ETFs For The Niobrara Shale

When it comes to U.S. shale plays, most investors are familiar with the Bakken, Eagle Ford and Marcellus shales. Maybe you've been keeping up with the shale bonanza and are now familiar with the Utica Shale. That quartet is a good shale starting point, but go west young men and women and you will find what might just be America's next billion-barrel oil field. We're talking about the Niobrara Shale, which is found in the Denver-Julesburg Basin in North Colorado South Wyoming, Nebraska, and Kansas. For now, it appears most of the oil reserves are in Colorado and Wyoming, but that's not what's important. What is important when it comes to the Niobrara Shale is that there is a good chance there's more than a billion barrels of recoverable oil and natural gas there. We know that because on Monday, Anadarko Petroleum APC said said lands it controls in Colorado's Wattenberg field may hold more than a billion barrels of recoverable crude and natural gas. Wattenberg is in Niobrara. These are the ETFs you'll want to get acquainted with to play Niobrara. iShares Dow Jones US Oil & Gas Exploration & Production Index Fund IEO: If you're talking Niobrara, Anadarko has to be in the conversation. With an allocation of almost 9% to Anadarko, no ETF features more exposure to the second-largest U.S. independent oil and gas producer than IEO. Regardless, the chart shows IEO would be a buy above resistance at $65. Plus, the ETF features exposure to several Niobrara players. First Trust ISE-Revere Natural Gas Index Fund FCG: A frequent guest on our shale lists, FCG merits consideration here as well for this reason: EOG Resources EOG, Noble Energy NBL, Anadarko, SM Energy SM, Quicksilver Resources KWK and Chesapeake Energy CHK combine to account for about 17% of FCG's weight. The ETF could be a buy above $20. PowerShares Dynamic Energy Exploration & Production Portfolio PXE: The PowerShares Dynamic Energy Exploration & Production Portfolio is the only ETF that offers any decent exposure to Bill Barrett BBG, an unheralded Niobrara play. SM Energy is also found in this ETF's lineup. PowerShares Dynamic Oil & Gas Services Portfolio PXJ: Anadarko said it believes it can drill 2,700 in Wattenberg. That's just one company. In other words, Niobrara could see thousands of wells drilled there and the companies that call PXJ home are going to benefit from the Niobrara boom. The ETF is a buy above resistance at $22. Bull case: Niobrara meets or exceeds production estimates. Oil prices continue rising and natural gas prices catch a bid as well. Bear case: It's hard to see a bear case here. The wild card is Uncle Sam or state governments stifling shale production.