New Oil Play in Louisiana-Arkansas Area?

Jefferies & Company reported that a new oil play may be developing along the Louisiana-Arkansas border. Located in lower Smackover, the area of interest contains “exceptionally thick, organic rich, laminated lime mudstone”. These are known to be part of the low permeability and porosity zone, therefore rendering it more expensive. To access these resources more efficiently, advancements in horizontal drilling technologies are necessary, as vertical wells have proved to be rather inefficient. There have been previous discoveries in the area, ranging back to the 1920's. Over the past 80 years, ventures primarily focused on upper Smackover, or high permeable and porous, with the lower areas receiving less attention due to its lower permeability. However, the upper Smackover play is fairly mature, leaving lower Smackover relatively unexplored. Last year, Branner Engineering drilled a horizontal well into the area, but the results were not made public. As of now, Jefferies notes that “success is far from certain” due to the lack of favorable horizontal drilling results. New resource capture is a valuable catalyst for long-term exploration and production stocks. Jefferies lists the following companies that are exposed to the oil play: Chesapeake Energy Corporation CHK, ConocoPhillips COP, EOG Resources, Inc. EOG, El Paso Corporation EP, Forest Oil Corporation FST, Petrohawk Energy Corporation HK, Marathon Oil Corporation MRO, QEP Resources, Inc. QEP, SM Energy Company SM, and Exxon Mobil Corporation XOM.