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Will Shift to Anadarko Reshape the U.S. Shale Play Map?

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In a low oil price environment, oil companies looking for options to reduce the cost of production and cope up with oil price volatility. For this reason, many of the U.S. oil companies have left the Canadian oil sands and moved to the Permian Basin where production cost is lower.

Apart from the Permian Basin, there are five other major oil producing regions in the United States, which are covered by EIA in its monthly Drilling Productivity Report. These include Appalachia, Bakken, Eagle Ford, Haynesville and Niobrara.

However there is growing interest in another shale play located to the north of Permian Basin. It has witnessed a brisk increase in investment and drilling activity recently, which has prompted the EIA to include the region in its monthly Drilling Productivity Report. The growing presence of shale players in the Anadarko region may have led to its inclusion. The region incorporates 24 Oklahoma and five Texas counties.

Production Related Details

In terms of production, the Anadarko region generated 447,000 barrels of oil and 5,979 million cubic feet of gas per day in August 2017. Moreover, the region is becoming popular due to surging natural gas production and the trend is expected to continue in the coming month.

The month over month data shows that the region is likely to register an increase in oil and gas production, for September 2017, by 12,000 barrels and 78 million cubic feet per day, respectively.

Why the Shift?

The interest in Anadarko region – incorporates one of the most prolific natural gas reserves in North America – can be attributed to the rising opportunity of using upgraded drilling and completion technology.

Another factor that is increasing the focus on Anadarko is rising lease operating expenses in the Permian Basin. There is also a shortage of oilfield services and occasional production hiccups from time to time in the Permian Basin. Investors should know that 129 rigs, as of July, were actively engaged in drilling activities in Anadarko basin, which were less than 373 active rigs in the crowded Permian Basin.

The Anadarko region includes the STACK (Sooner Trend Anadarko Basin Canadian and Kingfisher Counties) and the SCOOP (South Central Oklahoma Oil Province) plays. These two areas have witnessed an increase in investment from exploration and production companies in the recent years.

Anadarko Petroleum Corporation (APC - Free Report) , SandRidge Energy, Inc. , Continental Resources, Inc. (CLR - Free Report) , Newfield Exploration Company (NFX - Free Report) , Apache Corporation (APA - Free Report) , and ConocoPhillips (COP - Free Report) are among the oil companies operating in the basin. Anadarko Petroleum Corporation presently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.   

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