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Companies Drilling in the Monterey
Shale - Monterey Shale Stocks
Venoco Inc. (VQ) is a company with one of the largest stakes in the
Monterey Shale. Venoco currently over 300,000 acres in the Monterey Shale under lease and has over 10 billion barrels
of oil available for extraction at its current sites.
VQ 2011 Update - The company spent $34 million or 50% of its second quarter capital expenditures on projects targeting the onshore Monterey
shale formation. The company spud two wells during the quarter and set casing on five wells that were spud earlier in the
year. During the first half of the year the company spud seven wells and set casing on eight wells (including wells spud during
2010). The company expects to drill three to four additional delineation wells in its Sevier discovery during the second half
of the year. The company also continues to expand its onshore Monterey acreage position which is currently approximately 304,000
gross and 214,000 net acres across three basins: Santa Maria, Salinas Valley, and San Joaquin (which includes the Sevier discovery).
Of these totals, approximately 60,000 gross and 46,000 net acres with Monterey shale production or potential are held by production.The company is currently operating one rig in its Monterey shale play and
is working to identify and secure up to four additional rigs by year-end 2011. The increase in rigs would be in anticipation
of much greater activity in 2012 when the company currently expects it may run six to eight rigs in the play and spud between
50 and 75 primarily vertical wells, as warranted by drilling and production results. 2012 drilling activity will be focused
on delineation and development wells in the company's Sevier discovery, in the area covered by the company's joint 3-D seismic
shoot (with Occidental Petroleum) in the San Joaquin Valley and, after completion of an anticipated 3-D seismic survey, in
the Salinas Valley. "We are shoring up our development plans for the Sevier discovery and have been in contact with
the agencies to ensure we have a clear path forward to develop this discovery. We currently expect to drill 30 to 40 wells
there next year," said Mr. Marquez. "We were pleased to see the recent U.S. Energy Information Administration's
assessment of emerging resource plays, which confirms a lot of what we've been saying about the Monterey's resource potential.
Not only is the Monterey shale the largest overall play, it also dwarfs all other individual U.S. oil shale plays. According
to the EIA, at 15.4 billion barrels the Monterey shale represents 64% of the technically recoverable shale oil resources in
the lower 48 states," commented Mr. Marquez. "While to date we have not seen significant cumulative production
as a result of our drilling in the onshore Monterey, we have been encouraged by the scientific information collected thus
far. After extensive logging, coring and testing we have accumulated sufficient data from our vertical wells to announce discoveries
in our Sevier prospect in Kern County and in our Salinas Valley prospect," said Mr. Marquez. "We believe the resource
potential in Sevier is approximately 90 MMBOE on 20-acre spacing and approximately 44 MMBOE on 40-acre spacing in the Salinas
Valley." Occidental Petroleum Corp. (OXY)
is another key player involved in the Monterey Shale. The company currently has over 1.2 million acres in the Monterey Shale
(located mostly in Kern County, California) and plans to spend $6.3 billion developing the acreage over the next four years.
Canadian Natural
Resources Limited (CNQ) is an Independent Oil and Gas Company engaging in the exploration, development, and production
of crude oil. They currently hold over 70,000 acres of prime shale gas land in the Monterey shale.
Plains Exploration & Production PXP - Well, we haven’t done the operations onshore in the Monterey Shale. Our strategy there, if you recall, is to wait till the operators.
They were doing a lot of work there. Venoco being number one. I think it has five or seven wells they are going to drill and
take a very scientific approach and try some horizontals and so forth. We have our 100,000 acres or 86,000 acres there. So
we’re waiting for the big announcement for us to get busy. Lately, the announcements were a little muddy at best. So
we’re in a wait-and-see mode there. I think Oxy is doing the same thing. They may do a little more technical work, but
they have got a couple million acres. So, as long as other people are spending their money on and
trying to make it commercial, we’ll sit and watch that. We’ll focus on our own business. We are shooting a 3D
in the San Joaquin Valley with all the major leasehold owners out there, Aera, Chevron and so forth. So we’re doing
some deep work to work on other zones, but those are more – that would be more a continuation of what Oxy had success
on, some of the deep wall traps and some of the Miocene sand and some imaging deals to show additional productive deal. Obviously,
we’ll drill the Monterey on the way down
and if it’s prospective, we’ll look at it. But it’s way too early for us to be making a call that something
we wanted to put a lot of capital in. Plains Exploration PXP 2011 Update - In our core California asset area, Platform Irene is shut-in for planned maintenance.
The work began mid-January and is expected to be completed by the end of the first-quarter 2011. Onshore California,
PXP continues its active development program in the Los Angeles and San Joaquin Basins. With
a large resource inventory identified for this asset area, it will sustain multi-year drilling programs providing future reserves,
production and free cash flow. California is PXP's largest asset area with approximately
211 million BOE of proved reserves at year-end 2010 of which over 95% is oil. PXP maintained average daily sales volumes of
approximately 40,000 BOE per day throughout 2010 and expects a 3% to 5% sales volume increase during 2011.
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