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Weekend: The Hottest North American Oil Play

Written By Brian Hicks

Posted June 4, 2011

Welcome to the Wealth Daily Weekend Edition — our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles.

If you’re looking for a bright spot in an otherwise gloomy economy, look no further than Eagle Ford Shale…

As we have found in other new shale projects such as those being worked in the Marcellus and the Bakken there are boom times connected to this massive new find everywhere you look…

A vast formation that stretches 400 miles across Southwest Texas, the Eagle Ford Shale could potentially be one of the biggest U.S. oil and gas discoveries of the last forty years. It is that big.

And with oil prices now hovering around the $100 mark, the Eagle Ford has emerged as one of the hottest North American shale plays, since most of the resources found there are in oil rather than natural gas.

As a result, the number of drilling permits in the Eagle Ford skyrocketed last year, jumping by 974%. In all, permits soared from just 94 in 2009 to 1010 in twelve short months, according to the Railroad Commission.

Of course, with of this all new activity has also come volumes of new domestically-produced energy. Oil production in the Eagle Ford has jumped tenfold to more than three million barrels, while natural gas production jumped from 17 billion cubic feet to 79 billion cubic feet in 2010.

Where to Find Jobs in America

But it’s not just on the energy front where the economy wins with this one.

Thousands of jobs are also created as these projects take shape. According to a recent study by the University of Texas, the economic activity in the Eagle Ford Shale has generated 6,800 full-time jobs and paid $311 million in salaries and benefits.

What’s more, the study found the shale play supported 12,600 spin-off jobs and paid an additional $512 million in salaries.

Given the size and scope of the find, however, those jobs are just the beginning…

A recent study concluded that, over time, the Eagle Ford Shale could support 68,000 full-time jobs in Texas by 2020 and generate more than $21.5 billion in total annual economic output.

The problem is there are so many new jobs to be found in the Eagle Ford Shale, companies are now worried that may not be able to fill the new openings fast enough.

(Now that’s something that you don’t read about every day. If only the rest of the job market had those kind of troubles…)

But thanks largely to new horizontal drilling techniques, the Eagle Ford Shale is just one of the many hydrocarbon-rich areas experiencing boom times while the rest of the economy stumbles.

Another is located in North Dakota, where the drilling in the Bakken formation is delivering similar results. From a trickle not long ago, the region is now producing 400,000 barrels of oil a day. And some experts believe the Bakken could produce as much as one million barrels a day by the end of the decade.

You shouldn’t be surprised to learn that North Dakota has practically sat out the entire current recession with a measly unemployment rate of just 4% — less than half the national average.

Of course, without the new drilling techniques I mentioned earlier, none of this ever would have happened — even though we have known about these areas for decades. For a long time, the problem was oil companies never had a good, money-making way to coax out the energy and create those new jobs…

But that all changed when horizontal fracking was introduced, unlocking vast tracts of the United States to new areas of exploration and production. Take a look:

bminus3Believe it or not, the map above is one of the keys to a new energy future in the United States, as it works to help make us less dependent on imports while creating thousands of new jobs in a tough economy.

Eagle Ford Shale Stocks

One of my favorite Eagle Ford shale stocks is a company called Petrohawk Energy Corp. (NYSE: HK)


Priced in the mid-$20s, this Houston-based company has a forward P/E of 15.20 and was the first company to make a commercial discovery in the Eagle Ford three years ago.

In all, the company has access to 332,300 acres in the Eagle Ford to go along with sizable areas within the Permian Basin and the Haynesville Shale. As a result, production is expected to grow by 41% in 2011 — with production in the Eagle Ford Shale making the biggest jump for the company.

That’s one of the keys for Petrohawk, as it will allow the company to derive a much bigger slice of its revenue stream from oil rather than natural gas.

And at these prices, that makes HK an attractive take-over target.

Another way to play this brewing oil boom is with a company Keith Kohl has discovered. They’ve developed a new method of horizontal fracking that’s considerably less destructive to the environment. Due in part to the growing controversy that surrounds fracking, Keith believes this one is poised for massive gains.

Their technology is currently being used at 236 drill sites in North America… To learn more about this fast growing company click here.

As for more great investment ideas, check out the week’s top-read Wealth Daily and Energy & Capital articles below.

Your bargain-hunting analyst,

steve sig

Steve Christ
Editor, Wealth Daily

The Billion-Dollar Blunder: A Run for the Ages
Editor Chris DeHaemer discusses a forgotten 1991 report that has left a $3.00 company sitting on $224 billion worth of oil. Chris says its current run-up of 1,033% gains is just the beginning…

Box Seats to the Collapse: We’ve Reached the Point of No Return
Editor Luke Burgess explains precisely what investors need to do to avoid the brewing disaster.

China’s Copper Pipe Dream: Economic Facts Can’t Beat Down Copper’s Locked-in Trend
Supply and demand can’t hold a candle to copper’s memetic power. Forget the facts… leverage the fantasy!

$4.00 is Still Cheap Gas: Invest Accordingly
Next time you feel like complaining about high gas prices, just do what I do: Change your perspective.

Bet on This Rare Earth Stock Next: Elissa Resources (ELI.V)
Analyst Ian Cooper introduces a 38-cent company that may hold what rare earth giants desperately want.

A Golden Age for Money: The New Money is Gold
Analyst Luke Burgess explains why, as common perception starts to reevaluate gold and silver as currencies rather than commodities, everyone from market makers to amateur investors will diversify heavily into this once-fringe market.

More Profitable than Big Oil: Taking Advantage of Big Oil’s Buying Frenzy
Keith Kohl offers investors a more profitable alternative than the struggling supermajor oil companies.

Housing Market Will Weigh on U.S. Economy For Years: The Most Important Economic Barometer Today
Analyst Greg McCoach explains why owning physical metals is all you can do to protect yourself from the terrible and unfortunate economic events that loom in our near future.

The Undiscovered Arabian Oil: What Happened to the Other Half of a Legendary Reserve
It’s a story that spans two continents and three decades, and right now, it’s standing at the threshold of a fundamental shift in global economics… What investors should know about the future of East African oil.

Fifteen Reasons for $5 Gasoline: Chaos and Oil Shortages Abound
Christian DeHaemer explains the current global oil shortage and why you should expect it to get worse.