Saturday, July 30, 2011

New Eastern Ohio Utica Shale oil Bakken ?- Who benefits?

Chesapeake finally announced what the market has been speculating for a few months. The Utica Shale play in Middle/Eastern Ohio may be better than the Eagleford Shale play in Texas. Audrey is estimating that acreage will eventually be valued at $10,000-$15,000/acre. Here is a summary of what Chesapeake has done to date: (note - there may be one Canadian junior exposed to this play)

see drill permitting in the ohio counties here

The Utica shale sits deeper than the Marcellus shale that has been getting attention in the past year or so in the region. According to Chesapeake's presentation for shareholders, the Utica features an area of dry gas along the Ohio River through Columbiana and Jefferson counties, a more profitable wet gas area running in a strip from roughly Trumbull to Meigs counties, as far west as parts of Harrison and Carroll counties, then continuing west into central Ohio, from Lake Erie to the state's southern tip with oil producing potential.

McClendon said he could not disclose findings yet, for competitive reasons, but there have been nine vertical wells drilled in the region, with six horizontal wells. The wells are spread across several counties, and their output increases confidence in the findings the company stated about the Utica shale.

Chesapeake has analyzed more than a half mile of core borings and examined more than 2,000 well logs in making its determination of the potential of the Utica find. The company also factored in its experience in other unconventional energy fields.

McClendon said the only public company competing so far in the play is Enervest of Houston, whom he described as a highly regarded firm that is a joint holder on some Utica acreage.

So the question is....are there any Canadian juniors that will benefit? I own shares in a company whose sole focus is Ohio and is currently drilling a light oil horizontal play in northern Ohio. Their market cap is in the $10 million range and they have an extremely tight share structure. Volume has picked up the last month both on anticipation of drill results and the potential for their Utica acreage. I have a call into management for more information and they will be part of my "Under the Rocks" report for early August.

Monday, July 18, 2011

$1,600 gold and the bear market in gold juniors

The higher the gold price rises, the more Canadian and stateside investors throw away their Canadian junior gold explorers. When you are broke and trying to put food on the table, you sell what you have without thinking. I often thought $1,000 gold would lead to an explosion in the junior gold sector. I was wrong. It will take the Chinese and Middle Eastern institutional entities to start the next bull market in gold juniors. They are the only ones with the excess funds to drive this market higher. The only question is when?

Monday, July 11, 2011

Failed talks on the debt ceiling lead to a sell-off in the Canadian Juniors

Risk-off was the play of the day as a break down in the debt ceiling talks caused the average resource investor to sell today - as expected.

Thursday, July 7, 2011

The Junior Resource Sector Lit Up Today

Many of the junior resource stocks I follow were up 10% or more today. The reason.....President Obama hinting that a debt deal is getting closer. Even though any deal will only kick the can down the road for another 6 months or so, the majority of investors are terrified of August 2nd coming without a deal. 2008 is still fresh in the Canadian resource sector and most retail investors spook easily. As long as a deal seems likely and with gold nearing all time highs, the juniors will scream higher into the Fall season.

Tuesday, July 5, 2011

49 North Resources up over 30% vs (10%) for the TSX-V since January

Just a quick update on 49 North Resources (FNR) which I labeled the one stock to own in 2011 if you could only own one stock. FNR is up over 30% since I first issued this report in January compared to a loss of over 10% for the TSX-V index. As production numbers from their heavy oil project get released later this Summer, I would expect this out performance to intensify.


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