Anadarko Petroleum Corporation (APC), Chesapeake Energy Corporation (CHK): Show Everyone The Money

Page 1 of 2

Looking for a new “get rich quick” scheme? Head down to South Texas and start drilling wells in the Eagle Ford Shale then, as nearly every company with acreage down there is experiencing outstanding production right now. Production in the play popped 74% year over year in February, bringing production to about 471,000 barrels per day. Today I’ll highlight three players reaping the Eagle Ford’s benefits, as well as the one poor exploration and production company that goofed and somehow lost money in South Texas.

Show everyone the money
Anadarko Petroleum CorporationWe’ll start with Anadarko Petroleum Corporation (NYSE:APC). The company recently announced that sales of crude oil and natural gas liquids in the Eagle Ford jumped 60% year over year, to 28,000 barrels per day. The company plans to bring a natural gas processing plant on line this quarter, which should have a capacity of 200 million cubic feet per day.

Moving on to Chesapeake Energy Corporation (NYSE:CHK), the debt-ridden natural gas producer is reporting that the Eagle Ford is the driving force behind a big increase in the company’s oil production. Management expects to produce 1 million barrels of oil more than originally anticipated, on account of drilling longer laterals, better than expected well results, and sufficient midstream infrastructure– which is something that is currently holding back Chesapeake’s production in the Marcellus Shale.

Naturally, no story mentioning Chesapeake Energy Corporation (NYSE:CHK) would be complete without mention of an asset sale. It is the second-largest leaseholder in the Eagle Ford, after EOG Resources Inc (NYSE:EOG) , and the company plans to sell off its northern block of acreage in the play to anyone who wants it. Given the company’s recent history for disappointing investors on price when it divests acreage, we can expect that someone will come away with pretty good deal.

Finally, we have Halcon Resources Corp (NYSE:HK), a small company that is worth mentioning here because it is targeting the East Texas section of the Eagle Ford. The company has seven producing wells and 50,000 net acres in the Eaglebine section of the play; it aims to eventually bring that number up to 150,000 acres and drill an additional 15-20 wells this year. Halcon Resources Corp (NYSE:HK) estimates that its reserves may be in the neighborhood of 350,000-400,000 barrels of oil equivalent, though it is worth mentioning that average production so far has turned out to be 94% oil.

Almost everyone is getting rich
In summary, production is way up in the play, Halc贸n is finding success in an obscure corner pocket, midstream infrastructure is in place, and it’s basically raining money for the oil and gas industry in South Texas. It sure seems like a company would really have to go out of its way to blow it in the Eagle Ford, and that’s exactly what Hess Corp. (NYSE:HES) did.

Forbes‘ Chris Helman has the whole Hess Corp. (NYSE:HES) soap opera here, but essentially the company put Chesapeake Energy Corporation (NYSE:CHK) to shame by selling a large amount of acreage for a very small amount of money, and then took a giant tax-hit on it to boot. Hess teamed up with the tiny, yet courageously named, ZaZa Energy Corp (NASDAQ:ZAZA) for an Eagle Ford joint venture, poured over $1 billion into the project and then bailed to avoid another $500 million in drilling costs. The company is dealing with plenty of corporate governance issues right now, but this is one failure investors may have a hard time forgiving.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!