In the U.S. there could be not just one, but maybe two huge oil shales that we don't even know about yet -- and Core Labs (CLB) is doing the work to find out how big they will be.
Last night on my Mad Money show, Core Labs CEO David Demshur said we aren't yet discovering the big shales in this country.
Core Labs is the most profitable oil service company, if you go by the return on investment metric, and some major clients are studying its results right now in order to see if these two prospects could be as bountiful as the Eagle Ford or the Bakken.
The Eagle Ford is drawing comparisons to Saudi Arabia by EOG Resources (EOG), the biggest factor in the field. Continental Resources (CLR), the most aggressive driller in the Bakken, analogizes that field to Prudhoe Bay. Demshur says he's confident that at least one of these new shales will be equal to the scale of those gigantic fields. It's another U.S. game-changer -- maybe two -- and it will be electrifying for whoever owns these fields. This, of course, remains a secret, as Core is not allowed to disclose for whom it is working.
Demshur ought to know: His company maps out reservoirs and figures out how much gettable oil there is under the ground. You would bring in Core if you thought you had something huge and imminent. I sense we will be learning about these fields within the year, after the clients buy up as much land as possible around them in order to be sure the acreage will be worthwhile. As soon as Demshur told me about this, I had two thoughts in mind. One is that our country has far more recoverable oil in it than anyone thought it did five years ago.
Second, because President Obama doesn't want to be identified with any fuel that isn't renewable, this kind of find most likely won't mean much to anyone except for the shareholders of the companies that finds the oil.
In another country, the nation's leader would be trying to figure out how to get more people to work on this kind of project, how to bring it to market quickly, how to get the price of gasoline lower with it and how to redo the defense budget in order to configure the possibility of energy independence. He or she might even have a task force that deals exclusively with new oil finds.
But the processes of even exploring and producing oil are antithetical to the ethos of many environmentalists, because they feel strongly that anything that depresses the price at the pump is something that will create more pollution. I believe the president shares those concerns above all others. Witness the emphasis he placed on climate control in his inaugural speech. The other imperatives -- national security, affordability, jobs, account balances -- are all trumped by this environmental gospel.
It's a significant roadblock when even cleaner fossil fuels like natural gas don't get considered in the mix of what could go right in this country.
I know, I know -- the market's taking care of it. The market's working. We will all make money if we can figure out whom to back and how long to back them.
But if we had an energy policy that was above the market's greedy hands and integrated new finds like what Demshur is talking about, we could fundamentally change the budget of the nation and the creation of new jobs.
I can just imagine a motivated energy secretary calling the president of another country saying, "We have to harness all of this oil coming in and bring the heads of private industry in here to figure out what we can accomplish as a nation with this bounty." We did not have that kind of energy secretary in the first Obama term. I bet the second secretary won't be any more enthused with these prospects, and that those prospects will be ignored.
Anyway, right now these two plays are well-kept secrets. Let's see if we hear the names of any new shales during the upcoming reporting period.
They might just be the next Bakken or the next Eagle Ford, and we may have the next Continental Resources or EOG on our hands and we don't even know it yet. In the meantime, it just might pay right now to bet on Core Labs. It's got the best return on investment of all service companies. It's also racking up huge contracts from the government of Mexico, which is finally putting its reserves to work -- and Demsure has got a colossal amount of Iraq business now that that country has unleashed its land to big oil companies.
It's good to know there are some winners here. I just wish the public -- the ones who don't own the stocks -- could get a chance to win, too, with lower oil prices and a more rational distribution of jobs. Instead folks must suffer amid huge job-wanted geographies and a much bigger no-jobs section of the country, with no government to change the picture for the positive.