Ben Dell, E&P analyst for Bernstein Research in New York, says E&Ps were in a “feeding frenzy” in the first quarter as they “have lapped up acreage in shales across North America.” Most attention went to reports on the Marcellus shale in Appalachia, as well as the Fayetteville, Haynesville and Ootla (in Canada), he says. Others are the Woodford and Barnett. During quarterly conference calls, shale was the word that Wall Street was tuning in. “Listening to the news flow during the quarter, one could have almost forgotten that oil and gas are produced from anything else but shale….” The biggest shale story of the past decade, the Barnett, “is looking like old news, even though growth prospects there remain strong.” He warns, “Within the shale-gas madness, though, lurk two dangers for the E&Ps: overpaying and over-promising. Regarding costs, as E&Ps scramble to announce acreage acquisitions at ever-higher costs per acre, the danger of acquiring useless land is considerable. Land prices are rising in the Marcellus and other shales, and those who join late will be punished by high costs for worse acreage, since the better land will already be taken.” Producers that Dell covers that have shale-gas plays are: Apache Corp. “During the quarter, Apache announced three large successful horizontal gas wells in the Ootla shale in northern British Columbia. The company cautioned investors about the Ootla, however, given various technical challenges ahead.” Chesapeake Energy Corp. “The company…announced that its development in the Haynesville shale would be one of the most important projects in company history….” Devon Energy Corp. “Devon's first-mover advantage in the prolific Barnett shale continues to bear fruit. (It is) continuing to drill aggressively on its 727,200 acres in the play, with minimal further leasing needed. The advantage…is material, considering the recent prices for Barnett acreage of $10,000 to $15,000 per acre…For those seeking exposure to the Barnett shale, Devon is a strong name, given its superior economics in the play. However, with its current price-to-cash-flow ratio near 8x, we remain cautious on Devon until the company can prove its complete portfolio.” EnCana Corp. “The company has strong positions in the Rockies and the Barnett, although it doesn't dominate any of the U.S. basins where it produces.” EOG Resources Inc. “Of all the announcements in the first quarter from the E&Ps, EOG probably had the most significant one. The company announced that it had succeeded in producing oil from horizontal wells in the Barnett shale, which no one had previously done. We agreed with the company that this had been one of the best-kept secrets in the industry…(Meanwhile) EOG may reveal more about its Marcellus shale activity, which the company has been guarded about until now. While EOG closed a sale in the first quarter for its shallow Appalachian gas assets, it retains its deep rights to the shale.” Newfield Exploration Co. “Newfield's main area for gas is now the Woodford shale, where the economics are improving and results are highly predictable.” XTO Energy Inc. XTO announced $2.1 billion in shale and other gassy purchases this year through April, including acreage in the Woodford, Fayetteville, Barnett, Fayetteville and Marcellus. “These purchases will fit well into XTO's strategy of acquire and exploit….” Dell also notes shale activity by producers outside his coverage group “may be worth watching:” CNX Gas, Penn Virginia Corp. and Cabot Oil & Gas (Appalachian/Devonian shale, which includes Marcellus) and Petrohawk Energy Corp. (Haynesville, Fayetteville). Watch for pressure on finding and development (F&D) and operating costs, and a resurgence in land-driller revenue outlooks, since shale plays require horizontal drilling and fracing. “Since the land drillers' revenues are the same dollars as the E&Ps' F&D costs, they will rise in tandem.” He concludes, “The challenge for investors going forward is determining which shales are game changing and worth paying a premium for. While shales are abundant, the determining factor for the peer group's performance is the ability to develop them at low F&D. In this respect, the Barnett and Marcellus may be differentiated, but further well data will be required to determine whether other shales have comparable economics…In this respect, it is not having shale that matters, but the economics of the well.” Dell can be reached at For more on the Haynesville, Barnett and Fayetteville, see: Haynesville Sightings, More On “Haynesville 101″; Fayetteville Deal Priced At $50K/Mcf/d; Dave Pursell’s ‘Bat Out Of Haynesville’ To Debut On ‘Shreveport Idol’, McClendon…On The Haynesville: The Next Barnett? and Larry Nichols…On The Haynesville Shale. –Nissa Darbonne, Executive Editor, Oil and Gas Investor, A&D Watch, Oil and Gas Investor This Week,;