The Arckaringa Basin Could Be the Largest Shale Oil Find of All Time

The Arckaringa Basin Could Be the Largest Shale Oil Find of All Time

It’s a company called Linc Energy (OTC: LNCGY).

That a company this small is in the driver’s seat in a find this big is one of the major new wrinkles in these mega-projects.

It used to be (and we are only talking about four or five years back), that the top international majors would be calling the shots on mega- billion dollar projects like this one.

But what’s happening in the Arckaringa Basin is occurring more frequently — especially in this part of the South Pacific.

Today, small cap companies are controlling access to some of the biggest shale projects on the planet, requiring the big boys to rethink their strategies.

These developments provide individual investors some major opportunities to buy into projects with small companies at low cost or ride in on the backs of the majors and oil field service producers coming in.

And if you learn the right way to invest, there is some serious money to be made down under.

Both shale/tight oil and shale gas have significantly changed the hydrocarbon production landscape. Until recently, the emphasis has been on North American production.

However, studies from the U.S. Geological Survey, the International Energy Agency, and even OPEC itself have all concluded shale oil and gas is prevalent elsewhere in the world.

And that has led to new targets for major development.

The Shale Oil Boom Continues Down Under

For example, a second event is unfolding just north of Australia, where another small company just happens to control access to a massive project. This one is in Papua New Guinea, and it has some of the largest international majors just drooling over the idea of being involved.

However, the parade of big companies seeking a piece of significant projects controlled by much smaller operators hardly ends there, especially in this part of the world.

Chevron (NYSE: CVX) once again made news early yesterday morning by announcing it had agreed to pay as much as $349 million to join Australian minnow Beach Energy (OTC: BCHEY) in two separate projects.   

Both are shale gas plays – one in South Australia and the other in Queensland.

Now despite the huge projects Chevron already runs further west (the ones I know quite well from my work there), these two new concessions amount to the company’s first foray into Australian shale gas. These are Cooper basin developments, where several projects are into producing shale gas. Chevron is likely to take over controlling interest (as much as 60% in the first), while settling for a bit more than a third in the second.

Beach Energy is an Adelaide-based producer and does have depository receipts trading OTC in New York. However, the issue is that these shares have virtually no liquidity. No shares traded on Friday and the average number for the past three months is just 33 shares a day.

Therefore, there will be a likely big bounce in these shares, but there will be no way to control the rapid price rise and subsequent difficulty in exiting a position. Beach has greater liquidity on the Australian Securities Exchange, but trading on the ASX remains difficult for many non-Australian investors.

Nonetheless, the parade of internationals moving into Australian projects continues. Chevron joins the likes of U.S. companies ConocoPhillips (NYSE: COP) and Hess (NYSE: HES), Norwegian major Statoil (NYSE: STO) and U.K.’s BG Group (OTC: BRGYY), a more liquid depository receipt opportunity.

To sweeten the pot, the Australian government has recently estimated there may be as much as 400 trillion cubic feet (11.3 trillion cubic meters) of shale gas in the country.

[Full Article at link above]

 

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