So who exactly stands to gain from the potentially massive Utica Shale natural gas play in Quebec? That's the "64,000 question," says Wellington West analyst Kim Page of the resource play that, over the past few weeks, has gained considerable credibility thanks to favorable drilling results from Denver-based large cap producer, Forest Oil Corp. (NYSE:FST).
In a strategy note to clients Mr. Page said:
The Utica Shale gas play in Quebec has the potential to be a massive new natural gas resource for an increasingly energy starved North American market place.
Industry estimates regarding the play, which covers an area of 5,000 square kilometres along the shoreline of the St. Lawrence River in the St. Lawrence Lowlands, range from 5 to 25 trillion cubic feet of recoverable resource potential, the analyst told clients. That compares with current proved Canadian natural gas reserves of approximately 58 trillion cubic feet.
He said major producers like Forest Oil and Talisman Energy (NYSE:TLM) who have interests in the area provide significant credibility to the play, noting Forest Oil believes there is upwards of 4 trillion cubic feet of potential recoverable resources on their lands alone.
However, it's the little guys who could stand to get the most, according to Mr. Page.
"We believe junior producers partnered with the majors will gain from their operational expertise," Mr. Page wrote. Of the four junior companies he lists with large acreage in the main prospective window, he said the market is currently paying a premium for Junex Inc.(OTC:JNEXF), over Gastem Inc. (OTC:GTMIF) and Questerre Inc. (OTCPK:QTEYF).
He added that Altai Resources Inc. (OTC:ARSEF), has the highest overall leverage to the play, in view of its acreage position and relatively small market capitalization.