Is the Paradox Basin the Place to be? Two Billionaires Think So – Resolute Energy Corp (REN)

While the company’s focus is on its approximately 127,000 acres targeting the Bakken, the company does consider its Paradox acreage part of its strategic growth plan.  In fact, management believes the Paradox Basin is a “potential game changer” for the company.  The company recently completed a well in the Cane Creek play of the Paradox Basin which was initially producing approximately 1,500 barrels of oil per day.

Other strategic growth properties for MDU Resources include approximately 90,000 net acres targeting the Heath Shale, 22,000 net acres in Central Texas, 65,000 net acres targeting the Niobrara, 10,000 net acres in South Texas and an option for 51,000 acres in Nebraska.

Bill Barrett Corporation (NYSE:BBG) has a very large acreage position in the Paradox Basin with approximately 366,000 net undeveloped acres.  However, the company has been allocating a minor portion of its capital expenditure budget to this play over the last few years.  Bill Barrett has historically been primarily a natural gas producer, but has been focused on reducing exposure to nature gas and focusing its capital expenditures on lower risk projects and oil plays.

Bill Barrett is currently focused on what management refers to as its core properties which include 121,285 net undeveloped acres in the Uinta Basin and 75,605 net acres in the DJ Basin primarily targeting the Niobrara Formation.  Other exploration properties include 64,000 net acres in the Powder River Basin, 97,000 net acres in the Southern Alberta Basin and 37,000 net acres in the San Juan Basin.

The bottom line

Of course the ownership of property in the Paradox Basin in itself is not a reason to invest in a particular company and each should be evaluated on individual merits.  Resolute is primarily extracting resources from its Paradox holdings through secondary and tertiary methods including CO2 flooding.  Bill Barrett is allocating a very small portion of its budget to the Paradox Basin acreage.  It is unknown when they will elect to explore the Paradox Basin in earnest so the company’s core properties should be the primary focus for evaluation.  MDU Resources seems to be very excited about its particular holdings in the Paradox Basin calling them a “potential game changer.”  The company is currently focused on both its Bakken and Paradox properties, however due to the company’s diversification; any upside from these holdings may be muted by the utility and construction segments.

The article Is the Paradox Basin the Place to be? Two Billionaires Think So originally appeared on Fool.com and is written by Alex Gray.

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