This reemerging shale play is perfectly positioned for lng exports

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The reemergence of the Haynesville Shale has Chesapeake Energy, EXCO Resources and Freeport-McMoRan in the perfect position to profit as America starts exporting natural gas.

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  • http://www.eia.gov/naturalgas/crudeoilreserves/
  • http://www.aga.org/KC/ABOUTNATURALGAS/ADDITIONAL/Pages/HowtoMeasureNaturalGas.aspx
  • file:///C:/Users/Owner/Downloads/2014_AD_Poster_Sessions%20(1).pdf
  • http://media.corporate-ir.net/media_files/IROL/10/104617/2014_Analyst%20Day.pdf
  • file:///C:/Users/Owner/Downloads/Q1%202014%20Earnings%20Review.pdf
    And https://www.flickr.com/photos/royluck/5556781051/in/photolist-
  • file:///C:/Users/Owner/Downloads/Q1%202014%20Earnings%20Review.pdf
  • file:///C:/Users/Owner/Downloads/Q1%202014%20Earnings%20Review.pdf
  • http://www.fcx.com/ir/2014present/Howard_Weil_2014_Final_small_MAR14.pdf and https://www.flickr.com/photos/andyarthur/7734855298/in/photolist-deqma4-nMH1B3-7rwdK9-6bfNWz-foGiXm-5Er79u-eRVuDz-hwBJzg-4Gpbv3-4Gpcz9-4GjZqk-fFf1xu-fFf11b-gW29af-gW2ofQ-gW2o4N-gW2ghn-gW27Km-gW29bQ-gW2pnm-gW2nwA-gW3jYM-gW2dg3-gW28oW-gW2uxF-d6u3ES-4GpaYy-etzyFY-cMva17-5EmPqD-5Er7g1-5Er72L-5Er769-h5vagQ-h5uQsD-h5wbqR-h5vaY1-h5vayd-dQcqcX-9rTqCz-9rWhdf-fP4kri-nvoLvK-fP4kiz-6smTmS-cKmnpq-bg6vWP-7x1piA-6shJke-4Aup3r
  • file:///C:/Users/Owner/Downloads/Q1%202014%20Earnings%20Review.pdf
  • This reemerging shale play is perfectly positioned for lng exports

    1. 1. This Re-Emerging Shale Play Is Perfectly Positioned for LNG Exports Photo credit: Chesapeake Energy
    2. 2. The Haynesville-Bossier Shale in Texas and Louisiana is loaded with natural gas.
    3. 3. According to the U.S. Energy Information Agency, it holds 17.7 trillion cubic feet of proven reserves.
    4. 4. That’s enough gas to meet the needs of 17.7 million American households for 15 years.
    5. 5. There’s probably more gas than that, but it’s not currently economical to drill.
    6. 6. The economics will change as natural gas export facilities begin to come online.
    7. 7. That’s because the Haynesville Shale … … is perfectly positioned to fuel natural gas exports. Source: Chesapeake Energy Investor Presentation
    8. 8. That sets the following companies up for future profits.
    9. 9. Chesapeake Energy • 387,000 net acres in the Haynesville. • Estimates those acres hold 10 trillion cubic feet equivalent of recoverable natural gas reserves. NYSE: CHK
    10. 10. Chesapeake Energy • One of the leading drillers in the play with 728 producing wells. • Chesapeake Energy has at least 1,900 undrilled future well locations. • Company operating 7-9 rigs in 2014, which are drilling wells more than million dollars cheaper than just last year.
    11. 11. Chesapeake Energy • One of the leading drillers in the play, with 728 producing wells and average daily production of 495 mmcfe. • Meanwhile, Chesapeake Energy has lots of running room, with at least 1,900 undrilled future well locations. • The company is operating seven to nine rigs in 2014, which are drilling wells more than $1 million cheaper than just last year.
    12. 12. EXCO Resources • 70,000 net acres in the Haynesville- Bossier. • Currently 600 high- rate-of-return drilling locations. • Up to 1,206 locations with higher gas prices. NYSE: XCO Photo credit: Flickr/Roy Luck
    13. 13. EXCO Resources • One of the leading drillers in the play with 728 producing wells. • Chesapeake Energy has at least 1,900 undrilled future well locations. • Company operating 7-9 rigs in 2014, which are drilling wells more than million dollars cheaper than just last year.
    14. 14. EXCO Resources • It spent $320 million to bulk up on its position in a deal with Chesapeake Energy last year. • It reduced its drilling costs from $9.5 million in 2011 to $7.2 million at the end of last year. • At current prices and pace, EXCO can drill for 14 years and earn a 20%-plus internal rate of return. • As the price of gas moves up, so do EXCO’s drilling opportunities and returns.
    15. 15. Freeport-McMoRan Copper & Gold • Estimates its resource potential in the Haynesville is about 5 trillion cubic feet equivalent of recoverable natural gas. NYSE: FCX Photo credit: Flickr/Andy Arthur
    16. 16. Freeport-McMoRan Copper & Gold • Freeport-McMoRan acquired its Haynesville Shale position last year, when it bought Plains Exploration & Production. • Its current focus is to hold acreage and manage the asset for cash flow. • However, once gas prices improve, Freeport- McMoRan has 11,000-plus future locations that can be drilled.
    17. 17. Investor takeaway All three companies have the potential for needle-moving growth if natural gas prices improve as America begins to export gas.
    18. 18. OPEC’s Worst Nightmare

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