Wyoming’s Powder River Basin (PRB), the source of the largest coal reserves in the U.S., where the top 10 producing coal mines in the country are located (representing roughly 40% of national supply), is becoming increasingly well known for oil production as horizontal drilling and hydraulic fracturing technology continues to proliferate. Technological drilling innovation is continuing to unlock more and more of the Turner, Parkman, and Niobrara-Codell formations in particular, which have gone from only 12% of basin-wide oil production in 2009 to over 46% as of this year, with some 36.6k bbls/day as of Q1.
Oil production is up sharply across the PRB in general, with EIA data showing production has more than doubled since 2009, to around 78k bbls/day as of Q1 2014. The meat of the PRB is in Wyoming, and of the 590 wells drilled since 2009, the vast majority are up in the northeast, in Converse and Campbell county. The PRB’s energy reserves are so abundant in fact, that the basin is even seeing pioneering activity in the long sought after industrial process of underground coal gasification (UCG). Linc Energy (ASX:LNC) recently received EPA and WDEQ (Wyoming Department of Environmental Quality) clearance for the first domestic R&D license in two decades for UCG, signifying that the time may have finally come for this technology to really take hold in the U.S., following fast on the heels of Linc Energy’s successful testing of this technology in Australia.
The immense commercial potential of hitherto underexploited oil in the PRB’s less-permeable formations, now made readily accessible through horizontal drilling and fracking, has ignited a firestorm of activity in recent years, attracting many developers and investors to the region. One such company is development stage Falcon Crest Energy (OTC: FCEN), whose recent appointment of 35-year veteran geologist Michael Cvetanovic to the company’s Advisory Council signals to markets how serious the company’s move is to generate sustainable revenues in the PRB, through shrewd execution of their 100% acquisition and JV-focused regional strategy.
Cvetanovic has been in the game for almost four decades and has worked in difficult overseas environments like Indonesia, New Zealand and Nepal to name but a few, working with E&Ps ranging from start-up to mid-sized, in a variety of roles, both at home and abroad. Not only does Cvetanovic possess a strong set of technical skills in the areas of petroleum system evaluation and regional play analysis, he has been instrumental in applied prospect generation across a wide range of geologies on multiple different continents, doing both on and offshore drilling. Cvetanovic has played supervisory roles in both drilling and seismic work, yet also possesses considerable experience negotiating corporate acquisitions in often difficult to navigate overseas markets, as well as handling even more complicated farm-in and JV arrangements.
Falcon Crest’s focus on the PRB will be well-served by Cvetanovic’s skill set and the company’s emphasis on delimiting exploration risk through the targeting of proved petroleum reserves, dovetails exceptionally well with Cvetanovic’s own proven capabilities. FCEN already holds a significant leasehold position in Crook County’s (the most northeastern county in the state) Rocky Ford oil field, with a 75% WI in some 585 acres of prime territory via a BLM deal and the company has their sights set on expanding their existing footprint, to become a leading regional E&P, with multiple irons currently in the acquisition fire.
Regional operator Chesapeake Energy (NYSE: CHK) just posted double-digit, quarter-over-quarter Q3 production growth, including their Powder River Basin assets, with around 726k BOEPD on average, further illustrating the basin’s potential. FCEN looks to achieve similar and even greater success, with a leaner, meaner business model and a more investor-accessible share price. As such operators continue to snatch the power of OPEC to steer global oil prices away from Mideast exporters, returning the power to set our own energy destiny to the U.S., markets will no doubt will be keeping one ear to the ground for news out of development stage opportunities like Falcon Crest.
To learn more about Falcon Crest Energy, please visit www.FalconCrestEnergy.com
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