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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