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A few weeks back CNBC sent anchor and Mad Money host Jim Cramer up to the Bakken shale to get an on the ground view of the amazing changes taking place in the area. North Dakota is booming with an overwhelming demand for employees. The companies leading the drilling efforts such as Continental Resources (CLR) and Brigham Exploration (BEXP) have benefited handsomely from the massive growth in that area.

Though known by many industry experts and investors, another area exists in southern Texas that might match or exceed the oil produced from the Bakken. That area is called the Eagle Ford Shale.

With an estimated 25B boe, Eagle Ford has enormous untapped potential. Companies have in earnest only been drilling in the area for the last couple of years. Petrohawk (HK) was a leader in the area and BHP BIlliton (BHP) recently bought them out.

Under the radar companies Carrizo Oil & Gas (CRZO) and C&J Energy Services (CJES) have major exposure to Eagle Ford riches. CRZO is an oil exploration company with 63K acres in the area plus thousands of acres in the Marcellus, Niobrara, and Barnett. CJES is an oil services company that specializes in hydraulic fracturing with 3 of 5 fleets currently working in the Eagle Ford.

Both companies have tremendous growth opportunities ahead. CRZO just recently began drilling outside the Barnett shale with numerous wells going on line since June in both the Eagle Ford and the Niobrara. Analysts expect revenue to grow 54% this year and 108% next year. That growth is dependent on how fast companies like CJES can fracture wells and get them completed and producing.

CJES on the other hand is a recent IPO from July that will use the proceeds to double its fracturing fleet. The company added a fifth fleet on August 1st and will grow to at least eight and possibly nine by the end of 2012. An incredible growth story mostly missed due to the bad timing of an IPO issued right into the market drop at the beginning of August.

Even with oil prices remaining strong at around $90, the market has sold CRZO off hard from $44 to $27. CJES on the other hand trades below the IPO price of $29.50. It's a rare opportunity to buy a fast growing company below IPO prices. This doesn't make sense. Oil prices have remained strong even in the sell off.

Back on July 12th, Cramer featured CRZO when the stock was trading around the $44 high. He thought the stock was cheap than and undoubtedly would want to load up on the stock now. It wouldn't surprise me if he doesn't add CJES to his list of favorites soon. Both companies have some of the cheapest 2012 multiples. Investors might have to wait, but eventually the Eagle Ford will get its due deserve and the stock prices of these two companies might grow like CLR and BEXP did from the Bakken exposure.

CRZO Highlights

To highlight the growth expected for CRZO in the 2H of 2011 and into 2012 we'll point out the drilling growth especially in oil areas Eagle Ford and Niobrara from recent presentations. Not to be missed is the recent start of drilling in the Marcellus as well. Another catalyst though mostly ignored with natural gas prices so low. The amounts listed below are totals since beginning of operations in the area.

Eagle Ford (oil)
June 6 - Drilled 8 wells, completed 5, preparing to complete remaining 3 in June
August 18 - Drilled 16 wells, completed 8, 8 wells waiting on completion

Niobrara (oil)
June 6 - Drilled 4 wells, completed 3, preparing to complete 4th
August 18 - Drilled 6 wells, completed 5, completing 6th well

Marcellus (gas)
Expect initial operated gas sales in Q3 2011

In less than 3 months, the drilled oil wells and completed wells have nearly doubled. On top of that, the Marcellus play will just start selling gas this quarter. Not many companies offer this amount of obvious of growth. Tune into a presentation on September 13th to follow the drilling progress over the last month.

CJES Highlights

Very simply, CJES is at least doubling their hydraulic fracturing fleet within a 18 month period. Demand remains incredibly strong with over 3,500 wells remaining to be fractured industry wide in the US. Note how CRZO has 8 wells to be completed in the Eagle Ford alone. Considering this amounts to 50% of the wells it has drilled in the area running with only 3 drilling rigs, I'd say the industry needs a lot more help.

  • Fleet 5 - started working Aug 1st
  • Fleet 6 - delivery Q411
  • Fleet 7 - delivery 1H12
  • Fleet 8 - delivery 2H12
  • Fleet 9 - possible by end of 2012
  • Coiled Tubing units - 3 more by year end


With oil prices continuing to remain high, both companies offer incredible valuations compared to their growth prospects.

Disclosure: I am long CJES, CRZO.

Additional disclosure: Please consult your own financial advisor before making any investment decisions.

Source: 2 Eagle Ford Shale Plays Not Closely Followed