Tuscaloosa Marine Shale Set For Exploration Ramp Up

BMI View: The Tuscaloosa Marine Shale looks set to see a substantial uptick in exploration in the coming quarters, with a number of independent firms pledging considerable increases in capital expenditure (capex) to develop the play. While a technically challenging below ground picture keeps us cautious for now, we note that significant above-ground incentives and recent technological improvements could hold the key to unlocking the potential of this highly promising formation.

In recent months we have seen a surge of interest in the Tuscaloosa Marine Shale (TMS) play, as independents ranging from Canadian firm Encana to Houston-based Sanchez Energy and Goodrich Petroleum Corp. re-evaluate its potential as an economically viable producer in light of new drilling methods. We caution that significant risks remain given the nascent stage of this play's development. However, with companies benefitting from slowly improving drilling technologies, and recently implemented fiscal and regulatory incentives, exploration is likely to remain elevated in the coming quarters, with potential for 2014 to be a breakout year for the TMS.

Technically Challenging, But Could Be Ready For A Boom

New Play Emerging
US - Tuscaloosa Marine Shale Map

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Related sectors of this article: Oil & Gas, Projects, Upstream, Exploration, Development, Production
Geography: United States

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