Start Stockpiling Before Summer

Forward to a Friend Having trouble viewing this issue? Click here. Refer a Friend to Energy and Capital.

Start Stockpiling Before Summer By Keith Kohl | Friday, April 19th, 2013 The good old days are gone. I know that's not what you want to hear. But it's the truth. A century ago, huge wells like Spindletop blew crude into the air at an incredible rate, spewing more than 100,000 barrels per day for a week and a half before workers could get it under control... In 2008 the average oil and gas well in the United States was actually six times deeper than Spindletop. And that gap is even wider today, when you consider how much the drilling of deep, unconventional oil formations has accelerated since. We're no longer discovering the gushers of years past. To add insult to injury, our future oil supply comes with a hefty price tag. Advertisement "Octopus" Drilling Technology 8 Times More Powerful than Horizontal Drilling This new technology will make America the most powerful oil and gas producing country in the world, toppling the mighty Saudi Arabia. In fact, this technology will double U.S. oil production to 11 million barrels per day. Most importantly, it will create a new wave of oil millionaires and billionaires over the next year... To get in on this opportunity, click here for full details.  The Cost of Our Oil Boom We've talked in these pages about just how far companies are willing to go for crude oil. I think it's just as imperative to understand how much we're truly willing to pay for those barrels... Although a traditional well can run a company a cool $1.5 million, depending on where they're drilling, even a small well can cost upwards of half a million dollars. At last count, only about one-quarter of all drilling rigs in North America are drilling vertical wells. The rest, as you've probably guessed, involve horizontal and directional drilling. And horizontal wells don't come cheap. The average cost per well increased more than 360% between 2000 and 2008! (click chart to enlarge) That price spike is actually a positive thing, as it's an indication of our oil boom. Without tapping into our tight oil and gas plays, production would have continued its decades-long decline. Expensive wells have become commonplace in the most prospective shale plays across the United States. In 2011 the average well cost in the Eagle Ford Shale was over $10 million; prices were even higher in the Bakken. I've actually heard of companies ponying up more than $16 million for a single shale well! I hope you can see the opportunity that's presenting itself... I'll let you in on a little secret when it comes to investing in the U.S. oil boom: The most profitable companies from here on out won't necessarily be the ones sitting on the most oil. No. Our biggest returns will be from companies that can accomplish one goal — improve drilling efficiency. A hundred years ago, wildcatters were frantically drilling across the country, hoping to strike oil. Nearly all of the older drillers have experienced the frustration of hitting a dry well. And I can't possibly think of anything worse than spending millions and hours of labor only to strike out. I mentioned earlier this week that today's Bakken drillers don't have this problem. The name of the game isn't finding the oil, but rather extracting it efficiently. So the only one area that needs to improve for that to happen is in the technology side of drilling. And that, dear reader, is taking place as we speak... Two Months to Stockpile Considering the fact that there are nearly 200 fewer rigs drilling in the U.S. than one year ago, it's difficult to believe production will keep growing. But that's exactly what's about to happen in North Dakota — within the next two months. Lynn Helms, director of the Department of Mineral Resources, reiterated this point for us. According to Helms, the drilling rig count is expected to jump by more than a dozen by early summer; state production is expected to top 800,000 barrels per day by the end of May. I'll give you three guesses as to how companies are going to do it, but you're only going to need one... It'll all come down utilizing multi-well pad drilling. When Helms reported an increasing amount of companies in NoDak are switching to multi-well pads, my eyes lit up. Rather than just putting one well on a single pad, these guys have typically been drilling up to eight. But for them, eight isn't nearly enough. Some shale players are putting more than a dozen wells on one pad, while others are gunning for at least 18. A few are pushing for as many as 24! This drilling strategy is driving down costs in turn — some by as much as 30%. This is precisely how they're going to boost Bakken production... My latest investment report outlines three stocks taking full advantage of multi-well pad drilling in this region. Taking the next step, however, is up to you. Until next time, Keith Kohl @KeithKohl1 on Twitter A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.   I liked this article | I did not like this article Follow Energy and Capital on The Bottom Line Related Articles Saudi Oil Greed Salty Saudi Tears Blockbuster U.S. Shale Formation Breaking Through the Bakken Bottleneck Recently... Solar Stocks Are Back! The Only Sure Bet in Oil Fracking Strikes Again! The Gushers are Gone Forever 25 Years' Worth of Gas Produced in Just 100 Days!

This email was sent to ignoble.experiment@arconati.us . You can manage your subscription and get our privacy policy here. Energy and Capital, Copyright © 2013, Angel Publishing LLC, 1012 Morton St, Baltimore, MD 21201. All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Energy and Capital does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment. Neither the publisher nor the editors are registered investment advisors. Subscribers should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question. Unauthorized reproduction of this newsletter or its contents by Xerography, facsimile, or any other means is illegal and punishable by law. Please note: It is not our intention to send email to anyone who doesn't want it. If you're not sure why you're getting this e-letter, or no longer wish to receive it, get more info here, including our privacy policy and information on how to manage your subscription.