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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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This JV Could Trigger A Shale Boom In An Unexpected Venue

Earlier this month I discussed the billions of dollars in investment capital lining up for natural resources.

Much of that cash is earmarked for energy. With one of the most-watched vehicles being American Energy Partners (AEP) -- a $14 billion start-up headed by Aubrey McClendon, former head of U.S. shale giant Chesapeake Energy.

And late last week, the market got some surprising news about where this shale insider is deploying his big funds. Related: Low Oil Prices: Assessing The Damage So Far In 2015

Australia.

On Thursday, Australian junior E&P Armour Energy announced it had signed a letter of intent with AEP -- focusing on the company's acreage in the McArthur Basin of Australia's Northern Territory.

The deal is a big one. With AEP agreeing to pay $100 million in work commitments in order to earn a 75% interest in Armour's tenements. Suggesting that AEP's management likes what it sees in the McArthur Basin, and is willing to pay up for it. Related: The Precarious Life Of Energy Engineers In The United States

In return, AEP will get access to a dominant land position in the basin -- with the joint-ventured land package covering 21.5 million acres.

And there have already been some intriguing results to support the unconventional potential here. With wells on the tenements having flowed up to 3.3 million cubic feet per day of natural gas.

As I've discussed previously , Australia has long been pegged by industry insiders as the next story for unconventional oil and gas. Because of the country's well-developed industrial sector, and its regulatory openness to resource development. Related: Wind Energy Could Blow U.S. Coal Industry Away

The new AEP deal is a major confirmation of the potential here. Making this a place to watch for news on drill testing and development over the coming months.

AEP and Armour Energy still have to finalize their JV arrangements. If and when they do, keep an eye on Armour (which is a public company) for results here.

Here's to sneaky shales,

Dave Forest

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  • Simon on August 25 2015 said:
    Australia has vast virtually unexplored unconventional gas and oil resources that have been ignored due to their being disconnected from the Australian East Coast markets where most of Australia's population reside. In effect these were regarded as stranded assets. However over the last couple of years there has been talk of the North East Gas Interconnector (NEGI) that will connect Australia's Northern Territory unconventional gas fields to Darwin and Gladstone where our huge LNG export plants are and also provide a pipeline to our southern states who are facing a 2-3 times increase in gas costs due to most of our current gas production going off-shore. The prospects of Armour Energy and Central Petroleum are further entranced by their basins being located in the least populated, most arid, regions of Australia so social impacts will be minimized. Adding to their attractions is the vastness of the areas withArmour's tenements being larger than the Barnett Shale and Eagle Ford Shale together and it takes a jet around 3.5 hours to fly across Central Petroleum's tenements. http://www.alternative-energy.com.au/forum/showthread.php?t=10015

    http://www.australian-gas.com/assets/images/North-East-Gas-Interconnector.jpg

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