3 micro-cap shale oil companies exploring in Canning Basin

The eastern seaboard coal seam gas (CSG) developments that are regularly in the news are drawing attention away from the huge potential in shale gas and oil in the Canning Basin in Western Australia.

It’s not being overlooked by big oil players both domestic and international, though. BHP Billiton (ASX: BHP) stated recently that it is wanting to explore the unconventional gas and oil potential, and US Hess Corporation (NYSE: HES) as well as Apache Corporation (NYSE: APA) have interests in the area. Projected shale gas reserves suggest that this basin could be holding up to 235 trillion cubic feet of gas, or about 500 years of WA’s annual domestic gas supply in the state.

Here are three companies that you need to know about to follow this gas bonanza story.

Buru Energy (ASX: BRU) is a $445 million oil and gas explorer and producer. It has just announced that Apache will be joining its joint venture, and agreed to fund a $25 million exploration program in return for 50% interest in three of the company’s exploration permit areas, and potentially more in one other area.

Initially, the company will receive $7.2 million, and then will be assisted with 80% of the cost of exploration covered by the agreement. The company reported a net loss of $17.7 million for 2013, which followed a $10 million loss in 2012.

New Standard Energy (ASX: NSE) is an oil and gas explorer with three major projects in the Canning Basin, and has a market capitalisation of $40 million. In July, PetroChina Company purchased a 29% interest in the company from ConocoPhillips (NYSE: COP). At the time of the transaction, the ownership structure became 25% New Standard Energy, 29% PetroChina and ConocoPhillips holds 46%.

Oil Basins (ASX: OBL), a $10 million oil and gas explorer and developer, has interests in two onshore permit areas. It just raised its ownership in its Backreef area, north of the Erskine oil terminal, to 100% by having a share issue of 25 million shares that raised $420,000. It maintains a 50% stake in its other much larger area near and around the town of Derby. In 2013, it realised a net loss of $6 million. Its share price is $0.016

Foolish takeaway

The WA government projected it would be another five to 10 years before shale gas would be produced on a commercial level in the basin area, yet the potential is enormous for the state and the companies both big and small there. These three micro-caps have to grow a lot themselves, possibly through joint ventures or buy-outs from major producers. Still, you’ll want to keep these names on your radar.

Knowing the future story of shale gas is good, yet there are excellent oil, copper and gold producers making money right now. We’ve uncovered three companies poised to benefit from the rising prices of these commodities. Get our brand-new report -- "3 Tiny Resources Companies That Could Win Big" -- FREE!

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now