformed the market over three years -- but its 20 per cent price uptick this month on the Perth Basin news shows that every canine indeed has its day.
MPO Price at posting:
$1.08 Sentiment: LT Buy Disclosure: Held
