Tuesday, September 9, 2014

Falcon Crest Energy (FCEN) Well Positioned for Growth in Burgeoning Powder River Basin

The Powder River Basin in northeastern Wyoming (as well as part of southeast Montana), historically known for its abundant reserves and production of coal, has been on a tear in recent years, stacking more and more oil production as fracking technology proliferates (with emphasis on the Niobrara, Shannon, Sussex, and Turner formations). Despite widespread fracking throughout the major U.S. oil plays creating a glut of energy supply and dragging down prices somewhat, supervisor of the Wyoming Oil and Gas Conservation Commission (WOGCC), Mark Watson, told NGI’s Shale Daily last week that the future for Wyoming in particular looks pretty good, with flaring and groundwater impact issues that have hampered other states well in hand and production continuing to accelerate apace of expectations.

With over three decades in the game, Watson’s projections carry significant weight and his assertion that while natural gas production is slowing, increasing rig counts and oil production are quite bullish, looks quite accurate. Current gas production state-wide is around 5 Bcf per day and oil is around 200k BOPD and rising, with Watson noting as many as 10 rigs added in just the last few weeks and that horizontal activity in the southern Powder River Basin (PRB), as well as the northern DJB (Denver-Julesburg Basin), continues at a good clip. Wyoming crude production was up more than 22% in June this year (214k BOPD) compared to the same month in 2013, a healthy jump from the 11% to 15.5% YoY increase seen for the January to May period. With news breaking this week that Enterprise Products Partners (NYSE: EPD) is looking to put in a Bakken to Cushing pipeline that would also run through Wyoming and Colorado, picking up PRB/DJB oil along the way to take to the central oil facility in Oklahoma, we could see even more upside materialize here, especially for smaller PRB players like Falcon Crest Energy, Inc. (OTC: FCEN).

Falcon Crest Energy just announced a 75% WI leasehold acquisition from the BLM last month of some 585 acres in the PRB and the company is currently hard at work looking to tack on additional private leasehold rights to expand their federal land position. With a narrow focus and clearly defined strategy of minimizing risk by working in proved petroleum reserves, FCEN will be pursuing an established model for developing and turning over properties that should offer investors a predictable and sustainable growth curve, closely tracking that of the PRB itself.

With a solid bench of industry veterans for management, including their lead petroleum engineer and geologist, George Wulf, who has nearly six decades in the industry under his belt, development-stage FCEN is on its way to becoming a hot E&P player in Wyoming and they reportedly have several additional acquisition/JV targets currently in the hopper. The company has done some key managerial overhauling this year in general, including launching an advisory council to spearhead corporate initiatives, bringing in men like 35-year veteran commercial lawyer Peter Kent and former land strategy manager for big boys like ConocoPhillips, Scott Davis.

A clear strategy, overhauled/streamlined managerial structure and now a primary acquisition where partners L & J Operating Inc. (operator) out of Gillette and the Texas-based Evergreen Petroleum have extensive experience, all makes for a strong lead by Falcon Crest in the PRB that is worth checking out.

For more info on Falcon Crest Energy, visit: www.FalconCrestEnergy.com

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