Motley Fool says Oklahoma firms in the Powder River Basin could be in line for greater success

At least one financial advising firm, The Motley Fool is suggesting the country’s next hottest oil producing region will be the Powder River Basin in Wyoming.

This week, the Motley Fool explained its reasoning—that the Permian Basin production will slow in the coming year because of a lack of pipelines to move the product to the Gulf Coast refineries.

“Output currently stands at around 3.3 million barrels per day (BPD) and has increased an astounding 800,000 BPD over the past year, which represents more than half of the worldwide production increase. That fast-paced growth, however, is about to come to a screeching halt because there is only enough pipeline capacity to move 3.6 million BPD. While the industry is building new pipelines as fast as it can, the current bottleneck could last until late next year,” wrote the firm.

It went on to suggest that the slowdown will open the door for the Powder River Basin where numerous Oklahoma energy companies have been exploring for the past few years.

” That gives producers with land in the region a leg up on the competition, which is why investors should put this area on their radar,” added the advising group.

Here’s what the Motley Fool said of Chesapeake Energy’s investment in the Powder River Basin.

“Chesapeake Energy (NYSE: CHK) is also excited by what it sees in the PRB. The shale driller pointed out in its second-quarter report that the region was “quickly establishing itself as the growth engine of the company.” That’s after output in the area surged from an average of 18,000 BOE/d at the end of last year to 32,000 BOE/d by mid-July. Chesapeake expects its PRB production to reach 38,000 BOE/d by the end of this year and for it to more than double in 2019 compared to this year’s average.

Driving Chesapeake’s growth is its focus on the Turner. However, the company is looking at adding another drilling rig next year to possibly explore some of the region’s other formations, including the Teapot, Parkman, Sussex, Niobrara, and Mowry. Given EOG’s recent success in those latter two plays, Chesapeake Energy’s acreage could also hold a treasure trove of oil riches in the region.”

Devon Energy was included in its analysis.

“Devon Energy (NYSE: DVN) and Anadarko Petroleum (NYSE: APC), meanwhile, have been scooping up drillable land in the Powder River Basin over the past few years. Devon Energy made a bold bet to buy acreage in the area in late 2015, spending $600 million for 253,000 net acres, which more than doubled its position. In the meantime, Anadarko Petroleum recently announced that it had invested another $100 million to lease land in the PRB, boosting its position to more than 300,000 acres.

While both Devon and Anadarko are still in the early stages of developing their acreage in the PRB, they believe it has the potential to be a meaningful growth driver in the coming years. Devon’s production in the region is already on pace to grow more than 20% from last year’s average. However, with its plan to double its activity level next year, the PRB could emerge as a third growth engine to complement its positions in the Permian and STACK shale play.”