Monday, September 26, 2011

Buckeye Oil Billions

Most investors have probably already heard about the new oil potential in Ohio via the Utica Shale. Great article in Forbes about the potential for thousands of jobs in this struggling manufacturing state. Would imagine that many a laid off employee in the manufacturing sector could potentially shift to the oil services sector. Sure it'll take training, but the skill set would appear similar.

Now if Obama's job ideas would just include money for retraining unemployed workers instead of short term tax breaks. Why does the government always come up short term ideas?

Or maybe Obama could just come up with an energy plan to take advantage of the new abundant oil and nat gas resources in the US. Sure he can for through with his green energy plan, but that is a long term plan for 2020 or 2030. What this country needs is a plan to make it to the 2020s living off the fuels already available. 

On a cautionary note, the more I read about the oil shale plays including our recent investments in Eagle Ford plays Carizzo Oil & Gas (CRZO) and C&J Energy Services (CJES), the more I get concerned that oil shale will do to the oil industry what natural gas shale has done to the nat gas industry in the US. Remember that the Bakken is just now swinging into full speed and the Eagle Ford is ramping up so the Utica would be the 3rd major play kicking up the production in a major way. Don't forget about the Niobara as well. Definitely something to keep on the radar for the future.

Oil is a international market so maybe it won't be that impacted until foreign locations kick up production as well. Possibly not enough exists like in the domestically isolated nat gas markets to crush it.

Read the article for more information on the Utica Shale and the potential for jobs in Ohio. Per a industry study, the following economic impacts are expected for the state by 2015:


  • 200,000 jobs
  • $12 billion growth in overall wages
  • $22 billion increase in state economic output
Incredible especially considering these investments could decrease the energy costs to US consumers and make us more energy independent. No longer reliant on Middle East dictators not that friendly to the US. One has to wonder why the government isn't full speed forward on plans that would speed up production. 

For now, Stone Fox Capital hasn't come across any clear winners from this shale other than the normal companies involved in the other areas. CJES would probably benefit from the expanded demand fir its fracturing services. In fact, it wouldn't be a surprise to see them deploy new fleets 6, 7, or 8 in the Utica or Marcellus areas to expand from the current focus on mainly TX, OK, and LA.


Disclosure: Long CJES and CRZO. Please review the disclosure page for more details.


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