Investing in the Paris Basin Shale Oil Play

The Paris Basin shale oil play in France has the potential to be 10 times the size of the Bakken play in North America, and some high profile exploration is beginning soon.

Estimates range from just a few to many tens of billions of barrels of oil in the Paris Basin. Much like the North American shale plays, these formations have been drilled through many times - there are over 1,000 wells drilled into the Basin - so exploration risk is low. It's completion risk - how to best unlock the oil from the rock - that is the main risk.

So there is a lot of data, which makes exploration much less risky. It also means that local residents are used to having oil wells drilled in the region - unlike New York state.

Activity by explorers in this part of France has been growing, and is now hitting a fever pitch. A huge land race is underway, with applications for more than 1.6 million acres pending approval for several companies, including Toreador Resources (TRGL-NASD)* in the US, Vermillion Energy (VET.UN-TSX) and Realm Energy (RLM-TSXv) in Canada.

Exploration - real drilling - in the Paris Basin will ramp up this fall. Toreador is the purest play. In May they announced an exploration deal with Hess Corp. (HES-NYSE) that could be worth as much as $265 million for 50% of Toreador's 600,000 acres in the play. They spud their first well into the play in Q4 2010. It will be one of the most watched wells in the world.

Canada's Vermillion Energy has also acquired acreage in the play and begun exploration activities. Vermillion is already recognized as France's largest oil producer.

Craig Steinke, executive chairman for Realm Energy, says, "The Paris Basin is arguably the most exciting shale play in Europe right now. We expect to acquire a good-sized position in this play."

Many of the European shale gas plays are being bought up by the majors and there are intermediate and junior producers in the game, which should keep news flow on the play steady for retail investors.

When this happened in North America, there was huge wealth creation as the juniors and intermediates were small enough that their stocks could benefit from a productive land position.

Like the big North American shale oil plays that enriched investors, the Paris Basin has big reserve potential, good existing well data, and a local population that's familiar with drilling.

Hopefully, history will repeat itself.

*Keith Schaefer owns shares in Toreador.

Keith Schaefer is publisher of www.oilandgas-investments.com. E-mail him at editor@oilandgas-investments.com.

About the Author
Keith Schaefer

Keith Schaefer, Editor and Publisher of Oil & Gas Investments Bulletin, writes on oil and natural gas markets – and stocks – in a simple, easy to read manner. He uses research reports and trade magazines, interviews industry experts and executives to identify trends in the oil and gas industry - and writes about them in a public blog. He then finds investments that make money based on that information. Company information is shared only with Oil & Gas Investments subscribers in the Bulletin – they see what he’s buying, when he buys it, and why. 

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