2016: The Shale Year

The way the government across the pond is going right now, there’s one unerring conclusion to draw: We are going to see substantial UK shale activity in 2016.

I understand that thought will cause some fractivists to toss and turn at night before waking up in a cold sweat.

Unfortunately, the cold, bitter pill for us to swallow is that the UK is in the same situation that an increasing number of net energy importers are finding themselves: in need of diversifying its energy supply.

Yes, this includes more investment in renewable technology, which only makes sense. Don’t get me wrong, dear reader — that transition will inevitably take place… but it won’t happen overnight.

Keep in mind that in 2012, oil, coal, and natural gas accounted for 87.4% of the UK’s primary energy consumption!

2016: The UK’s Shale Year

What makes the statistic above an absolute nightmare for the UK, however, is the fact that the country is a net importer of all three of those energy sources:

It’s never a pretty picture when you have to start relying on things like OPEC, or even Russia, to meet your energy demand.

This dynamic, however, could change significantly in the coming years… with 2016 being a major catalyst.

It’s all thanks to just two geologic basins that most people have never even heard of before today…

What’s more is that at first glance, you might get the feeling that this opportunity is similar to when we first started investing in U.S. tight oil and gas back in 2005. It was a period when companies were just beginning to put their drill bits into the ground and discover the real potential of plays like the Bakken.

You don’t need me to tell you how vital a role tight oil and gas resources play in the United States.

Roughly six out of every 10 barrels of crude oil extracted within the United States are from just one of seven key shale-producing regions. Furthermore, these seven regions accounted for 95% of the United States domestic oil production growth between 2011 and 2013.

But while the UK shale sector is still in its infancy, there are some drastic differences between then and now…

Perhaps the most obvious is the fact that when independent U.S. companies first began tapping into areas like North Dakota, nobody had any idea what was about to happen.

In other words, companies have been cracking the shale code for a full decade, and they’ve become quite efficient at it. Despite seeing a decline in the number of drilling rigs, the new-well oil production per rig has surged higher over the last few years.

Here’s just one example of how efficient new rigs have become in both the Bakken and Eagle Ford:

Click Chart to Enlarge

This is the kind of potential we’re talking about when it comes to the UK, and the only question now is to find out where the activity will take place.

Although there are many regions in the United States that hold tremendous potential for shale development, the UK is different — there are only two major areas, and both have had their fair share of interest now that the government is getting on board.

The British Geological Survey estimates that between 822 and 2,281 trillion cubic feet of natural gas-in-place is contained in northern England’s Bowland Basin, with the average estimate pegging the number around 1.3 trillion cubic feet.

On the other side of the shale coin, UK Oil & Gas Investments made its own jaw-dropping announcement in southern England’s Weald Basin, where there’s a reported 271 million barrels of oil per square mile!

To give you an idea of how one discovery like this can be a game changer, just consider that a year ago, there was only believed to be approximately 4.4 billion barrels of crude in the Weald Basin.

The Kings of the North

We’re not the only ones to see the investment potential here. Canaccord Genuity has put a “speculative buy” rating on IGas, with a 55p price target — a 175% upside from its current value.

And when you see the direction that Parliament has been headed, it’s hard to argue against a company that has exposure to those two major shale plays I just mentioned.

Yet because this story is still in its infancy, I can also understand how daunting it can be to search the UK’s shale sector for potential winners.

That’s why I’ve taken some of the legwork out for you…

You see, there are currently three must-own UK shale stocks perfectly positioned for this upcoming surge in activity. Not only is each one in itself considered an unconventional diamond in the rough, but together they offer small, individual investors like us access to both of the UK’s shale prospects.

Until next time,

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

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